As the cost-of-living crisis bites, a growing number of employers are facing demands for pay increases at best, and threats of strikes at worst. This article addresses some employment law implications arising from steps being taken to manage the situation.

With high inflation and prices for energy, food and fuel soaring, the UK is grappling with the worst ‘cost-of-living’ crisis in recent years. This is causing problems for both employers and employees. It also comes hot on the heels of the Covid-19 pandemic, from which many households and businesses are still reeling. Employers may be struggling to absorb higher costs that can’t be passed on to customers. Meanwhile, many employees are facing financial worries with their salaries not keeping pace with inflation. Alongside resulting financial stress, this can impact their productivity and engagement at work.

We’re seeing proactive steps by employers, employees and the government to tackle the situation.

What steps are employers taking to support their staff financially at this time?

Two of the main ways that employers are supporting employees is by giving them a pay rise or offering a ‘one-off’ cost-of-living payment or allowance.

The entitlement to a pay rise is usually not contractual but given at an employer’s discretion and often set alongside a performance or annual review. Rather than waiting for review time, some employers are now bringing these reviews forward, or even running an extra review altogether this year,...

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