Financially healthy employees: A four-step plan for employers
The consequences for employers of having employees with financial problems are significant. Dutch research proved that an employee whose wages are seized, is 20% less efficient at work on average. Additionally, they are absent due to illness seven extra days a year and staff members with problematic debts require an extra three hours for the process of the wage seizure. The total amount this can cost a company is roughly €13.000 a year.
This article will show you what steps you can take to prevent the wage seizure of employees, how to support employees whose wages are seized and ensure your employees are financially healthy.
Step 1: Preventive policy
To prevent wages from being seized, it is important to create and maintain an open and safe environment on the work floor. Many employees say they are anxious to admit they are facing financial difficulties. Or they are not aware that it can be helpful to tell employers about their financial issues. Problems that lead to the seizing of wages cannot, therefore, be intercepted in time, with all the consequences that accompany it. As an employer, you can lower the threshold for your staff to discuss their problems and to avoid the situation exacerbates.
You can do this by communicating clearly: make it known that you are willing to help with finding solutions for financials problems. Let your employees know where they can go with questions or for support. Make sure there is a confidant in the company whose door is open.
You can communicate, for example, through team meetings, the intranet, a flyer and/or during a performance review. Additionally, make sure you focus actively on the subject: for example, you can do an (anonymous) financial health check, or you can organize a workshop regarding personal finances.
Step 2: Detecting risks
Does an employee ask (repeatedly) for an advance on their wages? Is he or she unfocused, tense or absent often? Has something changed in his or her personal circumstances that might has consequences on their financial situation? These can be signals for (early) financial problems.
To prevent matters to get worse, we advise employers to take these red flags seriously and invite the employee to a conversation. Make sure you give the employee space to voice their concerns and offer tools to help. Demonstrate what instances can support the employee to get their financial affairs in order (see below) and make a step-by-step plan.
Make sure the employee has the opportunity to contact or visit supporting organizations during working hours. In short, ensure you recognise the signals* in time, communicate with the employee about your worries and be available to come up with solutions.
Step 3: Support with wage seizure
Even if you take specific measures to prevent wage seizure, ultimately it is the responsibility of the employee to make use of the facilities that you can offer. Not every employee will take preventive steps in time.
When this leads to the seizure of wages, you can best help your employee (and your company) by taking quick action. Talk to the employee and find out if he or she already has support in finding solutions to the financial problems. Offer help where the employee is not receiving support yet. Find out what assistance suits their needs best. There are several possibilities for this:
>You can redirect the employee to the municipal debt counseling*. Pay attention: the facilities and procedures differ per municipality. Therefore, check what the possibilities are with the municipality where the employee lives.
>The employee can voluntarily hand over the management of their finances or they can qualify for protection of their financial circumstances with an external trustee. Here a third party will take care of the necessary financial actions and the debtor and those involved are relieved of the burden of the administrative and financial work.
> When the employee needs intensive guidance, a curator or mentor* can offer support. These types of assistance are specific suitable for people who are not sufficiently capable to make independent and deliberate decisions.
> You can also ask a professional third party to advice on, or assist with the possibilities to the financial situation. Moneywood's sister company Salupa offers support with wage administration and Aeslupa can help with finding solutions and limit the adverse consequences of wage seizure.
Step 4: Stay up to date
In conclusion, we advise to make the financial health of your employees a returning theme in your HR-policy. When you have the support and administration in order for employees with problematic debts, it is important to remain informed about both preventive measures and how to support the employees with financial difficulties. Ensure the subject remains mentioned in meetings and on the intranet, make sure that information is up-to-date, discuss the matter during performance reviews and plan follow-up conversations with employees that are dealing with debt or wage seizures. Additionally, keep informed about the possibilities regarding your employees’ financial health and feel free to contact us for any questions or advice.
*) Do you have difficulties navigating the Dutch websites? Moneywood is happy to help.