Feature insight - Employee welfare and wellbeing
Financial wellbeing
Brian Hall, managing director of BHSF Employee Benefits, reveals the effect absence from work can have on an employee’s finances and what employers can do to help
W e know that a relatively short absence from work can have significant, long-term consequences on an employee’s personal financial situation. Research carried out found that working age families in the UK could only manage for 29 days without the main breadwinner’s income (Legal & General Deadline to the Breadline research via TNS Global) before experiencing significant financial difficulties otherwise known as their ‘deadline to breadline’. At this point they may become entirely dependent upon state benefits, friends and family. BHSF’s 2017 Breaking the cycle report (http://bit.ly/2qICppk) found that 81% of employees have no personal sick pay insurance or income protection policy, so are reliant on statutory sick pay in the event of an absence from work due to sickness. At just £89.35 a week, for these individuals the deadline-to-breadline clock starts ticking immediately and the looming spectre of financial difficulty begins to raise its head. It’s likely all line managers will at some point in their career manage someone with financial problems and, with an average debt of around £30,105 per adult (http:// bit.ly/2pBMney), there is now more than ever a growing need for employers to provide assistance to line managers. Wayne Wild, director of WEC Group said: “Debt is a major problem, personal debts are at historically high levels and this must affect an employee’s mindset while at work. “Personal stresses will be exaggerated when work stresses are loaded on top. Financial stress can have a disproportionate effect on the ability of an employee to perform. Staff with financial problems will invariably struggle to focus on their work, may make mistakes or miss opportunities, and the effect can be catastrophic to any business, large or small.” We know that stress affects work in
various ways; financial stress is a prime example and one that can remain hidden. It is important to remember that debt may not be down to something that the employee is necessarily doing, but rather a situation they have found themselves in. Debt can have a number of causes; for example, a change in domestic circumstances, a period of illness, mental health issues or the use of dubious loan companies. Employers might consider offering lines of credit and advice on how to manage money, or simply provide access to the tools people need for their own financial education. . ..disproportionate effect on the ability of an employee to perform Dr David Cameron, consultant psychotherapist, warns that workers may not be forthcoming about their debt issues: “As with mental health, there are barriers to employees coming forward and asking for help or telling someone that they are struggling. Alarmingly, 45% of employees feel unable to approach the employer for support with personal problems and more than half are uncomfortable approaching their employer with a mental health problem”. We believe many employees, and their employers, are caught in a vicious cycle. It begins with the employee unwilling to approach their employer with problems and, concerned with job security, continuing to turn up for work but being a shadow of their former selves. The employer, without the specialist knowledge to recognise and prevent or at least help to mitigate the triggers of poor
performance, either fails to act or treats the problem as a disciplinary issue. Over time, the employee has increasing days off and, ultimately, goes onto long-term sick leave. This can have a major impact not only on the employee but also the employer as they limp along, unable to recruit, understaffed and underperforming as remaining colleagues try to pick up the extra workload, resulting in increased stress all around. So what can employers do to assist? Providing opportunities for financial education and support can help, as well as creating a culture where employees feel comfortable approaching the employer with issues. The new range of lower cost lending via employers through companies such as Salary Finance may also have a part to play in avoiding the punishing interest rates offered by payday loan companies. An employee assistance programme (EAP) can also be a significant benefit to those at risk of falling into debt or struggling with their finances. Many EAPs offer debt counselling and advice services. It is important for human resources to regularly remind employees about the specific services available from the EAP and how it can help them. In many low margin businesses, it is increasingly difficult to offer a comprehensive sick pay provision. However, this is where a programme of voluntary benefits may assist, with employers facilitating low-cost insurance plans that the employee can fund themselves via payroll. There are various plans available to cover absence from work and health. Employees are often happy to contribute to a plan when they feel their employer has vetted it and is prepared to offer it in the workplace. With help, these employees can regain control over their situation and their health. n
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Issue 31 | June 2017
| Professional in Payroll, Pensions and Reward |
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