16 February 2023
The increased cost of living has had various effects on the labour market which employers should be mindful of. Older employees are now delaying their retirement plans meaning employers can benefit from more experienced individuals for longer. As a result of this employers will need to make sure they are adequately supporting their older employees.
Additionally, the cost-of-living crisis will be mentally distressing for many, particularly those with caring responsibilities and those from lower socio-economic backgrounds. Below, we discuss some key points to be aware of and how you can support your employees during this time.
Delayed retirement
The cost-of-living crisis has caused 2.5 million pre-retirees to delay their retirement with 1.7 million of those expecting to have to keep working indefinitely, according to a recent study conducted by Opinium Research[1]. The study of 2,003 UK adults aged 55 and over found that nearly two thirds (64%) of those who are planning to push back their retirement state they are unable to afford the loss of income.
This could be beneficial to employers struggling with recruitment as there are now more experienced workers remaining longer in the job market. However, employers should also be keen to ensure that they support the physical and mental health of their older employees. This could mean reviewing health care benefits and pension plans and updating menopause policies, for example.
How to support your vulnerable employees
Many employees will find their increased cost of living very distressing. Particularly for those with childcare needs and other caring responsibilities, finances will be tight. If employees are stressed, this is likely to negatively impact their quality of work and general wellbeing in their role. From both an ethical and commercial perspective, it will be important to support your employees during this time where possible. Below are some examples of how you can do this as an employer:
- Ensure that you are paying your workers and employees a fair living wage.
- Review your reward strategy which could include introducing a financial hardship fund. If introduced, this fund should be accompanied by a clear policy setting out how the fund will work in practice. Employers should seek legal advice for drafting this policy.
- Review your benefits package. Smaller measures such as help with travel costs could be introduced if not already in place.
Undoubtedly, the cost-of-living crisis will also have a financial impact on employers, not just individuals. Therefore, if you are not in a position to offer financial help, below are some examples of non-financial support to be considered:
- Build your communication strategy to encourage a dialogue between managers and employees about finances.
- Train your managers to ensure they provide the right support to staff through the cost-of-living crisis, particularly in relation to mental wellbeing.
- Offer more work flexibility e.g. improved remote working options for those with caring responsibilities.
Other considerations
Certain other considerations should be borne in mind. For example, some employees may be looking to undertake second jobs to cover their increased living costs. Employers should review their staff employment contracts to see which, if any, of their employees are contractually entitled to take on a second job. If this is contractually permitted or you nonetheless allow your employee to take a second job, employers should be aware of various legal implications of doing so. For example, under the Working Time Regulations 1998, employees must not be required to work more than 48 hours per week unless they specifically opt-out of this provision. It will be important to check how any additional work may affect this and seek legal advice where appropriate.
Supporting employees from lower socio-economic backgrounds
With those from a lower socio-economic background suffering some of the worst effects of the cost-of-living crisis, now may be a good time for employers to consider how they can support these employees both in the short term and also in relation to long-term career progression.
In a recent study conducted by KPMG, the company found that socioeconomic background has the strongest effect on an individual’s career progression, compared to other diversity characteristics.[2] The study found that individuals from lower socio-economic backgrounds took on average 19% longer to progress to the next grade, when compared to those from higher socio-economic backgrounds.
To continue combatting these difficulties, KPMG has committed to pursuing the following goals:
- Reviewing the company’s approach to work allocation.
- Enhancing data collection relating to progression of the company’s talent.
- Tackling the bottleneck through piloting a new promotion readiness programme.
Whilst many companies have improved their diversity and inclusion policies and initiatives in recent years, the socioeconomic backgrounds of prospective and continuing employees are often neglected. Although this is not currently a protected characteristic for the purposes of the Equality Act 2010, the UN Special Rapporteur on extreme poverty and human rights called for ‘povertyism’ to be included in anti-discrimination law in an address to the UN General Assembly in October 2022. We are unlikely to see changes to the law anytime soon however the cost-of-living crisis may encourage more discussion on the topic. Employers should take this opportunity to review their approach to socio-economic diversity.
How Blaser Mills Law can help
Our Employment team is highly experienced in handling enquiries across the spectrum of Employment Law. In particular, our team is adept at drafting policies, reviewing and drafting employment contracts, assisting with grievances and providing general employment advice to employers.
[1] 2.5 million plan to delay retirement due to cost-of-living crisis | Legal & General (legalandgeneral.com)
[2] Social class is the biggest barrier – KPMG United Kingdom