What is financial wellbeing?
Firstly, it’s important to get a solid understanding of what employee financial wellbeing is. It’s essentially an umbrella term for your employee’s ability to manage everyday financial stressors and unexpected expenses that they might not usually have every month. This could be a car breaking down or their computer needing repairs. When your employees have financial wellbeing, they feel strong and in control of their lives.
Financial wellbeing also means having a financial plan for the future. This means having a retirement plan that works for you, as well as having the capacity to save money for important life purchases, such as a mortgage for a house or being able to pay for childcare.
On the other hand, employees who lack financial wellbeing can suffer from mental health issues, such as chronic stress or depression as a result of not feeling in control of their finances. This can have a notable knock-on effect for your business, as your employee performance may start to decrease, absenteeism may increase or employees may even quit their jobs.
As the cost of living continues to rise in the UK, your employees might be finding it harder and harder to cover their everyday expenses. According to the BBC, the cost of living crisis in the UK refers to rapidly increasing prices across the UK and the world, including for energy and groceries. The cost of energy in particular has caused many products to become more expensive.
You might already be considering offering employees a pay rise to compensate for inflation. Creating a financial wellbeing policy that helps educate them in financial literacy can be a helpful addition to your current strategy.
How to create a financial wellbeing policy
Creating a financial wellbeing policy is a good way to make it clear how you plan to assist your employees with their financial wellbeing at work. It also gives them an idea of what is available and what is not in terms of your financial benefits. Having a strong financial wellbeing policy in place can be very reassuring and may help to keep morale up across your business. Below are some ideas for creating a successful financial policy.
State your living wage
Firstly, your financial wellbeing policy might cover your base level of pay, such as a living wage. The Real Living Wage is a voluntary option for UK businesses, and many large companies offer their employees this wage. Every employer must be able to pay either the National Living Wage or the National Minimum Wage depending on an employee’s age. Many employers offer the London Living Wage if based in London. However, you might decide that it is more appropriate to pay higher than the minimum wage or living wage if you do not feel it covers all of your employee’s current expenses. For more information about the National Living Wage, please visit the UK government website.
Explain how you plan to use financial wellbeing surveys
You might explain that you use employee financial wellbeing surveys in order to find out whether their current pay and perks are working for them. This helps you to find out whether there are common issues or concerns among your employees and what solutions might be available. You might be able to cover some of their expenses via perks such as discounts.
Offer a perks package
As an employer, you could provide employees with a gym discount or membership if many are unable to afford the gym due to increases in cost of living. If you have a gym on site, you could make it free to use on certain days of the week. Another idea might be to offer discounts for travel, retail outlets or free healthy food in canteens. If you have an Employee Benefit Programme, you can discuss this here.
Another way to show your support to employees in your financial wellbeing policy may be to mention something about your hybrid or remote working policy. Employees who feel that their commute is becoming too expensive may benefit from working one or two days from home.
Include who to contact regarding financial concerns
Your financial wellbeing policy might include a point of contact such as a line manager for your employees, so they know who to talk to if they have any financial concerns. You could enforce the idea that this conversation would be confidential and supportive.
Educate employees about the options available
The UK government provides some support for people affected by the cost of living crisis in the UK. You could help them by pointing employees in the direction of the Citizens Advice website, which explains how the UK government aims to help people during the crisis, for example with the Energy Bills Support Scheme. Combining both education and practical support such as a perks package might be what your employees need to feel autonomous when it comes to their financial decisions. Some employees may be more welcome to practical help from you, while others might simply want to be pointed in the right direction and handle matters themselves.
Your employees might find learning how to budget intimidating. However, with the right education, you can make it simpler for them. Employees who aren’t comfortable asking for help might benefit from having someone they can get advice from on budgeting if they need this.
Offer debt support
If you plan on offering debt support to your employees, you can make the terms and conditions of this clear in your financial wellbeing policy. You might offer something like a loan consolidation from an employee’s payroll in order to help them pay off their debts. Other options include providing financial literacy workshops for employees. You could bring in a guest speaker or tutor who is able to provide expert advice on the best ways to manage finances.
Have a workplace ISA
If you have a workplace ISA or are planning to introduce one, this could be another great offering in your financial wellbeing policy. Not only do ISAs help employees to set money aside in order to save it, they might also gain interest on the money that they put in the account. Tax-free ISAs also mean that your employee doesn’t have to pay tax on their savings. A workplace ISA can help your employees to prepare for emergencies, particularly if they are approaching retirement age and are dealing with additional health conditions.
Providing your employees with a comprehensive financial wellbeing policy might just be what they need to feel confident about their finances. It’s a good way to show your employees that you’re looking out for them during a cost of living crisis. What’s more, it also helps you stand out to top candidates who are looking for job stability during uncertain times. Your financial wellbeing policy could combine both education and support in the way of perks, discounts and debt support depending on your budget.