Everyone in the UK is being affected by the cost-of-living crisis and many employers, despite facing increased costs themselves, are trying to find ways of helping their staff through the difficult time. According to the Office for National Statistics (ONS), latest figures show that inflation is at the highest it has been since 1982, rising to 9.1% in the year to May 2022. Household finances are being stretched further as our country faces the worst cost-of-living crisis in years.
The most obvious way an employer can help staff struggling financially is by raising salaries to reflect the inflation rate. The recent ONS Labour Market Overview in October 2022 found that in real terms (adjusted for inflation), total pay fell by 2.4% and regular pay fell by 2.9% from July to September 2022, which is among the largest falls in growth since comparable records began in 2001.
In August, Barclays awarded 35,000 members of staff a pay rise, which had a positive impact on both their staff and from a reputational point of view, however this may not be an option for many businesses who are feeling the pressure of rising costs themselves. For employers concerned about staff retention, a salary increase is a meaningful action to retain employees, however legally, employers are under no obligation to raise employee salaries to reflect inflation rates.
There are however rules around the minimum amount employers can pay employees and it is a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage, or to falsify payment records.
As well as ensuring they are paying the correct National or Living wage, employers who employ 250 or more staff must also comply with gender pay gap reporting regulations. This requires employers to annually report and publish specific figures about their gender pay gap.
As an employer you may wish to look at non-financial ways that you can help your staff. Some employers have offered benefit packages including:
Some employers have chosen to implement salary sacrifice schemes which allow employees to pay for things through their company payroll, reducing the amount of tax paid. This way of payment is commonly used with pensions but can be applied to insurance and things like company cars.
Another area to consider is hybrid and homeworking arrangements which can be beneficial in lessening travel costs.
It is advisable to ensure that employment contracts reflect any benefits offered or flexible working arrangements in order to avoid any potential disputes down the line.
Employers are encouraged to think about what they might be able to do in order to support their staff during the cost-of-living crisis. Any alterations to the usual employment terms must be reflected in the employment contract. Additionally, they are encouraged to reflect and assess the support available to employees in the workplace for mental health guidance, as poor mental wellbeing in staff can lead to further issues in attendance, performance, and morale.
If you have any questions or concerns about whether you are doing the right thing as an employer, or if you need your employment contract reviewed following any changes you may be thinking of making, contact our Employment Law team. They have the experience and knowledge to make sure that everything is fully legal and has your business’s best interests at heart.