Putting the spotlight on mental health and financial wellbeing at work

20 August 2024

More than 1.5 million people in the UK are experiencing debt and mental health problems, according to research from the Money and Mental Health Policy Institute. And with many people suffering in silence, the UK Debt Service believes that figure is probably even higher.

As if to prove that point, research conducted by the Mental Health Foundation found that over 40% of UK adults have experienced financial worries. Almost a quarter of them said those worries had a significant impact on their mental health.

Financial stress can have a profound effect on mental health, leading to anxiety, depression and other serious conditions. And it’s more widespread than you might think.

The problem of poor financial wellbeing extends well beyond those of us unfortunate enough to struggle to make ends meet and repay debts. An astonishing 24 million UK adults lack confidence in managing their money – according to the Money and Pensions Service – and only a third receive help.

How does financial anxiety affect the workplace?

The UK’s mental health epidemic is no secret. But we’ve recently started to hear more about the relationship between mental illness and financial wellbeing (or the lack of it).

During 2023, the average employee took 7.8 days sick, up from 5.8 days in 2019, figures from the Health Foundation reveal.

Of course, not all sickness absence is attributable to financial problems. However, we also know that people who start to suffer from depression are 4.2 times more likely to continue to be depressed 18 months later if they have problem debt.

A number of group protection insurers have observed separately that from 2023 onwards, people have really struggled to cope with the cost-of-living crisis and economic uncertainty.

How do they know this? They’re able to quantify the high demand for mental health consultations via the apps and employee assistance programmes that come as part of employers’ group protection policies.

Wider research highlights that employee concerns include:

• Worries about managing debt
• Concerns about inadequate pensions savings
• Ability to provide financially for loved ones if they get sick or worse, they die
• The strain of caring for disabled or elderly relatives
• Lurching from payday to payday
• Struggling to make ends meet.

How can employers improve the financial wellbeing of their workforce?

Employers have a duty of care to prioritise the wellbeing of their employees by implementing supportive measures that address both financial and mental health concerns. Organisations can play a vital role in supporting their employees’ financial and mental wellbeing. Here are some steps employers can take:

• Financial education: Providing financial literacy workshops or seminars can empower employees to make informed decisions about budgeting, saving, investing and managing debt. By equipping them with the necessary skills and knowledge, businesses can help alleviate financial stress.
• Group protection: Offering financial protection through life assurance, income protection or critical illness benefits can give employees invaluable for peace of mind. These policies provide vital financial and emotional support in some of the most challenging periods of people’s lives. Group protection policies include complimentary benefits that help employees take control of their own wellbeing.
• Other financial protections: Putting in place other employee benefits – including employer-sponsored retirement plans, financial planning services, and matching contributions to employee pension savings accounts – demonstrate a commitment to employees’ long-term financial security.
• Employee assistance programmes (EAPs): Implementing EAPs opens up confidential counselling and support services for employees facing personal or professional challenges, including financial difficulties. Access to mental health professionals can help individuals cope with stress triggers and develop healthy coping mechanisms.
• Flexible work arrangements: Offering flexible work arrangements, such as remote work options or flexible hours, can alleviate financial burdens associated with transport costs and caring for children and other dependants. It can also improve work-life balance and reduce stress levels.
• Open communication: Encouraging open dialogue about financial challenges and mental health issues is a simple step that can improve wellbeing. It creates a supportive environment where employees feel comfortable seeking assistance or sharing their experiences without fear of judgement. Line managers are ideally positioned to promote and signpost wellbeing support available to employees. Training line managers to provide wellbeing support can be a great investment.

What does financial wellbeing look like in the workplace?

Where employees have reached out and accessed valuable mental health support, a ‘return to work’ success rate as high as 96% has been reported.

Employees who feel in control of their finances have peace of mind, improved self-esteem, and a sense of optimism about the future.With improved financial security, adequate savings, financial protection and manageable debt levels, individuals are freed up from stress and anxiety and can focus on other aspects of their lives, including their work. By fostering a culture of support, understanding and empowerment, businesses can create environments where employees thrive both personally and professionally.