COMPLIANCE
Cost-of-living crisis: how can payroll help to ease the pressure?
Christina Holloway MCIPP, head of specialised services, Moorepay, provides some tips on how payroll can help in the midst of the current cost-of-living crisis
W ith household bills continuing to rise, many employees are worried about their finances and are looking to their employers for support. A recent poll conducted by the Chartered Institute of Personnel Development (CIPD) found financial insecurity is having a knock-on effect on performance at work. More than a quarter of respondents said money problems were affecting their job performance and a fifth found money worries affected their sleep. I’m going to examine some of the ways businesses can support their employees with the cost-of-living crisis and specifically what role payroll teams can play at this challenging time. Interestingly, this year’s Future of Payroll Report revealed 55% of respondents predicted the future will see payroll professionals having more involvement in employee financial well-being. So, while some of the points I raise may currently sit under the human resources (HR) umbrella of your organisation, we could see increased synergies between HR and payroll teams going forward. We could see increased synergies between human Paying a fair and liveable wage Although wages have risen in recent months, in many cases, they’ve failed to keep pace with the current rate of inflation. Your lower paid staff will see a larger proportion of their pay packet swallowed up by fuel and food costs. Could businesses prioritise committing to paying the real living wage, rather than awarding pay increases to the entire workforce? The real living wage, set by the Living Wage Foundation, is independently resource and payroll teams going forward
Consider employee benefits and discounts schemes A recent survey by Glassdoor found that 79% of British employees would prefer new benefits to a pay rise. Through signing up with a benefits and discounts provider, you can give your employees access to desirable perks and help them make their net pay go further. For example, our benefits provider and sister company, Wrkit, enables employees to purchase shopping cards for mainstream supermarkets. On the basis the average household spends £5,000 a year on groceries, they can save over £250 per year, which offsets the average cost of the National Insurance increase. Understanding the devastating impact payroll errors can have on employees It may seem obvious, but in this current climate, it’s absolutely crucial employees are paid accurately and on time. It was recently reported that Asda employees were having to skip household bill payments, take out loans and even use food banks to make it through the month, due to payroll errors that meant some employees were underpaid by £500 or more. Gethin Nadin, chief innovation officer at our sister company, Benefex, explained that “even during better times, most of this country had circa £500 or less in savings. This doesn’t give a buffer for people when it comes to payroll mistakes”. The reality is that “even a few days’ delay in pay can have a big impact: if there isn’t enough money for direct debits (usually set for payday), people end up in the red, get phone calls from creditors and end up stressed”. To conclude, I recognise employers are in a very tricky situation. They’re trying to help employees who are facing financial difficulties while also facing business price hikes. I’d like to emphasise that balance is absolutely key to this, as both businesses and individuals alike attempt to stay afloat in this unprecedented cost-of-living crisis. n
calculated, based on the minimum a worker needs to earn to cover the basic costs of living. It’s paid by nearly 10,000 UK employers and there’s multiple business benefits of paying the living wage, including: l drastically improving the reputation of your business l boosting employee retention l helping employee relations. Is pay on demand all that it seems? Pay on demand is becoming increasingly popular, but is it the right decision to give employees access to pay outside of their regular payday? In the recently published Future of Payroll Report , Damon Anderson from Experian flagged that many survey respondents were concerned about the danger of this ‘quick fix’ becoming heavily relied upon each month and becoming unsustainable in the long term. Anderson went on to stress that we must remember that earned wage access can only plug a short-term gap in an employee’s finances. Indeed, some survey respondents felt pay on demand could lead to financial difficulties for employees who already struggle with budgeting. The importance of financial advice and budgeting support The Money Advice Service reported that 39% of adults in the UK don’t feel confident managing their money. So, how can businesses support the financial well- being of their staff? You could start by implementing a financial well-being policy. This can be as simple as committing to signposting your employees to independent money and debt guidance, making sure your staff are aware of all the benefits you currently offer and normalising conversations about money worries at work. Letting your workforce know where they can access free, confidential and independent money advice could help some of them make savings and better long-term decisions.
| Professional in Payroll, Pensions and Reward | October 2022 | Issue 84 32
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