How to support employees in a financial emergency

Unless they are one of the fortunate few with a private income or a lottery winner, most employees will probably find themselves faced with a big, unexpected spend at some point in their working lives. Whether it is the boiler breaking down or a huge MOT and car service invoice, being hit with an unwanted cost can be pretty stressful. So what sort of benefits can employers put in place to help support staff when they are in financial dire straits?

Employee assistance programmes (EAPs), debt management support and emergency loans are just some of the ways that caring organisations can help their employees during difficult times.

The nature of a financial crisis often depends on the stage of life the employee is at, says Jo Thresher, head of money at work at Jelf Employee Benefits. “With younger employees it tends to be car breakdowns, relationship problems, not making pay last until pay day or underestimating bills or credit card costs,” she explains. “By mid- to later-life it’s usually things such as the boiler or washing machine breaking down, car problems again, mortgage bills, sick relatives, relationship breakdowns or children.”

Having an emergency fund in place is vital. “There are now several organisations out there directly offering loans through pay which will help with the immediate situation,” says Thresher.

Debt management support schemes can also be effective, but employees may be reluctant to ask their employer for help directly. “Emergency loans in genuine need are fantastic but could make an employee resentful once they are taken back and leave the employer with a bad taste if they are needed again,” adds Thresher.

Employers have a dual obligation to staff; that of supporting them in the crisis, as well as providing a good financial education and awareness scheme to help prevent future crises, says Andrew Kinder, chair of the UK Employee Assistance Professionals Association (EAPA). “Employee assistance programmes (EAPs) are a particularly effective channel to support staff [because] the 24/7, confidential nature of services can be a life-line for individuals who feel lost and anxious,” he says. “They can also be a valuable channel for line managers to seek support about how they can help team members facing a financial emergency.”

Employer support should be about addressing employees’ financial wellbeing, as well as mental and physical wellbeing, says Jeanette Makings, director of financial education services at Close Brothers Asset Management. “Money worries are a common cause of stress and people with financial difficulties may not be as effective in work and more prone to take time off as a result,” she adds. “Employers want to have engaged and effective workers who value them and their benefits. They need to recognise that financial wellbeing is a big part of that.”

There are a number of other ways employers can help support staff in times of trouble. “Employers can also offer online budget modellers, a debt counselling service, payroll advances and workplace lending schemes,” says Makings. “And not forgetting time off to sort out financial issues.”

Finally, it is important to remember that there can be a stigma attached to many financial problems, which can make employees reluctant to talk about them. Kinder says: “This is why it’s so important to encourage employees to seek support early. To try to contain and minimise the impact of the emergency, and reassure employees who are in this type of predicament that there is a solution.”