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Dev-Bank Wales MBO


13 July 2022

Cost of Living Crisis: What should Employers do Next?

Every employer has a legal duty to look out for the health and safety of its employees, and if employees make it known that they are struggling because of the current crisis and that it’s starting to adversely affect their work, what should employers be doing about it? 

Increasing salaries?

Some larger employers have made the news recently by announcing that they will be throwing money at the problem; by increasing salaries, paying one-off bonuses or making home energy cost contributions. For example, Barclays are awarding 35,000 of its staff a pay rise from 1 August. This won’t be feasible for the majority of businesses, who are themselves feeling the squeeze.

Legally, there is no obligation on employers to raise employees’ salaries to reflect the increased cost of living. What is agreed in an employee’s contract of employment is technically what an employer is obliged to stick to. In that sense, many employers will look at non-financial ways of helping staff.


It’s important for employers to recognise that the crisis will affect different employees in different ways. In that sense, there will be no “one size fits all” solution here. As such, a good first step would be to ensure good communication with employees (e.g. through a mentoring system), so that they are encouraged to voice their concerns and issues. Only after listening to employees can an employer truly understand what solutions are the right ones.

Salary sacrifice

Encouraging employees to think about utilising schemes such as cycle to work may help. On the one hand, it can be more tax efficient for employees, and on the other, cycling to work can achieve a saving on fuel costs.


One approach for employers is to signpost employees to useful resources – e.g. financial education and budgeting training and tools. This can push employees to think about financial discipline and can also help the employer to demonstrate that’s it’s fulfilling its duty of care towards employees.

Home or hybrid working

Some employers are repositioning home or hybrid working flexibility as a cost-of-living crisis solution (because of the saving on commuting costs), as opposed to a more traditional work-life balance solution. From a legal perspective however, it’s important that an employee’s contract is updated or varied to reflect their true current working arrangements. That can avoid problems and disputes arising further down the line. It's also worth bearing in mind that whilst the saving on commuting cost could be helpful to employees right now, when it comes to the winter months, the cost of heating homes during the day may become a concern for homeworking employees.

If you need any help or advice on any of the above, please contact Rebecca Jenkins on / 02920 829 130 for a free initial chat to see how we can help you.


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