How to help an employee with money problems

One in 3 households today have trouble paying their bills (in Dutch). And according to the (Dutch) Nibud survey report on employees and debt, employees with money problems call in sick an average of 7 extra days per year, and are 20% less productive. “That means the employee’s debts can cost an employer thousands of euros per year”, says Van der Lans. She is project leader at Wijzer in Geldzaken (Dealing with money matters, a Ministry of Finance initiative). Employer Martin Kniest also knows that money problems can cause stress: “So take good care of your employees. If they call in sick, your company stops running.”

Nibud is planning to start a survey of money problems and worries at the workplace. If you are an SME employer, and would like to help with the survey about money problems among your staff, sign up for the Nibud survey (in Dutch). The website also offers information about the survey.

Helping employees with money problems

Most employers (77%) would like to help employees with debts (in Dutch). The following tips by Van der Lans and Kniest can help you get started:

1. Keep an eye out for signs

Recognise the signs that can mean your employees have money problems. “Employees with growing debt problems often stay silent in fear that no one will understand”, says Van der Lans. “Some signals include when the employee asks ‘when will my salary be paid?’ (if it is later than expected), deduction of health insurance premiums from their and calling in sick without a clear reason.” Find out about the other signals via the Signal check (in Dutch).

2.  Talk about rising inflation

Talk to your employees regularly about changes in the economy. Make it as easy as possible for them to talk about it. “For example, ask ‘How is it going at home?’, ‘A lot of people are having trouble paying their bills because of high energy prices. How are you doing?’ Or bring up an event in their personal lives, like: ‘You mentioned that you are getting divorced. How are you doing now?’”, suggests Van der Lans. Learn about more conversation tips (in Dutch) to help limit stress, embarrassment, or sick leave.

3. Refer to aid workers

Kniest remarks that not every employer knows enough about money issues or problems. “In that case, you need to work with experts. Keep it simple, and regularly ask an aid worker or social worker to come by during the lunch break. Choose experts who really understand money problems, not just ones walking around in three-piece suits. An employee needs to be able to relate to someone before they open up about their problems.” There are several organisations (in Dutch) that can help with money problems and debts.

4. Offer a budget coach

You can offer to pay for a budget coach (in Dutch) for your employees. A budget coach can offer a short, intensive period of help finding a structural solution for the employee’s financial situation. Kniest explains how a budget coach is the basis for solving money problems: “I often see that people do not know how to spend their money wisely. That is a sign of a deeper problem or a lack of insight. The problem is not simply an extra snack at lunch, but a certain pattern. Make sure that your employee can deal with money independently and responsibly.”

5. Pay education costs

Research has shown that people with higher levels of education are more likely to be financially healthy than people with lower levels of education. The more education people have, the more they know about money issues. Education also improves their position in the job market, which helps them earn a higher salary. So make sure your employees have enough knowledge, and offer them extra education. Employers can deduct education costs from their taxes.

6. Take advantage of the work-related costs scheme

The work-related costs scheme (WKR) allows you to deduct some compensation for your employees, to make certain products or services free of charge. For example, you can use the WKR for telephones, computers, birthday gifts, a bicycle for commuting to work, or a sports membership for your employees. You can also offer compensation for energy costs via the WKR. That way, the extra money is not seen as wages (and taxed) by the Netherlands Tax Administration.

Financial support

Offering extra income via (temporary) salary raises or allowances may be a solution for your employee, but that does bring extra problems. Extra pay may change the employee’s right to benefits, and the Tax Administration will take some of the money as well. Ask your accountant about the consequences that financial support will have for you and your employee.

1. Tell employees about the energy allowance

Do your employees earn less than €1,310 per month (single income) or €1,871 per month (double income)? Then they can request an energy allowance from the municipality of €1,300 per year for 2022 and 2023. Many working people do not know that they are eligible for the allowance, so tell your employees about it. Some municipalities may have a higher income limit. You can find the right municipal helpdesk via Geldfit (in Dutch).

2. Extra working hours

If you have a staff shortage or a seasonal peak period, you can offer extra working hours. But check in advance whether working extra hours will actually give your employee an extra income. The (Dutch only) Nibud websites Bereken Uw Recht and Werkurenberekenaar (Working hours calculator) can help you. Make sure to tell your employee that more hours may have an effect on their taxes and allowances, such as the care allowance. And working extra hours regularly may entitle them to more contract hours (in Dutch). Ask your accountant for more information, if you are not certain.

3. Index the salary to inflation

You can ‘index’ your employees’ salary to inflation to adjust for the current rate of inflation. You can check inflation at CBS. As an employer, you can (partially) adjust salaries accordingly.

4. Pay a one-time allowance

You can also choose to pay all your employees a one-time allowance, either as a bonus or as compensation for inflation. You may choose a fixed amount for all employees, or a percentage of their annual salary. Please note: when you pay a percentage, employees with lower wages receive a lower allowance. Or you can switch it around, like the telecom firm KPN did. They actually gave employees with a lower salary a higher amount.

5. Pay an advance

Consider paying an advance on their monthly salary, holiday allowance or 13th month. An advance means that the employee will not receive the money later, so their money problems may simply move to the future, or even pile up. You also cannot be sure that the money gets to the right place. Kniest: “An advance is often just a plaster on a wound, instead of a real solution.”

6. Financial plan and a loan

Are your employee’s debts starting to pile up? Marijke Honing, franchise entrepreneur at McDonald’s Utrecht, explains that you can offer temporary relief with an (interest-free) loan as part of a financial plan. “But a loan should always be combined with the right help and support over the long term. You want the employee to become financially independent, and not lean on you.” Draw up a financial plan together with your accountant and/or a budget coach, including agreements for the monthly payments and the repayment deadline.

Employees’ money problems and legislation

Make sure to obey the law when your employee has money problems. For example, as an employer you must comply with the GDPR (General Data Protection Regulation) privacy law. That means you cannot share your employee’s money problems or request for an advance within the company. If your employee’s money problems start to pile up, it may result in attachment of earnings or deduction of health insurance premiums. As their employer, you must cooperate with these measures. Find out what else to look out for when your employee has debt problems.