REWARD
C ovid may finally be receding into the distance. But with rampant inflation, fuel price rises and the biggest drop in living standards since the 1950s, there’s plenty to keep workers and employers alike awake at night. At a time of continued business uncertainty and financial pressure, payroll has never been more important. The function offers a unique and potentially effective way for employers to: ● deliver financial wellness initiatives ● improve transparency about payslips ● enhance overall engagement with staff. In short, digital transformation initiatives are reshaping the way organisations do business and deliver customer experiences. They should definitely do the same for the employee experience. A cost-of-living crisis PayDashboard research from last year found the vast majority (84%) of Brits worry about their finances. Nearly two-fifths (38%) said they are, or have recently been, in serious debt. Of those in debt, half have lost sleep or felt more anxious, and around a third are more depressed. If anything, cost-of-living challenges have worsened since we ran that study. The research is available in full here: paydashboard.com/money. Inflation is predicted to hit a 40-year high of nearly 9% by the final quarter of 2022, the tax burden is rising, and living standards are set to fall by over 2% over the coming year. Household energy bills could soon rise as high as £3,000 per year. At a time of continued business uncertainty and financial pressure, payroll has never been more important The problem for employers We all know employee well-being has a direct impact on engagement and productivity in the workplace. But it’s also key to retention. Over two-fifths (43%) of workers told us that employer guidance and support around pay — for example, access to financial health advice — would make them more loyal to a company. There’s a clear opportunity here, but we need to find
the right way of solving it. Employees have historically felt uncomfortable about talking to their employers regarding financial matters. Our research showed 40% of employees wouldn’t want to speak to their employer directly about their finances. That puts the onus on companies to find alternative ways to deliver financial education and advice in a way their staff feel at ease with. Rather than in-person workshops and payroll clinics or having to speak to a line manager or the human resources (HR) team, we need to consider possible channels for anonymous mass communication with staff. How payroll can help In our research, 62% of employees said they have at one time felt confused about their payslip. For a staggering one in ten workers, they struggle to understand their payslip every pay day. The new health and social care levy, with the rise in National Insurance contributions (NICs), will not only add to their financial woes but also bring further challenges around interpreting payslip details. While some employers have questioned the political angle of including the suggested Her Majesty’s Revenue and Customs (HMRC) wording: “1.25% uplift in NICs funds NHS, health and social care” on payslips, the concept of this is incredibly effective. Employees checking their payslips are finally being provided with some commentary about a change in their pay. So, to start helping our employees with their financial well-being, a great place for payroll teams to start is by breaking down the fundamentals of pay and tax and looking at how this is displayed on payslips. Our tips for payroll teams At PayDashboard, we’ve been providing financial education to employees via the payslip for years. It’s an effective way of mass-communicating information to employees, through a process that’s already run each month – providing staff with payslips. This tactic offers maximum reach, but also the anonymity for employees who don’t feel comfortable reaching out to payroll for personal help. In the case of the health and social care levy, we provided our users with a helpful article explaining the levy in more detail. We also gave them a calculator that used data from the employee’s last payslip for them to calculate how the levy would affect their net pay in April 2022,
allowing them to start preparing for the potential shortfall in their household budget. There are some payroll topics that are of more interest to employees than others. Of the 30 to 40 guidance articles we provide to PayDashboard users, these are always the most popular. If you’re starting to provide more guidance to your employees about pay issues – these three topics are likely to go down well. 1.) understanding your tax code – particularly how to identify emergency tax codes for new starters 2.) the marriage allowance – over one million eligible UK couples still aren’t claiming this tax break 3.) payslip terminology – why not create a glossary of payslip terms for your staff that’s accessed via your intranet or HR system? Ideally it would be downloadable in their payslip portal. If your technology allows you, then delivering helpful information about pay via your payslip portal is really effective. With digital payslips, you have a captive and receptive audience, and there’s an appetite for more information to be provided alongside payslips. CIPP research tells us that 52% of people say they’d be interested in short videos or guides on specific areas of their payslips. That research can be located here: http://ow.ly/URA630sjlra. A great place for payroll teams to start is by breaking down the fundamentals of pay and tax and looking at how this It’s time for payroll teams to showcase their knowledge Now it’s time for payroll teams to step up and get more involved in the financial well-being of their workforce. The next few years could be tough on us financially. But by leveraging the knowledge of the payroll team, and the best of digital technology, employers can help their loyal workers weather the worst of the financial storm. n is displayed on payslips
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
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