Hot topic: Helping with employee finances, part two
Heather Carey and Heidi Allen, February 07, 2019
HMRC recently ordered Iceland to compensate its employees after its voluntary savings scheme, designed to ring-fence pay for Christmas, led to underpayment of the minimum wage
With many low-paid workers struggling to make ends meet are savings schemes and other benefits the best way to help with finances? Or is it time to simply increase pay?
Heather Carey, deputy director of the Work Foundation, says:
"Improving wages will always be vital to low earners, but there are other steps businesses can take to improve working practices and lend greater support.
"Employee benefits can be extremely valuable, particularly schemes that help to mitigate living costs, as well as benefits that provide financial education and support.
"But it’s not just about offering the right mix of benefits. Employers and employees face a number of barriers that serve to undermine the take-up of benefits and the value they offer. This points to a need to think about low earners at every stage – from planning and design to promotion and evaluating ROI and impact.
"Getting this right can pay huge dividends – not just for low earners but also for businesses themselves – reaping the rewards of better employee engagement, productivity and performance."
Heidi Allen, head of employee wellbeing at Neyber, says:
"This story shows how difficult it can be for employers to help workers save and stay on the right side of tax-related red tape. The NMW is vital legislation to protect low-paid workers, but Iceland’s experience shows that employers need more clarity around how to implement it.
"It’s positive that Iceland offered staff a way of gradually saving up for the expense of Christmas and potentially helping them to avoid going into debt. Plans like this can support financial wellbeing as well as helping to build a caring culture – as long as employers and employees are both aware of any tax implications.
"Making a small increase to the pay of UK workers won’t provide a solution on its own. Helping employees to break negative financial habits, reduce debt and get into a pattern of saving will reap greater long-term benefits."
Read the first part of this hot topic