Employees with money issues – as an employer can you help and what should you do?
The cost of living crisis is an issue that is affecting many employees. As an employer you may well find yourself wanting, or even feeling an obligation, to do something about it. The question is, are you allowed to help and if so, what can you do that will be effective?
In this article we will look at a few of the things you can do to help your employees when times are tough.
The cost of living crisis and your employees
There is no getting away from it, the cost of living is rising rapidly and that means employees may well be facing some hard times. Some may already be in financial difficulties. While you probably want to help, it isn’t something you should do without having the right policies and procedures to make sure you help in the right way.
Firstly though, let’s deal with a hard truth. As an employer you are not obliged to help employees with their financial wellbeing or personal difficulties. As a sympathetic, supportive employer, you probably do want to help of course, but the bottom line is that you have no real requirement to do so.
While the above may well be true, in the real world most employers care about their employees and want to offer assistance in difficult times. What you can do, and what the best course of action is, will always depend on your circumstances. So, we suggest you call us, and we can look at what you can do that will work for both you and your team.
Firstly, though it’s important to recognise that there is a very big difference between short term financial problems, such as unexpected bills, and long-term issues such as mounting debt. It’s very important that you separate your response to these.
Short term issues.
When employees have a sudden difficulty with unexpected bills or similar it is not uncommon for them to reach out to their employers for help. The most common request is for a loan or advance on wages to be paid. Despite some common misconceptions about loans, as an employer you do have the option to offer them. However, it isn’t something to take lightly.
There is a lot to unpick about whether you should have a loan policy and your decision will be dependent on a lot of factors. If you are going to consider loans to employees though, you must formalise what they are and what that will mean to both of you. You will need an agreement of course, and that will need to be a legally binding set of terms and conditions. Then it will need administering, probably as a deduction from salary. As you can tell there is a lot to be done so you are going to need a fixed policy and procedures to make sure it all works.
There is absolutely no reason why you cannot advance or loan money to an employee with sudden financial problems, but you must do it right.
Long term help for financial matters
We are seeing more and more employers recognising the impact long term financial planning can have on the wellbeing of their workforce. Financial problems are a major source of stress and that can lead to issues with mental well-being as well as other wellness issues. As a result, many employers are now asking how they can reach out and help their teams.
There is an important step to be taken before any of these suggestions below though, and that is to foster an environment where the team feel they can talk. Some employers are choosing to bring in advisors to run confidential money awareness sessions. In other cases, it may be a matter of sending the message that managers are willing to listen and help where they can. Money is a deeply personal issue and people with problems are often embarrassed or reluctant to admit they need help. The first move towards helping them is therefore to foster an environment where they can reach out for help.
Usually money issues develop over time, so future planning and small savings all add up to make life easier when your team could be feeling the pinch.
- Saving schemes.
While it may initially seem counterintuitive to set up saving schemes in difficult financial times, a little bit can go a long way. You may remember the Christmas club type schemes from years ago. The modern equivalent of these are workplace ISAs and loyalty saving schemes. You could even contribute to them yourself based on productivity bonuses perhaps and turn them into a valuable part of your employer brand.
- Discount cards, rewards, and memberships.
There are a lot of options around these from free memberships at the local gym, through to corporate discount cards at your local bulk buy retailer. Encouraging bulk, low cost buying of staple items can help employees end up with a little more money at the end of the month. Things like discount cards can also help maintain the work life balance for the team by stretching the money a little further.
- Money management advice sessions.
This is one of the most valuable things you can do for your team. If they can meet and discuss their financial situation with experts, it can help encourage a better understanding of how they can deal with the cost of living crisis, now and in the future. There are impartial services that will help, and you can always reach out to local advisors and experts who may offer appropriate services.
- Crisis advice
Again, this is all about messaging and creating a safe environment of trust. If your team know there is someone to turn to who will be able to point them to people who can help in a crisis, they may reach out before things become escalate and become too difficult to resolve.
Whatever you choose to do, or not to do, about employees with money concerns you need to have the right advice. Instant responses such as employee advances will need to be recorded and implemented properly for payroll and other purposes, and other ideas such as saving schemes could have tax implications and so on. As always, to help your employees, you need to understand what you can and cannot do.
Call us and let’s talk about your options.