How employers can support workers facing cost-of-living pressures

The HR team has signed off a cost-of-living payment, launched a hardship fund and pushed out line-manager talking points. Yet absence is creeping up, exit risk is rising and one-to-ones are filled with quiet anxiety about rent and groceries.

On paper, support exists. In practice, many workers still feel exposed.

Monster’s polling shows why: employees are taking on extra debt, cutting pension contributions and are increasingly open to leaving for higher pay. Financial stress is feeding burnout and lower productivity. At the same time, a UK interview study with low‑paid workers found that employer cost-of-living schemes were often experienced less as support, more as a reminder of who holds power.

The real question for HR is not “how generous can we be?” but “what kind of help actually feels fair, secure and dignifying?”.

Why well‑meant cost-of-living “gestures” so often backfire

Many current responses sit in the “gesture” category: one‑off bonuses, manager‑signed vouchers, hardship funds overseen by HR. The qualitative study of frontline workers found these were frequently framed as gifts or acts of kindness, not entitlements. That framing matters. It invites gratitude and loyalty, not scrutiny of whether baseline pay is adequate.

Workers described discretionary hardship funds as particularly fraught. Access often required disclosing rent arrears, debt or family circumstances to managers or HR. For those already worrying about being seen as unreliable, that felt intrusive and risky. Some talked explicitly about surveillance and dependency, not support.

When eligibility criteria are opaque and decisions rest with senior leaders, people infer distributive and procedural injustice. One‑off payments are also read against stubbornly high prices: 94% of workers in one Monster survey said groceries were their fastest rising expense. A single payment is welcome but quickly mentally filed as “not enough” when wages still do not cover basics.

This is where psychological contracts come under strain. MaPS argues it is in employers’ “personal and professional interests” to support financial wellbeing, but workers in the study often felt that ad hoc schemes dodged the harder question of low pay and insecure hours. Some went further, seeing cost-of-living payments as a disciplining tool: a reminder to stay loyal because management could always withdraw the “gift”.

The complication for HR is that these schemes are usually created with good intent and tight budgets. Yet if support is experienced as stigmatising, conditional or temporary, it can deepen mistrust while still costing money.

Shift from gestures to rights: structural support that builds trust

A different family of interventions focuses less on generosity and more on predictable rights. In the same UK study, workers viewed contractual pay rises – particularly those negotiated collectively – as strengthening their power and reducing reliance on managerial goodwill. The TUC reports that union‑negotiated cost-of-living deals are associated with improved perceptions of fairness and voice, compared with unilateral schemes.

This distinction matters. A pay rise embedded in contracts, aligned where possible with accredited Living Wage benchmarks, signals that being able to afford rent and food is a baseline expectation of the job, not a favour. It directly improves distributive justice. It also has behavioural consequences: Monster’s research links stagnant wages to greater openness to leaving; revisiting reward strategy is now a retention lever, not just a cost.

Structural support also includes secure contracts and predictable hours. Financial Inclusion Commission commentary highlights that financial exclusion damages health, reduces productivity and drives people out of work. Insecure hours push people towards high‑cost credit even when pay rates look competitive on paper.

For HR leaders, this is uncomfortable territory because it sits at the intersection of reward, workforce planning and industrial relations. Yet it is also where the biggest trust gains lie. Support “cannot be left to individual goodwill alone”; constructive relationships with trade unions or staff forums, and transparent pay-review processes, make the system feel less arbitrary even when budgets are constrained.

Build inclusive financial wellbeing infrastructure, not one‑off fixes

Beyond pay, MaPS and the Financial Inclusion Commission are clear: the workplace is an “ideal setting” for building financial security and resilience. Payroll savings schemes, access to affordable credit, debt advice and money guidance all feature in their recommendations. Financially secure workers, they note, are healthier, more productive and better able to contribute to growth.

The design question is how to do this without sliding back into stigma or paternalism. Two principles help.

First, normalise rather than single out. Offer financial education, debt advice signposting and payroll savings to everyone, not just those flagged as “struggling”. Embedding resources into a broader mental fitness and wellbeing offer reduces the sense of being identified as a problem case. Digital, behaviour‑science‑informed approaches such as Leafyard’s mental fitness platform can help here: its curated wellbeing library and microlearning format allow staff to build money skills and stress‑management habits in 10–20 minute bursts, privately, on their phones.

Second, shift from crisis response to prevention. New‑generation EAPs like Leafyard frame support as an ongoing mental fitness journey rather than a last‑resort hotline. Multi‑month, habit‑based programmes and short five‑day experiments are designed to help people build coping strategies – including around stress and uncertainty – before issues escalate. In cost‑of‑living terms, that might mean employees using structured experiments to test small budgeting or sleep changes that make shift work more sustainable, or guided video coaching to develop problem‑solving and emotional regulation when bills spike. Preventative mental fitness is not a substitute for pay, but it is a realistic way to protect performance and health while structural changes work through.

Privacy is crucial. The low‑pay study showed how quickly people withdraw when support requires disclosure to managers. Anonymous, self‑directed tools avoid that trap. Leafyard’s human‑centred design and intelligent triage route people to self‑help, live NCPS‑accredited counsellors or other resources without HR ever seeing individual data. Behavioural analytics are aggregated into board‑ready reports and pounds‑and‑pence ROI, giving HR evidence of impact without compromising trust.

This can create a rare win‑win: employees get stigma‑free support; HR gets hard numbers on reduced absence, burnout and turnover to defend wellbeing budgets in a tight financial climate.

Where HR should focus next

The cost-of-living crisis has turned reward strategy into a live test of fairness. One‑off payments and hardship funds may still have a place, especially in emergencies, but they are the least efficient way to spend scarce budgets if they are experienced as intrusive or controlling.

A more sustainable approach starts with pay and security, is shaped with collective voice, and is underpinned by inclusive financial wellbeing and mental fitness infrastructure that people can use early, privately and on their own terms.

For HR directors, the practical questions are sharp:

• What proportion of our “support” budget is tied up in discretionary gestures versus permanent improvements to pay and security?
  
• Where can we partner – with unions, MaPS‑aligned providers, or digital EAPs like Leafyard – to create stigma‑free, preventative support?
  
• How will we evidence the business impact, in productivity, retention and reduced financial distress?
  

When fairness is felt, not just stated, and when wellbeing systems respect autonomy as much as they offer help, cultures shift faster than most leaders expect.