We asked the employment team at Tughans LLP to provide practical answers to unusual, sensitive or complex work-related queries. We call this feature “How do I handle it?”

The articles are aimed at HR professionals and other managers who may need to deal, from time to time, with the less commonplace disputes at work; issues that may, if handled incorrectly, lead to claims for discrimination, constructive dismissal or some other serious difficulty. 
 

Employers are increasingly aware of the ongoing cost of living crisis and the pressure this puts on employees, which is particularly emphasised by the sharp rise in fuel costs due to the ongoing conflict in the Middle East. As a result, many employers are giving more thought to how they can offer meaningful and practical support during this period of uncertainty.

One way to help ease pressure on employees is the provision of temporary payments, but there are several important considerations to keep in mind before offering any additional payments over and above employees’ normal remuneration.

First and foremost, when communicating this benefit to employees, it is important to make clear that  the payments are temporary in nature and do not form part of employees’ contractual remuneration. You should write to employees and expressly inform them that the proposed payments:  

• Are a form of temporary support, are non-contractual and at the discretion of the company;  
   
• Will be payable in May, June and July only;  
   
• Will be paid as part of employees’ normal salary, via payroll and subject to normal deductions; and
   
• Will cease automatically after the third and final payment in July.  

You might also explain that “normal deductions” mean the usual payroll deductions, including income tax and National Insurance, and (where relevant) any pension contributions or salary sacrifice arrangements already in place. You should also suggest employees consider their personal circumstances and seek advice as the payment could have tax  implications for them and, if applicable, could impact any means-tested benefits (including Universal Credit).  

A lack of clarity can lead to employees assuming they are entitled to these payments through “custom and practice,” which could lead to complaints when the payment is not made in August. The narrative might quickly shift to you “have cut my pay,” rather than “the temporary support ended,” which in a worst-case scenario, would put the organisation at risk of claims for unlawful deduction from wages.  

You should apply this incentive consistently and fairly across the workforce, to all employees. For example, providing a higher payment to senior management than to a part‑time employee could give rise to complaints of less favourable treatment, on the grounds of part‑time worker status.  

There may be circumstances where you do not wish to make payments to particular employees, say where they under notice to terminate their employment. If you do decide to exclude certain employees, you will need to ensure there is a clear and objective justification for doing so. You should also consider setting out clear eligibility criteria, applying them consistently and communicating transparently to employees.

To ensure you are well prepared, it is sensible to anticipate questions from employees in advance. You may wish to reduce the volume of follow‑up queries by including a brief FAQ section in your communication, addressing points you expect to arise, such as how the payment will appear on payslips, the anticipated statutory deductions, and who employees should contact if they have any questions.

Employees are likely to welcome these additional payments, which can boost morale and help support retention. The key is to communicate clearly that the payments are temporary, discretionary and subject to normal deductions. Taking these steps will help ensure that this goodwill gesture achieves its intended purpose and does not inadvertently create later problems.