1. Consider what will benefit your employees

The first step in considering the cost of living help you can provide is assessing what benefits will support employees best. If you don't already have a financial wellbeing policy, this is the ideal time to develop one.

Review your existing employee benefits package and consider whether the benefits on offer provide short-term help with the cost of living and longer-term provisions to ensure employees' financial security in the future.

Short and long-term support

If you're able to offer loan consolidation by way of low-interest or interest-free loans, this can relieve an employee's financial stress and help them to save money on interest payments.

Increasing workplace pension contributions provides long-term financial security. Alternatively, consider using salary sacrifice to collect pension contributions through the company payroll. This reduces the income tax and NI your employees pay, giving them more money in their pay packet.

Communicate with staff

This guide should give you some ideas of the employee benefits you may want to offer. Whatever you choose, it's vital you communicate this with your employees. This could be via emails, staff meetings or information leaflets. You may need to introduce new benefits, but it's also well worth reminding your team of the benefits already in place.

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2. Direct financial support

A pay rise is potentially the most straightforward way of alleviating your employees' money worries. This may only be a realistic option for some employees; however, you should still ensure that lower-paid employees' earnings reflect the increase in the national minimum wage.

A one-off bonus can help your employees to pay off debts or cope with the rising cost of living. For example, mortgage rates have dramatically increased, as have household utility bills. Whilst bonuses won't have the same effect as pay raises, they will help employees to absorb the cost increase while they plan for the future.

Consider the impact on benefits

If you do decide to offer a one-off bonus, you may wish to make this optional. This is because bonuses can impact an employee's state benefits, such as universal credit or working tax credits, without providing enough income to cover the loss.

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3. Flexible working

Flexible working is a valued employee benefit that can give your employees a better work-life balance and reduced stress. It can also enable them to find personalised solutions to the cost of living crisis.

For example, employees with lengthy and expensive commutes could save money by working from home for a couple of days a week. This can also impact other expenses, such as shop-bought lunches and trips to the nearest coffee shop.

Others may find that their utility bills increase when they work from home, which means they're saving money by spending more time in the office. However, they might still want to opt for flexible hours.

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4. Help with transport costs

The nature of your business may not lend itself to working from home, or you might want to ensure that staff are in the office at critical times. If travel costs are an issue, offering loans or salary sacrifice schemes can help employees reduce costs.

An annual season ticket can be considerably cheaper per trip than individual, weekly or monthly tickets. However, the initial outlay can be prohibitive. Season ticket loans allow employees to buy an annual pass for the bus or train and pay it back in instalments.

You can also provide annual passes and arrange for employees to pay for them via salary sacrifice, thereby saving money on their income tax and National Insurance.

If your employees drive to work, season ticket loans can also pay for annual parking passes. You can also use salary sacrifice to enable employees to lease an electric car and save money on fuel costs. In Central London, employees could also claim a discount on the congestion charge, although this ends in 2025.

Alternatively, cycle-to-work schemes allow you to buy a bike for an employee, and they pay for it via salary sacrifice.

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5. Childcare support

Parents in the UK spend approximately a third of their income on childcare costs. Providing support and employee benefits that help reduce these can make a substantial financial difference to employees.

The childcare voucher scheme is now closed to new applicants. However, employees who are basic rate taxpayers can still register for tax-free childcare. Members pay into an online account, and the Government contributes £2 for every £8 they pay in. While this isn't an employee benefit, you can help by offering information on the scheme to ensure employees know about it.

The Workplace Nursery Scheme enables you to pay a monthly fee for nursery places for your employees' children. Employees then pay their fees via salary sacrifice, so they don't pay income tax or National Insurance on those earnings. As a business, you'll also reduce your employer's NI payments, which is typically enough to cover the monthly payment cost.

This benefit will typically save your employees around 25% of their fees, which could go a long way to supporting them through the cost of living crisis and in the long term. It's also available to higher-rate taxpayers where tax-free childcare isn't.

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6. Invest in insurance

Insurance policies can help by supporting employees when something goes wrong. For example, an illness that results in a loss of income could be devastating at any time, particularly during a cost-of-living crisis when every penny counts. All the policies we mention below are available as group policies which you can take out and offer as an employee benefit.

Income protection

Income protection and critical illness coverage play different roles in alleviating money worries during a period of ill health. Income protection pays a monthly income equivalent to a percentage of an employee's salary. So in practical terms, it offers extended sick pay at a lower cost to your business. Critical illness insurance pays a lump sum following the diagnosis of a serious illness. Employees could use this as income or put it towards adaptations to their home or even a family holiday at a stressful time. Some insurers also cover children for free, enabling parents to take time off to care for them.

Life insurance

Life insurance doesn't directly support employees through the cost of living increases. However, it can offer financial security to their families if they're no longer here. A life insurance policy pays a lump sum if an employee dies.

Health insurance

Health insurance allows your staff to access private medical treatment quickly, enabling them to recover and get back to work and reducing any potential loss of income.

It also comes with other services and offers that can improve their financial wellbeing. These often include mental health support, debt management advice and member discounts on everything from health and wellbeing products to cinema trips and coffee.

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7. Offer an employee assistance programme

Employee assistance programmes can offer a range of benefits that can help with the rising cost of living and some of its other effects. For example, an employee assistance programme (or EAP) can provide mental health support if an employee is experiencing stress due to financial pressures.

Some also provide financial education and advice, including debt support, allowing employees to take practical steps to solve any money problems.

If you offer health insurance as part of your employee benefits package, your provider may also offer an EAP as part of your policy.

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8. Employee discount schemes

Employee discount schemes are a great way of helping money to go further. Depending on your chosen scheme, they can offer discounts with various retailers, saving your staff money on daily essentials. They can also allow a few treats to take the sting out of rising costs.

Schemes vary in the way they operate. Some provide direct discounts, while others offer cashback or vouchers. Many health insurance policies provide partner discounts to members. Some are automatic, whilst other benefits are earned. For example, Vitality Health allows members to earn discounts by hitting healthy living targets.

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9. Subsidised meals

The cost of food rose by 16.9% during 2022. Providing help to reduce food costs could make a fundamental difference to your team. Offering free food in the form of snacks or even lunches has financial benefits but can also play a part in your workplace health strategy.

Alternatively, if you have a staff canteen, consider providing subsidised meals, allowing staff to eat good quality food more cheaply.

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10. Offer financial education

When money is tight, the best approach is often to empower people to improve their money management skills. It's also a low-cost approach to improving your staff's financial wellbeing.

Running financial education seminars at work can help you to make employees aware of existing employee benefits and allow them to plan for the future.

You could also signpost them to helpful resources, for example, budgeting tools, financial planning advice or information about benefits or grants. Citizens Advice and other charities can also provide advice and support.

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Get in touch

We can offer advice on insurance policies that will be a valuable part of your benefits package during the cost of living crisis and in the long term. Contact us for a comparison quote.

Matt Fletcher
Senior Broker

Matt Fletcher

Matt, one of our senior brokers, joined us from Axa several years ago. His knowledge and expertise span health, life and income protection insurance alongside critical illness cover.

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