Employees’ wellbeing has a role in productivity
Written by Harriet Gray, Employment Associate in the People, Reward and Mobility team at Dentons UK and Middle East LLP, based in Scotland.
Record-high inflation rates have pushed up bills and expenses and yet wages are not increasing at the same rate.
The ONS has reported that real wages (adjusted for inflation) have fallen by 2.4% for total pay and 2.9% for regular pay over the year. Employees will undoubtedly be facing additional financial worries and employers need to consider the stress this can cause. If employers can help to alleviate this stress, that may benefit their business. But that can be difficult at a time when those businesses will also be feeling the impact of rising costs.
What can employers do?
The most obvious option is to increase employees’ wages in line with the current inflation rate. In September, the Living Wage Foundation announced that the real Living Wage (i.e. what the actual hourly rate would be taking into account the cost of living) had increased by 10.1% and is now £10.90 an hour. While many cannot increase employees’ pay outright, some businesses may be able to take other steps, such as increasing hours and introducing paid overtime opportunities.
This would give employees more disposable income while benefiting the business with additional work.
What benefits can employers offer?
Examples of the types of benefits which could help employees’ salaries go further include:
- providing access to special discounts for expenses such as childcare, gym memberships or transport
- reducing the time between claiming and paying expenses
- health insurance
- salary sacrifice schemes – for example bike to work or pension contributions
While such benefits still present a financial cost for the business, this may be lower than increasing wages and would still be beneficial to the employees.
Employers could also offer sessions on budgeting and saving advice.
What if an employee asks if they can take a second job?
If a business is unable to increase wages, an employee may feel the need to get a second job.
The first step would be to check whether their contract allows this, as working another job is often prohibited through an exclusivity clause. It is important to bear in mind, however, that exclusivity clauses are unenforceable against zero-hour contract workers and will soon be unenforceable against those whose average earnings are £123 a week or less.
If there is an enforceable exclusivity clause in place, the employer should carefully consider whether to enforce it, taking into account the organisation’s interests versus the employee’s needs.
A second job with a competitor will usually be a concern. A few extra hours a week with an unrelated business may be much less of an issue.
Employers should continue to ensure their employees are receiving adequate supervision and breaks, that their mental and physical wellbeing are not impacted.
Why is it important for employers to support employees at this time?
Financial worries may take a toll on employees’ mental wellbeing. Research by Neyber estimates that money worries cost the UK economy £120 billion and 17.5 million lost hours of work a year. Recognising the link between financial wellbeing and productivity, and actively assisting employees during one of the worst cost of living crises the country has faced, will benefit businesses and their people in the long term.
Do you have a business, property or legal question or issue that you would like to know more about?
Contact Scottish Grocer and we’ll put it to an expert. Call Giles Blair on 0141 567 6074 or email giles.blair@peeblesmedia.com
