With rising energy and food prices having pushed inflation to a 40-year high, employers may be considering what support they can offer employees. This could be, for example, by providing financial assistance, being flexible about the place of work, allowing second jobs, or offering access to wellbeing services.

Direct financial support

Particularly given increased business costs, not all organisations will be able to offer additional direct financial support during the cost-of-living crisis. For those who can, the options include:

  • Salary increases. Some employers, most likely large organisations, may decide to bring forward annual review dates and make salary and benefit increases (subject to any applicable collective bargaining framework). If doing so, bear in mind that the national living wage is due to rise to £10.42 from 1 April 2023, an increase of 9.7%. 
  • One-off cost-of-living payments. You could make one-off payments to those most affected by the cost-of-living crisis:
    • Decide whether to make the payment as a standard amount to all eligible employees, or as a percentage of base salary.
    • If you want to set a cut-off salary level, and only make a payment to those earning below that, consider the discrimination risks (for example, as older employees are likely to earn more, there may be a risk of age discrimination). There may also be discrimination risks if you exclude those not currently at work (eg. on long-term sick, or family leave).
    • Set out clearly who is eligible and the arrangements regarding the payment (eg. that it will be subject to tax in the usual way). Be clear that any payment is a one-off discretionary payment and does not set any precedent for such payments in the future.
    • Users of Workbox by Brodies, our online HR and employment law site, can access a template one-off cost-of-living payment letter. If you are not currently a user, please get in touch to arrange a free demo or trial.
  • Other options include making bonus payments or offering access to a hardship/financial assistance fund.

Indirect financial assistance

The following measures could also provide some help with household budgets just now:

  • Staff discount programmes. A staff discount programme might provide savings on essentials such as groceries. The cost of running bulk employee discount programmes is often relatively low for the employer but can be of significant benefit to employees.
  • Food costs. There are various ways in which you could offer help with food costs while at work, for example by increasing your subsidy of work canteens/removing charges completely; providing free fruit and snacks; or introducing a lunch allowance for days worked in the office. You might want to provide help on a weekly/fortnightly basis, or more regularly for a limited period.
  • Holidays. Employees could increase their take home pay by selling back any unused holidays, subject to them taking their full statutory minimum holiday entitlement for the year.
  • Financial education. You could provide free access to guidance, or run sessions for staff, covering topics such as financial wellbeing and managing financial stress; debt management; and longer-term issues such as savings, investments, pensions and retirement. Financial advice would also help to ensure that employees are aware of the benefits they may be entitled to such as child benefit and tax-free childcare.
  • Season ticket loans. A season ticket loan is an interest free loan to cover the cost of travelling to and from the workplace via public transport. The loan repayments are paid monthly through the employee’s net pay over a set period.
  • Salary sacrifice. Salary sacrifice is where an employee gives up the right to receive part of their salary or bonus in return for some form of non-cash benefit. This can lead to savings on tax and national insurance (for example, in relation to cycle to work schemes and ultra-low emission cars) and often spreads out the cost of the benefit. We would recommend taking advice on the tax and NICs implications of salary sacrifice schemes.
  • Signposting. It is worthwhile highlighting to employees what external support is available to them, for example on government websites, via charities and foodbanks etc.

Flexibility over place of work

Some employees will want to work from home to avoid the costs of an expensive commute, whereas others will gain more financially by working in the office and minimising their electricity and heating bills. Don't make assumptions and, where possible, give employees flexibility over where to work. You might want to review your home and hybrid working policy and think about whether to offer an allowance to cover some of the increased utility costs for homeworkers.

Allowing second jobs/side hustles

During the cost-of-living crisis you could relax any contractual restrictions preventing employees working second jobs or 'side hustles'. For information on the key considerations, see our previous blog on the rise of side hustles.

Employee wellbeing

As well as financial assistance, it is worth considering whether you can put some measures in place to better support employee wellbeing. You could review your health benefits offering; and introduce/promote an employee assistance scheme which offers access to counselling or advice. In addition, it could be helpful to increase awareness of the fact that some employees may currently be struggling with their mental health because of financial pressures. This could be achieved via staff communications and/or line manager training.

In practice

What will be of most benefit in the current economic climate may well vary from one employee to the next. Therefore, if you decide to offer additional support, ideally you should communicate with employees and build in some flexibility where possible. 

Please get in touch with a member of Brodies employment and immigration team for more information on any of the options highlighted above and how to implement them.


Julie Keir

Practice Development Lawyer

Emily Russell