The bosses helping staff pay their soaring energy bills
- Published
When managing director, Ilona Hitel, heard that UK household energy bills were about to soar higher, she decided to help her staff.
"I knew some of the team were anxious about the costs ahead, and inflation, and so I said 'you don't need to worry'," explains Ms Hitel, the boss of London-based public relations firm CommsCo.
With energy bills due to jump by an average 54% or £693 a year from April, Ms Hitel is giving each of her 12-strong team a permanent £700 annual pay rise. The money will be in addition to their usual annual increase.
"We've got a responsibility to look after our staff," she says. "It's about how we treat our people in the hard times, and they were so pleased. It was a good reaction, they appreciated it."
Yet, with inflation rising to 5.5% in January, (its highest level for 30 years), it is not just energy prices that are increasing strongly. The cost of food has also soared. And Russia's invasion of Ukraine has led to much higher petrol and diesel prices.
Given these cost of living pressures, Ms Hitel isn't the only boss who is stepping in to support their staff financially during these troubling times.
Chris Stringer, chief executive of Birmingham-based That Recruitment Company, sent an email to his 24 employees this month, letting them know that they would be receiving a 5% pay rise - because he didn't want to to see them struggling.
"The price rises have been on my mind for a while, although the decision to give a pay rise wasn't very thought through," he admits. "I just thought that I'm in a position to that do that, and, you know, 30k (£30,000) now, is not the same as it was three years ago.
"The energy increase is concerning. Everybody is struggling now. I don't think you should work just to pay the bills. Life is hard. Anyway, it's only 14 staff not like 250,000."
The recruitment consultancy boss jokes that the reaction of his staff "wasn't as good as the response on (social media platform) LinkedIn", where one of his employee's posted about the increase, and has received about 40,000 likes so far.
"It's not a life-changing sum for our staff, but they're pleased I've recognised the cost of living, and given them extra security," he adds.
Stephen Clayton is another boss who has given his staff a permanent pay rise to cover the cost of their rising energy bills. The chief executive of energy consulting firm RSL Renewables says he didn't want staff to be be worrying about how to heat and light their homes.
"Some of my staff are young, some mothers with children, one whose monthly energy bill had gone from like £100 to £300," says Mr Clayton. His firm is based in South Shields, Tyne and Wear.
"I want people to leave the stresses at the door. But you can't do that when you have a massive bill to pay, you're not going to perform."
He describes next month's energy price hike as "disgusting", adding: "Normal people will be choosing between eating and heating, and that shouldn't be the case."
Mr Clayton says his team of 12 were "over the moon" when he told them the news in one-to-one meetings.
At Glasgow-based tech firm Firefish Software, employee David Connolly and his colleagues have been given a pay rise of £600 per employee to help cover the increased cost of living.
Mr Connolly, 31, says it was a "lovely gesture".
"It was a really nice surprise, I was shocked but delighted. Rising prices have been a concern of mine over the last few weeks.
"I've noticed prices increase at the petrol pump and then food shopping. The energy bills increase hasn't happened yet for us, but I keep on hearing horror stories so it had been a concern. It's good that employers are helping employees who are struggling and need support."
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When it comes to giving employees the extra income to cover the increase in their energy bills companies need to consider tax.
"If the idea is to give the employee an extra £600 in their pockets, it could be arranged for this to be paid net via payroll," says Clare Bowen, director at accountants MHA Monahans.
Ms Bowen explains this is where the employer would cover the tax and national insurance due by increasing the gross amount paid, but cautions this could represent a significant sum for someone on a higher rate tax band.
"For example, if an employer wanted to give an extra £100 into an employee's pay packet, £125 would have to be given for tax deducted to still amount to £100. However, for any employee who earns more, within the 40% tax bracket, employers would have to give £170. Not only must caution be exercised, but employers must consider if this is fair."
She also adds that employers could alternatively look at giving the additional money as a one-off extra payment rather than an increase to general salary, and note that it is a discretionary gift to ensure it doesn't get swept up in annual pay increases and become part of the normal pay.
"Employers would also need to consider where it was an amount subject to pension contributions," adds Ms Bowen.
Of course, contributing to employee's energy bills can pay dividends in other ways.
"It makes employees feel valued and appreciated," says Melanie Folkes-Mayers, managing director at human relations firm Eden Mayers HR Consulting. "What you don't want is team members leaving for that additional cost.
"An extra £50 a month isn't a huge amount to keep the team happy and help heat their homes and feel comfortable."
