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Financial wellbeing in the new financial year
As we head into the new financial year, some essential HR tasks need to be reviewed and made part of your agenda in the coming weeks. Many considerations need to be made in a new financial year, and firms should ensure they are compliant with updated legislation, such as the minimum wage.
In December last year, we posted an article on some key dates to be aware of in 2022, which covers these points.
The financial wellbeing of your employees is also a factor that should be considered as part of the new financial year.
What is financial wellbeing?
Financial wellbeing refers to an individual feeling confident and in control of their current and future financial situation. As a result, they can manage resources to live within their means, make informed financial decisions and investments, set realistic goals, and prepare for short-term and long-term needs or emergencies.
Finances play a critical role in employees' lives, and not having enough financial security can increase stress and anxiety, impacting their health and resulting in poor performance at work or absenteeism.
It was reported by the Chartered Institute of Personnel and Development (CIPD) in March 2021, that half of employers do not have a financial wellbeing policy, despite the financial impact of Covid-19 and the increased cost of living.
However, a financial wellbeing policy should be key in any business' approach to wellbeing. Even within companies where finances may be restricted, it is important to have a policy that shows employees you are supportive and informs them of external resources, should they need them.
The CIPD suggests that any employer can begin to build a financial wellbeing policy with these three simple steps:
- Let your workforce know that they can get free, confidential and independent money and debt advice from the government's Money and Pensions Service.
- Make sure your workforce is fully aware of all the benefits you currently offer and how to make the most of them. For example, many employee assistant programmes offer financial advice.
- Begin a dialogue with employees and line managers about the financial challenges and opportunities they face and the business. This will show your concern and help break down the stigma associated with money problems.
The CIPD recommends that a financial wellbeing policy should include:
- Signposting to financial wellbeing advice, such as the resources available from the Money and Pensions Service (which small employers can do easily).
- Targeted financial education support at key moments in working lives, for example ahead of maternity leave.
- Revising benefits packages to include finance-friendly initiatives, like giving employees the option to choose how often they’re paid.
- Implementing flexible working policies so employees with caring responsibilities can balance working enough hours to comfortably pay their bills.
- Giving people security over their hours and helping them to progress into higher-paid roles.
- Commitment, where possible, to paying all employees at least the Real Living Wage.
Statutory Sick Pay
The Money and Mental Health Policy Institute found that financial pressures are a common reason for employees returning to work early from sick leave, even when they aren't fully recovered. This is not something employers want employees to be doing, especially whilst emerging from a global pandemic.
Vulnerable Customers
The fair treatment of vulnerable customers is a key concern for the FCA. Firms are required to understand the needs of vulnerable customers and to provide additional or alternative services to meet these needs. This can aid those who face further difficulties when managing their finances, such as illness or disability, or those struggling with life-changing events, such as bereavement or a relationship breakdown.
Many financial services providers also have coronavirus specific sections on their websites with further information and support. Charities also specialise in providing financial information and guidance, such as StepChange and The Money and Mental Health Policy Institute.
Employers should support employees by directing them to available advice or assistance to help them feel better informed and supported when making important decisions.
Cyber Security
Financial scams have increased at an alarming rate as a result of the pandemic. In addition, the government has warned businesses of the increased risk of cyber-attacks resulting from the war in Ukraine. Criminals are targeting people with fake emails or texts pretending to be the government or local health authorities with information about Covid-19 or the vaccination programme. These communications often contain links to malicious websites or can infect the device with malware.
Helping employees to be aware of potential fraud could prevent someone who is already vulnerable from ending up in even more difficult circumstances
Businesses should support their employees in working towards living longer, healthier, and happier lives.
There are many elements to consider when looking into financial wellbeing. If you would like practical guidance or support in setting up an employee assistance programme, implementing a Financial Wellness policy, or employee and employer rights regarding sick pay and leave, please do not hesitate to contact the team at IHRS. Email HRhelp@ihrsolutions.co.uk, call 01604 709509 or visit our website.