The 18th – 24th March marks Debt Awareness Week, a topic that can be difficult for employees to speak about openly in the workplace. Here we will explore how employers can support employees who are struggling with debt issues.

The ever-increasing cost of living in the UK, along with the credit crunch means that debt is having an impact on more and more people. Statistics from the Financial Conduct Authority (FCA) show that almost 11 million people in the UK struggled to pay bills and meet credit repayments in 2023, up 3 million since 2022.

Talking about debt is a taboo topic for some, who believe that openly admitting they are struggling with debt is something that could be seen as a failure – but this should not be the case and employees should know that their employers can support and advise them through any difficulties they are having.

Debt can come in all shapes and sizes – whether that be the different causes of debt, or the length of time people are affected by it. Regardless of this, the impact that debt may have on an employee can be significant, leading to stress and potential mental health issues.

While an employer cannot be expected to wave a magic wand and solve an employee’s debt problems, there are things they can do to help them through what can often be a difficult time.

Many organisations have services available to staff such as EAPs (Employee Assistance Programs) where employees can speak to trained counsellors confidentially about any issues they may be having. If employees do not feel confident in speaking openly to colleagues about their debt issues, then doing so confidentially via an EAP service may be a good route and can provide employees with tips on how to reduce the impact debt is having on their mental health. Even if employees do openly engage with their employer about their financial problems, then EAPs can still be invaluable to employees to get professional support.

Sometimes debt can be as the result of a deeper issue than just overspending – and addictions of all kinds can leave people in financial difficulty. Drug and/or alcohol dependency can often lead to financial struggles, as can gambling addictions which are becoming an increasing problem due to the ease with which people have access to gambling websites at the touch of the button. EAPs can prove useful in these circumstances, but employers themselves should also be wary that these issues may be affecting their employees – so should exercise caution when organising office parties or sweepstakes for example as these may be triggers which can lead to a downward spiral for some employees. Signposting support on invites / sign-up emails is therefore often a good idea.

Some employers may be able to help struggling employees with interest free loans, which can help to reduce the impact of debt without adding additional problems of interest repayments further down the line. Employers can also help with directing employees to reputable credit agencies who may be able to assist them if there are no interest free loans available through the company.

Additionally, in some cases employers have taken the step of setting up charities and trusts that their employees can apply to on a one-off basis for assistance with an unexpected large bill like funeral fees for instance.

While the above approaches tackle debt when it’s already a live problem, there are also ways in which employers can help educate employees to avoid certain circumstances which might lead to debt in the future.

Tips for tackling debt struggles

Financial wellbeing training in the workplace can be invaluable in helping employees understand their money and the dos and don’ts when it comes to managing money responsibly. Some tips that employees could learn from training may include:

Checking their bank balance regularly – this can help ensure they understand how much money is left before their next payday.

Budgeting tips – set financial goals that will allow them to manage spending in certain areas (for instance, allocate X amount for petrol each month, and Y amount for morning coffees). Also look at what spending is essential, and what isn’t.

Not letting mood affect spending for instance, if someone has had a bad day, being careful not to go on a shopping spree to make themselves feel better if they can’t afford to do so.

Set up direct debits for bills – setting up direct debits for household bills to come out of their account at the start of each month for instance means they are paid for straight away, and bills don’t pile up. Outstanding bills are a common cause of debt, so managing these effectively can reduce the risks of financial problems.

Save where possible – we’ve all heard the term ‘saving for a rainy day’ and this is a good tip – putting a bit of money aside into savings each month will mean that if unexpected expenses do crop up, they are in a better position to deal with this.

As the FCA statistics show, debt is something that impacts a lot of people – so those struggling with finances should know they’re not alone and support is available. Also, an employer should be aware that it’s highly likely that some employees within their organisation are experiencing debt, so it’s important to have a support structure in place if anyone needs help.

Fiona and Helen
Helen Burgess & Fiona Debney
Employment partner at Gateley Legal

Helen advises on all aspects of employment law and HR practice across many sectors, while Fiona leads Gateley Legal's not for profit & philanthropy team within Private Client.