Vickie Graham: Workplace financial education is incredibly important during the pandemic

2020 has been a year where all aspects of our lives have been impacted. From a workplace standpoint, the global Covid-19 (Coronavirus) pandemic has impacted how we do business, how we interact with people, how we conduct meetings and events, how we engage and motivate our teams, and crucially how we pay and reward them.

Furlough, a word which has it’s origins from the 17th Century Dutch ‘verlof’ became one of the key words of 2020 and with it over 9.6 million employees from 1.2 million employers were furloughed between the end of March and 15 November 2020.

Workplaces needed to make decisions regarding furloughed employees’ pay: would they pay the 80% being claimed from the government, or could they afford to top up, so employees continued to receive 100% of their regular pay? For those employees receiving 80% they had to consider other financial implications. One of the areas that we have been asked about at the Chartered Institute of Payroll Professionals (CIPP) was regarding annual leave and if furloughed employees had purchased annual leave but were facing financial difficulties, could they sell it back?

Some employees may have been financially better off than in a ‘normal’ year. Without the expense of travelling to and from the workplace, savings may have been made in some cases. In others, costs of season tickets not being used were a wasted expense.

In some sectors, such as the gig economy, workers will have favoured ‘gigs’ where they could instantly access their earnings, especially if work had stopped as a result of pandemic. Pay on demand, as a concept, has gained in popularity, especially during this pandemic, but it comes with warnings regarding employee financial awareness and education.

The reality is that financial stress impacts employee health and wellbeing and, as a result, performance. Employers should have a financial awareness and education strategy to support their employees. Payroll departments can educate employees about their pay, deductions from pay and ways in which they can maximise their pay through initiatives such as salary sacrifice arrangements. If an organisation offers a flexible benefits platform and savings, these should be regularly communicated and explained to employees. During the pandemic, organisations have been advising employees how they can benefit from the working-from-home tax relief; a welcome saving if bills have increased as a result of remote working.

If an employer does not have a financial awareness programme within its organisation, there are lots of resources available to support it in creating one. Free resources are available online, and there are many organisations which caan deliver tailored financial education programmes based on an organisation’s benefits programme.

Vickie Graham is business development director at the Chartered Institute of Payroll Professionals (CIPP)