Beyond Pay Checks: How HR Can Help Employees Cope with Rising Costs

With UK inflation rising to 3.6% in the 12 months to June 2025 (ONS data), the highest level since January 2024, it’s clear that cost-of-living pressures remain acute.

This increase highlights that, although the Bank of England briefly met its 2% target earlier this year, the inflation challenge is far from over. After years of elevated prices in essentials such as food, housing, and energy, many employees remain under significant financial strain.

For businesses, this makes it essential for HR to take a proactive, supportive role in addressing these issues as part of broader employee wellbeing strategies.

Why Should HR Care About Employee Financial Wellbeing?

Financial Stress Impacts Productivity and Focus

Financial stress is not just a personal issue, it impacts work. Research shows that employees under financial strain are less engaged, more distracted, and more likely to take sick days. According to a CIPD report, nearly one in four employees say money worries affect their ability to do their job.

Talent Retention and Recruitment Depend on It

In a competitive job market, offering fair pay is just one part of the equation. Employees now evaluate total wellbeing support, and financial wellness benefits are increasingly valued. Companies that ignore this will risk losing talent to those that take it seriously.

Wage Growth Hasn’t Caught Up for Everyone

Despite average wages increasing, many UK workers, especially those on middle incomes or fixed salaries, are still grappling with the rising cost of living.

• The National Living Wage rose by 9.8% in April 2024 (from £10.42 to £11.44 per hour for those aged 21 and over).
• However, those on middle incomes or salaried roles have often seen much smaller or inconsistent pay adjustments, as employers struggle to keep up with ongoing inflationary pressures.
• As widely reported, real incomes for many have yet to recover from the sharp inflation spikes between 2021 and 2023, which eroded purchasing power across the board.

HR leaders must look beyond headline figures and take a ground-level view: what do pay and benefits actually feel like to employees managing rent hikes, energy bills, childcare, and food costs? Supporting financial wellness in this context requires more than just wage increases, it demands a thoughtful, holistic approach to employee support, including discount platforms, financial education, and flexible benefits.

HR’s Role: From Awareness to Action

Here are some proactive steps HR teams can take to address the cost-of-living challenge and support employee financial wellness:

1. Conduct a Financial Wellness Audit

Gather data via anonymous surveys to understand how employees are coping. Identify pain points across pay levels, departments, and demographics. Use this data to tailor interventions.

2. Offer Practical Financial Education

Partner with financial wellness providers to run webinars, workshops, and 1:1 sessions. Topics can include budgeting, debt management, pension planning, and understanding benefits.

3. Boost Total Reward Transparency

Clearly communicate the full value of compensation packages, including:

• Non-cash benefits
• Discounts and wellbeing perks
• Employer pension contributions.

4. Reassess Pay Fairness and Flexibility

• Review whether wages are keeping up with regional living costs.
• Consider cost-of-living bonuses, hardship funds, or salary advance schemes for those in immediate need.

5. Enable Smart Saving

Offer payroll-linked savings, workplace ISAs, or support for emergency savings pots. These programs help employees build financial resilience.

6. Employee Discount Hubs

Employee discount portals are online platforms that offer employees access to a wide range of discounted products and services. These may include exclusive discount codes, online marketplaces, and reloadable shopping cards.

The goal is to help employees save money on everyday expenses such as groceries, clothing, travel, and entertainment. By providing these savings opportunities, the portals contribute to employee well-being and enhance the overall benefits package.

Conclusion: Wellness Is More Than Mental and Physical

Financial wellbeing is no longer a “nice-to-have”, it’s a core pillar of any HR wellbeing strategy. Even if inflation shows signs of slowing, the ripple effects of recent economic shocks continue to affect employees. By embedding financial wellness into the employee experience, HR teams can:

• Strengthen morale, loyalty, and trust
• Improve engagement and productivity
• Nurture a workplace where people feel more supported and secure

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