How can you help your employees through the cost of living crisis?
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With inflation at a 40-year high, utility bills and food prices are rising at an alarming rate. Most people are having to make tough financial decisions, and sadly more and more families are on the poverty line despite having a regular monthly salary. Whilst the cost of living is also making life increasingly difficult for businesses, many employers are taking steps to soften the blow for their employees.

With costs rising many people are struggling to pay their bills. The obvious answer to this problem is simply “pay them more!” but it isn’t quite as straightforward as that. Not every small business is able to offset prices rises with a large pay increase.

If you can afford it, increasing employees’ income through pay rises or bonuses is bound to be beneficial, so we’ll talk about those things first. But there are also number of things that you can do to help your employees and they don’t all need to cost money, so we’ll also look at those.


OK, so this is the obvious one, but it isn’t the answer to everything. Also, it isn’t going to be possible for every employer, but it is worth making sure that you pay your staff fairly and, ideally, at least the Real Living Wage.

The Real Living Wage is based on the cost of living and is voluntarily paid by 10,000 UK employers who believe that we all need a wage which meets our everyday needs – on 22nd September 2022 it increased to £11.95 per hour in London and £10.90 per hour for the rest of the UK. This compares very favourably with the National Living Wage which was £9.50 per hour (for those over 23) at the time of the increase.

Financial problems are a leading cause of stress; it’s pretty obvious that worrying about not being able to pay the mortgage or feed your family could have a negative impact on mental health.  It’s also important to make sure that you get your payroll right; avoidable mistakes and errors can only make a bad situation worse.

It’s worth checking out citrus HR’s payroll software which can run your payroll stress-free and, in less time, than it takes to make a cup of your favourite coffee. Knowing that your payroll is accurate and error free will help both you and your employees to sleep better at night.


Many organisations are considering a one-off bonus to help with the rising cost of living, i.e. one of our customers offered all of their employees a lump sum of £500 to help with energy costs. This could be a great idea and will generally be very well received.

However, we advise that you should check to make sure that it won’t negatively impact any lower earners who may be on Universal Credit or Tax Credits. In some cases, a one-off bonus could even leave employees worse off. 


There are various benefits that employers can offer employees to help them reduce their household costs.

  • Financial Education: Some employers offer talks or courses on financial wellbeing and debt management to help employees manage their finances and access available support.  There are even companies supporting those who need help paying off their debts by offering loan consolidation through payroll.
  • Discount Schemes: There are a variety of discount schemes available to employers to help their people save money on the things they buy. Retailer discounts, transport savings, reduced gym memberships, restaurant/pub meal offers, and financial products such as mortgages are all available.
  • Employee Assistance Programmes (EAP): These have been around for some time now, and many people and their families find them useful when dealing with personal issues that may affect their health and mental wellbeing. Many EAPs are wide ranging, offering access to legal support, counselling, financial wellbeing services, and other mental health resources.
  • Pensions and Savings: In a cost of living crisis you wouldn’t automatically think of investments, but in the long run pensions are a great benefit for employees. It’s important to explain the benefits and to encourage employees to make good decisions for the long-term. Some small businesses also offer share save schemes or workplace ISAs with tax savings or discounted/fixed price shares. Obviously not everyone will be able to save but for those who can it’s important to make the most of their investments.
  • Salary Sacrifice schemes:  Many companies use salary sacrifice schemes to help earnings go further. These allow employees to pay for things through the payroll reducing the amount of tax paid.  It’s increasingly common for pension contributions to be paid this way, but it can also be used for cars, bicycles, and childcare vouchers.
Promote Support Services

There’s lots of help out there and it’s often just a case of knowing where to look.  Employers can help their people by promoting and sharing what help is available.

Citizens Advice can help employees make sure they are getting everything they’re entitled to and The Money and Pensions Service offer free, confidential, independent financial and debt advice. The charity Mind can help point those with mental health concerns in the right direction to get the support they need and most energy suppliers have special arrangements in place to help those who are struggling to pay their bills.


Giving more flexibility to employees and how they work may also help them to manage increased living costs.  It’s important to listen to your employees’ needs; this probably isn’t a ‘one size fits all’ situation. Can you ask your team what they think in a pulse survey and get ideas what they think could help them. Here are some examples of what you could suggest.

  • Working from home: Allowing employees to work from home more often and therefore saving on travelling costs may be of great benefit to some employees. (It may also reduce the business cost of running the office)>
  • Working from the office: Alternatively, coming to work at the office and not having to heat their own homes, might be preferable to your people, especially in the colder months.
  • Encourage car sharing: Why not encourage your team to car share?  This can help them to reduce fuel costs and will also be good for the environment. It may also be good for team bonding too.
  • Holiday buy back: Allowing employees the option of selling back any unused holiday (above the statutory minimum) may be an attractive option for some of your people and it could also give you some additional resource that you weren’t expecting.
  • 4-day week/9-day fortnight: Reducing the number of days that your employees work by letting them do their job in 4 days instead of 5 (see our blog here), or 9 days per fortnight rather than 10, could reduce the cost of commuting (and possibly also reduce office running costs too).

We’ve already mentioned how important it is to listen to your employees; it’s also important to be open and transparent about how your small business is coping at this difficult time, i.e. with what’s happening to your own energy costs.  You don’t want to make anyone feel less secure in their employment, but it can be helpful to show that increasing costs are affecting the business too. Teaching employees about energy saving at work can help them save your costs, but will also help them to make energy savings at home.

The Perception of Spending

Regardless of your financial position, this might be bad time for businesses to engage in what might be perceived as frivolous spending, i.e., redecorating the boardroom, lavish parties, etc.  Not every small business is struggling, but even if you aren’t your employees might be, in which case it’s worth considering how your employees may view any unnecessary spending.


It’s important to empathise with what your people might be going through. Increased living costs can lead to increased stress due to financial worries. This in turn can lead to more people suffering with poor mental health, and, worryingly, an increase in domestic abuse cases.  The Child Poverty Action Group state that “Poorer households show higher rates of domestic abuse. Women in households with low incomes are 3.5 times more likely to experience domestic violence than women in slightly better-off households”.

Being vigilant to signs, having a Mental Health and Wellbeing policy, and a plan for how you would support anyone suffering from other homelife issues including domestic abuse, can really help your people feel supported.

Equally, you should be aware of the challenges facing working carers, and where possible be flexible to their needs. Any way you can help to reduce the stresses of employees’ lives can only be a good thing.  Ultimately, you need to be open and approachable and your employees need to know you will listen to them.


Above all, there are going to be lots of people struggling at this difficult time. Caring employees will take the opportunity to help their employees where they can. Hopefully this can also lead to increased engagement and commitment from employees in return.  It’s never a great time to add to your business’ running costs, but our cost-effective, and cheaper than you’d expect HR support can help you make the right decisions to successful navigate these difficult challenges, so why not get in touch with us today?

Get in touch on or give us a call on 0333 014 3888 to find out more about our easy to use HR Software. Or start your free trial today.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Terms of Website Use. If you require professional advice, please contact 0333 014 3888 or email

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