“For those who can afford to offer a bonus one-off payment based on the Cost of Living crisis, the Chartered Institute of Personnel Development warns it may do more harm than good.”
Research shows that 48 per cent of organisations have paid or are considering paying a ‘Cost of Living’ lump sum, the median of which was £750. Preliminary results suggest 42 per cent of those paying a lump sum are applying this to lower earners and non-senior roles, but the rest are providing this to all employees. Others are staggering the levels of payments available to staff based on seniority.
The Chartered Institute of Personnel Development (CIPD) has warned against this, actually backfiring in some cases. For those who can afford to offer a bonus one-off payment based on the Cost of Living crisis, the professional body warns it may do more harm than good. Inadvertently, these payments can potentially undermine employees’ access to any Universal Credit or Tax Credits that they might be claiming, so this needs to be well planned. It is a delicate balance for those who have also based the payment on seniority, as if it is based on salary, a cut off threshold could be controversial if people are just over the upper pay level and are not eligible for the payment, raising questions of how to fairly administer this.
Financial wellbeing and wider benefits
The CIPD is encouraging employers to alleviate the financial burden placed on their employees by the cost of living crisis through greater wellbeing support. Others are offering flexible benefits so that employees can choose whether they take vouchers or the value of healthcare plans through lump sums, enabling employees to define the value they derive from the package on offer. We are seeing more employers requesting support for producing Total Reward Statements which outline the full investment employers make in each employee.
While bonus levels are set to remain steady, employers are supplementing their benefits packages by offering greater access to financial education programmes, interest-free loans and hardship funds to lessen the impact of rising costs on both sides of the employer relationship. The link between financial health and mental health should also not be overlooked, with Aon outlining how inflation is impacting every aspect of benefits packages. More employers are promoting discounts available to employees and others outlined how they are offering one-to-ones with benefits consultants to ensure the plan is adequately tailored to their employees’ needs.