Managing staff through the cost-of-living crisis
The ongoing cost of living crisis has put significant pressure on household incomes, with many turning to their employer to facilitate higher wages to offset soaring expenses. Whilst a pay rise is, undoubtedly, the best solution to this problem, in many cases, employers will be experiencing equal struggles and concerns, so not be in a position to offer financial assistance. However, it’s important to remember that they can provide support in other ways.
Should a bonus payment be given, it’s useful to specify how and when it will apply. Similarly, employers should be clear that it is a one-off payment in recognition of the financial struggles employees have, but does not form a contractual, nor a recurring, arrangement.
Similarly, if there already is a contractual entitlement to a regular pay review or pay increase period, employers should ensure this is adhered to. Failure to abide by the contractual terms can lead to claims for breach of contract and will likely hinder employee relations. This may lead to a reduction in productivity and higher turnover rates, causing further troubles for businesses.
Employers may be able to renegotiate contractual terms and conditions, to remove or delay a scheduled pay increase or bonus payment. However, to do so, they must ensure they complete a full consultation period with affected employees and exhaust all other cost saving measures.
The cost benefits to working from home were amongst the reasons employees enjoyed doing so throughout the Covid pandemic; they were able to save on commuting expenses, reduce childcare fees and live in cheaper areas. Many also believed it provided a better work-life balance. However, as household bills now climb, homeworking may no longer be an attractive prospect.
For some homeworkers, returning to the office may be a useful way to save on energy bills. Where this isn’t possible, employers might want to consider providing a homeworking allowance, to ease the financial pressures associated with working from home, especially through the winter months.
For other on-site workers, commuting expenses may be more of an issue. In these circumstances, providing travel ticket loans or free parking can help reduce their overall outgoings. The introduction of hybrid or flexible working can also reduce overall expenses. This may be done through the offering of flexi-hours, compressed hours or reducing working time.
Further initiatives employers may wish to include offering an employee assistance programme (EAP), introducing rewards and benefits programmes, providing free on-site meals and refreshments, and providing financial literacy and education sessions.
For businesses, cost saving measures will be of equal importance. Whilst all of the above could be implemented, it is likely employers will also have to look at their outgoings and make some difficult decisions to ensure the long-term viability of the organisation.
Before jumping straight to changing terms and conditions or considering redundancies, there are some simple steps employers can take to reduce their expenditure. Firstly, employers should ensure there are processes in place to track the amount of annual leave employees have taken. Where they have gone over their allowance, monies can be recouped. Similarly, should an employee leave the organisation with annual leave still to take, employers can require that they use it during their notice period, to avoid paying for both holiday pay and notice pay separately.
Where equipment has been provided to staff (e.g. laptop, phone etc), an effective check-in/check-out system ensures all property is returned. A policy on damages can outline any deductions which will be made to staff wages in the event they return equipment in unsatisfactory conditions.
Finally, reducing availability of overtime, freezing recruitment and introducing clear training agreements can help reduce business expenses. HR and payroll teams should work with senior management to develop a plan which supports employees whilst safeguarding the business as a whole. Such a future proofing strategy will, no doubt, help protect businesses and their staff during turbulent times.