Cost-of-Living Crisis: An employer’s guide to supporting employees
How is the cost-of-living crisis affecting your staff? Recent press reports indicate that money worries related to the current economic crisis have led to:
- ● UK employees becoming so anxious that it is affecting their performance at work
- ● UK office workers ditching spending on lunches near work for packed lunches
- ● UK workers feeling they need a salary of £49,300 just to feel 'comfortable'
That's why many employers are looking for ways to support their employees as they face rising financial pressures due to the cost-of-living crisis.
According to a recent report by the Chartered Institute of Personnel and Development (CIPD), some larger businesses in the UK expect to give workers pay rises of 5% in 2023, which is the highest in at least a decade.
However, businesses are not immune to rising fuel prices, soaring energy bills, and inflation. As such, increasing wages during a period of stagnating profits may not be an option for many employers.
Our recent research into how employers can support their staff through the cost-of-living crisis uncovered another solution for employers looking to ease the financial pressure on workers: employee benefits.
Of the 2,555 UK employers and staff we spoke to, almost four-fifths (79%) of employers and two thirds (65%) of employees agreed that benefits need to be part of the solution to help employees manage financial issues caused by the rising cost-of-living.
To help you minimise the current challenges of the financial crisis in your employees' lives, this guide to employee benefits reveals some of the steps employers can take to create a supportive work environment.
Support your staff with employee benefits
With many employees struggling to make ends meet due to rising energy prices and travel costs, our research found that between 82% and 88% of employers felt they have a responsibility to support their staff.
Doing so not only helps to combat skyrocketing costs for a wide range of essentials but also helps to attract and retain talent. This is particularly important in an age where 63% of employees are likely to leave their organisation for more lucrative opportunities due to the cost-of-living crisis.
That's why employers are increasingly turning to employee benefits. Employees also expect them to be a key part of their core compensation package from their current employer. Of those we surveyed, up to 72% of employers had seen an increase in the uptake of employees using their benefits as part of the solution to difficult times during the ongoing crisis.
That figure could have been higher were it not for one thing: some staff don't know what benefits are on offer.
The importance of communicating employee benefits to staff
Our research found that although UK businesses offer between eight and 11 employee benefits on average for their employees to take advantage of, only one in five employees is fully aware of the extent of their benefits package.
- ● Between 90% and 95% of employers feel that the uptake in employee benefits would be greater if employees were more aware of what was available to them
- ● A massive 80% of employees are unaware of the full range of benefits on offer
- ● Only 5% of employees feel their organisation is doing enough to support them.
It’s obvious, therefore, that employers must work harder to find an effective way to ensure staff are fully aware of what is on offer to them. One of the biggest disconnects with regard to employee benefits is salary sacrifice. Although 64% of employees say salary sacrifice benefits will help reduce cost-of-living pressures, 18% of employees don't understand what it is.
Salary sacrifice schemes offer employees a way to save money during the current challenging economic situation by providing tax breaks on everyday products and services they might typically want to buy.
It involves the employee exchanging part of their salary for a non-cash benefit. The employee pays less in National Insurance contributions (and sometimes income tax too) and the employer pays less in National Insurance. It's a win-win scheme that’s beneficial to all.
The most popular salary sacrifice schemes
Salary sacrifice schemes can make a huge difference to employees' quality of living at any time, but are particularly beneficial during a cost-of-living crisis.
Here are just some of the ways that salary sacrifice schemes can help your workforce alleviate financial worries by saving money on the things that matter.
Tech savings for all the family
Whether it's at work or at home, technology is an integral part of everyday life. That's why a salary sacrifice scheme that offers savings on tech items and appliances is a desirable workplace benefit for 57% of employees.
For example, our Techscheme helps employees save up to 13% on over 5,000 tech items in-store or online at Currys, ranging from smartphones and laptops to freezers and fitness trackers.
As well as helping your employees get the tech they want, your staff can also use Techscheme to buy tech for their loved ones. Plus, they can save on items that are already discounted and spread the cost interest-free straight from their salary over 12 instalments.
The scheme is free to join, cost-neutral to implement, and we can also provide marketing support to help excite and engage your employees.
With continual price hikes to the cost of everyday purchases, a prepaid shopping card that gives employees cashback every time they shop can make a huge difference.
Our cashback card scheme bYond helps employees earn up to 15% cashback at over 85 UK high street retailers, restaurants, and supermarkets, including Asda, Boots, John Lewis, Marks & Spencer, Primark, Sainsbury's, and Wickes.
This employee financial well-being benefit could give your workforce an incredible £500 cashback each year to help offset the cost-of-living increases. There's no risk of debt as employees can only top up their card with a debit card and, because it's regulated by the Financial Conduct Authority, it is a safe and secure scheme.
Plus, bYond can also help boost employee well-being with 56% of employees feeling more valued at work because of their bYond card.
Discount schemes on everyday items
Adding discount schemes to your employee benefits package can help your staff save money on a range of everyday expenses such as groceries, meals out, and beauty products.
For example, Extras Discounts saves employees up to 15% on the cost of physical and digital gift cards from big brands such as Costa Coffee, H&M, Spotify, All Bar One, Halfords, Pizza Express, and Selfridges & Co.
This simple and straightforward scheme gives your workforce instant access 24/7 to upfront savings on over 100 brands, whether for themselves or as gifts for friends and family.
There's no admin, approvals, or cost to your business with Extras Discounts, making this an easy and effortless addition to your employee wellbeing strategy.
Cutting childcare costs
With reports of parents having to remortgage their homes or take on second jobs to pay for rising childcare fees, salary sacrifice workplace benefits offering savings on childcare costs can make a life-changing difference.
With the UK's leading electronic childcare voucher scheme, care-4, employees can save up to £933 a year on childcare costs for children aged 0 up to 16 years. This HMRC-approved and tax-efficient benefit can cut up to £77.76 off the cost of childcare each month.
It's easy to move your employees from an existing childcare scheme provider to care-4, and they will also gain access to summer club discounts, a confidential childcare helpline, and an emergency childcare finder.
Supporting physical wellbeing
Rising living costs are a high or very high threat to the health of UK citizens, say 57% of those surveyed by The Health Foundation. This has led to a rise in salary sacrifice benefits, such as Cycle to Work schemes, that show an awareness of employee health.
Cyclescheme, for example, promotes a more active workforce by saving employees up to 40% on the cost of their choice of a new bike and accessories. As the UK's leading Cycle to Work scheme, Cyclescheme:
- ● Is free for both your business and employees to join
- ● Lets employees repay the cost from their salary interest-free over 12 months
- ● Gives your staff the freedom to shop at more than 2,000 retailers in the UK
No less than 82% of Cyclescheme participants report feeling less stressed after cycle commuting. Plus, by offering savings on electric bikes, Cyclescheme can also support your business's green and corporate social responsibility goals.
Looking after employees’ mental health
The financial stress of money worries during the cost-of-living crisis has put a significant strain on many people’s mental health. Salary sacrifice schemes that promote being active can improve mental health as physical activity releases feel-good hormones and helps to manage stress and anxiety.
For example, MyGymDiscounts offers employees up to 25% off a gym membership at a wide range of gyms, leisure centres, fitness studios, health clubs, and BootCamp classes across the UK.
No matter how your staff likes to get moving, there are 3,000 fitness partners to choose from including leading wellness brands such as David Lloyd, Fitness First, PureGym, Virgin Active, and Les Mills.
As well as having an impact on employee mental wellbeing, your business will benefit from active employees who are proven to be more productive and take fewer sick days.
Supporting environmental wellbeing
With more than half of drivers aged 16 to 49 years likely to switch to electric vehicles in the next decade, there is a clear demand for salary sacrifice schemes offering an affordable green car solution.
Our Green Car Benefit ticks all the boxes by offering employees savings on an ultra-low emission vehicle package that includes a car, insurance, road tax, MOT, servicing, replacement tyres, and more for an affordable monthly amount.
Your employees have the freedom to choose the exact electric or hybrid car they want from a range of green car choices from the likes of Hyundai, Citroen, Nissan, Tesla, Audi, and more.
Quick and easy to set up, green car schemes make sustainable travel more affordable during the energy crisis, whilst also supporting your company's green and sustainable business performance.
Ready to help your employees save?
We're on a mission to help more employers support their employees and help relieve some of the financial pressure during the cost-of-living crisis...and beyond.
Our employee benefits platform, Extras, provides quick access to a personalised employee benefits package in one easy-to-use dashboard.