Why employee financial wellbeing should matter to HR teams
30 July 2020

Why employee financial wellbeing should matter to HR teams

The impact of money worries on employee wellbeing and performance shouldn’t be underestimated. Here’s why financial wellbeing should be on your agenda, and five ways to make a difference


Eli Georgieva

Eli Georgieva

Eli Georgieva is head of marketing at Shopworks and fastP.A.Y.E


Employee engagement Health and wellbeing Pay benefits and reward


The impact of money worries on employee wellbeing and performance shouldn’t be underestimated. Here’s why financial wellbeing should be on your agenda, and five ways to make a difference

Too often, employee wellbeing initiatives can focus solely on physical and mental health. But the importance of financial wellbeing has been brought into sharp relief in recent months as the Covid-19 pandemic has affected millions of workers worldwide. An April 2020 study by the CIPD found that the financial security of 39% of UK workers had worsened as a result of the lockdown, with those most likely to have experienced worsening financial security including households earning less than £20,000 a year, female workers, and those in the hospitality sector.

ONS figures confirm this negative impact; 12.5 million people say their households have been affected financially by the impacts of the coronavirus, with the most commonly reported (by more than two-thirds of people) concern being a reduced income.

So what does all this have to do with HR? If we pay our people their agreed wage, salary or bonus, on time, and accurately, isn’t that enough?

There’s a growing consensus that employers have a responsibility to do more – and that it makes good business sense to do so. According to the 2017 Stevenson-Farmer review into workplace mental health, the cost of poor mental health to the UK economy is between £74 billion and £99 billion a year. With money worries known to be a stressor and contributor to poor mental health, how much of that impact could be mitigated by greater financial support and education?

The UK government is certainly hoping employers will intervene in this area. In February 2020, the Money and Pension Service (MAPS) rolled out a 10-year strategy for financial wellbeing, which identifies workplaces as a key channel through which the UK can become financially healthier.

While a holistic approach to employee financial wellbeing – one that considers personal financial circumstances, such as paying for food, utilities and bills – has been advocated by many experts, employers, on the whole, have been slow to take a strategic approach to financial wellbeing. In fact, the CIPD’s April 2020 poll found that just 32% of employers have a policy with a budget providing financial wellbeing support to staff, although another 11% plan to introduce one by the end of July 2020.

So what interventions and tools can HR teams introduce to have the biggest positive impact on financial wellbeing? Here are five techniques to try.


Five financial wellbeing interventions to try

1. Financial literacy training 

Financial literacy and education should be on the mind of every employer, and form a foundational part of organisations’ reward and benefits packages. Speaking to Employee Benefits in 2019, Professor Tina Harrison, chair of financial services marketing and consumption at University of Edinburgh Business School, said: “Improving financial wellbeing usually involves some form of education, either through workshops, online support, external consultants or simply through the provision of information. It doesn’t have to involve a lot of resources.”

Research by Employee Benefits/Barnett Waddingham Pensions in 2019 found that 36% of employers offer financial education to all staff and 26% of those that do not are considering introducing it. Two-thirds (62%) of those that provide financial education deliver it through face-to-face seminars, while 57% use an intranet site, 43% offer online tools and modellers, and 23% use web-based seminars.

Face-to-face training is also an option – one that might be preferred by many – but this can be tricky to organise and costly to introduce if you have a dispersed workforce.

2. Salary sacrifice schemes 

Salary sacrifice schemes are another excellent way to help employees by providing vital benefits and financial support without them having to worry about how they will pay for it. It allows an employee to exchange part of their salary for extra benefits, usually non-cash benefits from the employer. These can include childcare vouchers, a company car, purchasing a bicycle through a cycle to work scheme, and additional pension contributions.

A salary sacrifice scheme should be capped and set in a way that does not reduce the employee’s final cash earnings below the national minimum wage (NMW).

Once an employee enters a salary sacrifice arrangement, their pay is lower, and they pay less in tax and national insurance (NI) contributions. In turn, the employer will not have to pay employer NI on the part of the salary that is sacrificed.

3. Pensions  

Pensions are designed to provide money for employees’ retirement and are one of the most popular and widely available benefits. But since auto-enrolment was introduced and contributions became opt out (rather than opt in), can pensions really be seen as an extra benefit that employers can take credit for?

Candidates often ask about pensions at interviews, but may not understand them well enough to appreciate the real benefits of what you’re providing. Consider changing your pension policy so that you match any overpayment an employee makes up to a certain amount, and provide education about how pensions are structured and the financial benefits (both short and long term) of making contributions.

4. Health scheme

Providing the right health support package should also form part of your employee financial wellbeing strategy, and should go beyond health insurance to include long-term sickness and return-to-work support packages.

Illnesses amongst staff are inevitable but can be costly for your organisation. Providing health insurance or a health cash plan won’t stop problems occurring, but will help to ensure your people receive proper, timely care, and should speed up their return to work.

5. Income streaming 

Income streaming – which allows employees to draw down some of their already earned wages before payday – is a relatively new concept, but is gaining popularity as a way of helping employees better manage their finances, and avoid relying on expensive payday loans.

There are different models available; some will enable the employer to borrow the money they make available to their employees, and they charge the employer and employee a small fee for each transaction. In contrast, providers such as fastP.A.Y.E allow the employer to fund the streaming themselves and help their employee further by avoiding the creation of another debt cycle. This model allows more flexibility and does not charge a fee for those on minimum wage; it gives the employer full control as to how much they make available and how many times a month an individual can withdraw funds from their pay cheque.

Whichever route you choose, it’s vital that more organisations make finance an integral part of their employee wellbeing strategy.


fastP.A.Y.E’s income streaming service integrates with Ciphr’s people management solution to help you make earned wages available to staff on demand with the minimum of fuss. To find out how Ciphr can help, call us on 01628 814242 or email [email protected].