‘Once-in-a-generation’ events have occurred frequently over the past few years, with Brexit and a global pandemic as the two most notable examples. The current cost-of-living dilemma is currently affecting society. The rate of inflation is still rising quickly, driving up the price of everything at a rate that has not been witnessed in the past 40 years, from butter to electricity costs. Employers are faced with difficulty as a result of the current crisis: how can they support employees through economic uncertainty without having them search elsewhere for a new job and a higher wage in the context of a tight labor market with many open positions and few candidates?
What is the impact of economic uncertainty on business?
Given the rise in the cost of living, more workers can experience poor financial health and be forced to make challenging financial decisions. In the worst scenarios, some employees could not be able to pay their rent or mortgages or face the “heat or eat” dilemma.
Employee performance and financial well-being are correlated. According to a recent YouGov survey, 80% of UK employees believe that worry related to their financial security might impair their performance at work. Employee absenteeism rises as a result of financial stress. According to a Centre for Economics and Business study on the financial health of UK workers and its effect on productivity, 4.2 million workdays are lost annually due to absences caused by financial stress.
Employers might notice a rise in the number of workers taking on second jobs as a means of reducing some of the financial stress brought on by the cost-of-living crisis. There is no legal prohibition against an employee taking up a second job unless it is specifically stated in the employment contract. However, if an employee works many jobs, it may affect how well they perform at their primary job, especially if they are putting in a lot of extra time overall. According to the Working Time Regulations of 1998, no UK employee may work more than 48 hours per week on average (during a 17-week period). Employers should urge their employees to sign an opt-out of this restriction if they are doing second jobs that are pushing them over the 48-hour limit, or else they run the danger of legal liability under these restrictions. Beyond the legal ramifications, businesses may also want to make sure that an additional function that employee takes on does not adversely affect their wellness. Additionally, there may be a rise in employee presenteeism, according to employers. Employees might, for instance, show up for work even when they are ill and won’t be productive. Employers are aware of the effects that employees’ financial anxiety may have on them. According to a study by the Centre for Economics and Business, 70% of employers think that financial pressure on employees has a detrimental impact on staff performance.
Ways to Support your employees: Notes for HR
1. Examine the rewards programme
Employers’ most popular reaction to help workers over the past 12 months has been to raise salaries. According to the CIPD Labour Market Outlook for the winter of 2022–2023, 48% of businesses intended to increase wages to attract and retain employees more effectively. Increase from 38% the previous year.
2. Offer flexibility to increase employee mental health and morale
In the wake of COVID-19, employers have also been forced to think about more flexible working arrangements. Employees now more than ever want flexibility in their working hours and procedures. Employees will search elsewhere for a new position giving flexibility if companies are not ready to provide it.
Employees who have been employed by their employer for at least 26 weeks are the only ones who can currently submit a formal request for flexible working hours. The Employment Relations (Flexible Working) Bill, which the government tabled last year, would do away with the 26-week qualifying period, allowing employees to request flexible working from day one. The Parliament is now debating this Bill, which is anticipated to become law soon.
3. Examine the benefits package being provided for financial wellbeing
Today’s workforce, especially the younger generation, has higher expectations of their employers. Employers would want to think about expanding the perks they provide to workers, especially in terms of financial assistance and educational opportunities to help workers get through the current cost-of-living issue. Employers may want to consider options besides compensation and pension, like workplace savings plans, discounts with outside businesses, assistance with financial planning, employee assistance programs that offer to counsel to staff members who need it, and salary sacrifice plans that let staff members use their paychecks to pay for things like new technology, gym memberships, dental and medical care, and other expenses.
Conclusion: Provide resources to employees and build trust
In conclusion, economic uncertainty can have a significant impact on businesses and their employees. The rising cost of living and financial stress can lead to decreased employee performance, increased absenteeism, and even employees seeking second jobs to alleviate their financial burden. It is crucial for HR leaders to support their employees during these challenging times to maintain their well-being and productivity.
One way HR leaders can support and help employees in 2023 is by examining their rewards program. Increasing salaries can be an effective way to attract and retain employees, especially during economic uncertainty. Offering competitive compensation packages can help alleviate financial stress and improve employee morale.
Another important aspect is providing flexibility in working arrangements. The COVID-19 pandemic has highlighted the need for flexible working hours and procedures. Employers who can offer flexibility will be more attractive to employees who value work-life balance. It is essential for HR leaders to adapt and be prepared to provide flexible working arrangements to retain talent and enhance employee well-being.
Furthermore, HR leaders should evaluate the benefits package provided to employees, with a focus on financial well-being. This can include offering financial assistance programs, workplace savings plans, discounts with external businesses, and financial planning support. By providing resources and opportunities for financial education and support, employers can help their employees navigate economic uncertainty more effectively.
Overall, HR leaders play a crucial role in supporting employees during times of economic uncertainty. By addressing their financial well-being, providing flexibility, and enhancing benefits packages, employers can mitigate the negative impacts of economic downturns, improve employee morale, and maintain productivity. Prioritizing employee well-being and offering the necessary support will contribute to a more resilient and engaged workforce.
Contact Clarity Simplicity at 0808 178 7292 to get help in employment law.