The House of Commons’ research briefing document – published on 20 October 2023 and headed “Rising Cost of Living in the UK” explains how the current financial climate is impacting the UK, and what the Government’s support measures are.
Are Employers Obligated to Offer Financial Support?
Employers have a duty of care to protect employee health, safety, and welfare as far as reasonably practicable. However, they are not under any legal obligation to assist employees in their financial difficulties.
Despite this, it may be in an employer’s commercial interest to try to help employees suffering from financial problems as this could affect their performance at work, resulting in a drop in productivity. Employee mistakes could cost the business money, they may suffer from more mental health issues, and their attendance could suffer from increased sickness absence. Employees may also show a lack of confidence, low self-esteem, mood swings, or suffer from lack of sleep over any financial worries.
Employees could consider investigating matters and may look to take disciplinary action due to some of the matters referenced above. Such action could be problematic however, and factors such as the employee having an unblemished service record, the behaviour being out of character, how serious the decline in performance is, impact on the business, and whether the disciplinary action could help improve matters, must be considered.
If employers get this wrong, they could face a potential constructive disciplinary claim – or otherwise a disability discrimination claim if the employee’s mental health issues arise from the current cost of living crisis, and fall within the meaning of Section 6 of the Equality Act 2010.
How Can Employers Support their Employees Financially?
There are many ways employers can help support employees who are facing financial difficulties…
1) Counselling Services
While there is no specific obligation to provide counselling support services – such as an employee assistance programme (EAP), employers may consider setting up support services and offering it to their employees. Alternatively, they can signpost to debt advisory charities such as StepChange and the National Debt Line. There are other forms of assistance that can be provided using government website information.
2) Employee Loans
Where an employer is considering an employee loan, care must be taken to ensure such a loan does not fall foul of consumer credit laws. If consumer credit businesses do not have a licence, it is classed as a criminal offence and subject to fines. Unlicensed loan agreements would require the consent of the court for its enforcement.
However - if an employer is not carrying on with consumer credit business because the provision of loans is a one-off or infrequent event, then the employee loan agreement may fall within exceptions to get a licence. To determine this, employers must take advice from commercial lawyers who will draft the loan agreement. There could also be tax implications.
3) Pay Advance
Major business organisations in retail, hospitality, and healthcare have salary advance schemes that allow employees to access some of their earned salary before their set payday. Employers looking to implement pay advance must establish a policy highlighting arrangements for the salary percentage advance, as well as any consequences that would arise from employees breaching the terms of the policy.
4) Discounted Services
Employers may have customers - or partnership relationships with other businesses, where they can try to negotiate and secure discounted services, such as shopping or restaurant vouchers, and gym memberships. The employer could consider subsidising healthy work meals, life insurance policies, dental cover, and general health screenings. Another option is hybrid working to reduce the travel costs of coming into work. However, during the cold winter period, employees may prefer coming to work due to the heating costs of working from home.
5) Open Door Approach
Employers should try to ensure that they can facilitate a workplace culture where employees can speak freely and in confidence to their manager about personal matters that could be affecting how they carry out their job.
6) Increase Salaries or Give One-Off Bonuses
Unless it is a contractual right set out for the employee, any one-off or increased payment would be a discretionary agreement between worker and employer. Another option is to consider buying and selling holidays that are outside of the statutory leave entitlement. This should be done using a well drafted policy on the matter.
Above are just some of the options an employer could consider if deemed practicable. If you require any additional guidance or assistance on this matter, please contact the Quest Advice Line on 01455 852 028.
