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Wake-up call – Identifying and resolving employee personal debt

03 February 2012
Wake-up call – Identifying and resolving employee personal debt

A recent YouGov survey suggested that one-third of the UK population is in debt. Janine Mills explains what help is available for managers to tackle personal finance problems in the workplace

THE PROBLEM
In the current economic climate, and particularly after Christmas, people often overextend their finances resulting in, or adding to, debt. Recent statistics show that the total UK household debt at the end of 2010 stood at £1.45 trillion. A forecast by the Office of Budget Responsibility expects this to grow over the coming years.

DEBT: THE SIGNS
At work, there are a number of signs that may indicate an employee has a budding or serious debt problem, including:

â- Approaching payday lenders to make ends meet.
â- Creditor calls at work or an increased number of "personal calls" in the workplace.
â- Asking for - or undertaking - significant levels of overtime.
â- General impact on health, happiness and/or relationships.
â- Time off owing to stress or depression.

If you notice that an employee exhibits one or more of these behaviours, it could indicate a debt problem. Anyone experiencing debt-related stress can find it even more difficult to deal effectively with their financial situation. In the workplace, debt stress can lead to problems concentrating, poor judgment, overreacting to situations, time off work and mood swings.

MANAGERS: WHAT TO DO
Managers addressing an employee's debt issue will find that empathy is fundamental to dealing effectively with someone in debt. Counsellors recommend the following pointers for an empathetic approach:

â- Remain calm.
â- Use a soft tone.
â- Have a two-way conversation.
â- Listen.
â- Take a non-judgemental approach.
â- Give information in manageable chunks.
â- Use open body language.
â- Provide clear and concise instructions.

Employers can raise awareness of debt matters by running personal money management training for employees, adding financial awareness information to employee inductions/ handbooks and informing employees where they can obtain free, reputable debt advice.

CHECK LIST
There are a whole host of organisations that provide debt advice but some provide a free service whereas others charge a fee. Consider the following key points:

â- It is a common misconception that paying for a debt advice service leads to a better level of service. In fact, debt repayment can take up to two years longer when using a fee-based debt advice service.
â- Free confidential advice agencies in the UK include the Consumer Credit Counselling Service (CCCS), Citizens Advice and National Debtline (part of the Money Advice Trust charity).
â- The CCCS offers free advice including a telephone helpline service operating between the hours of 8am and 8pm, Monday to Friday. Advice is tailored to each individual's needs and CCCS makes a debt solution recommendation based on the information provided along with providing an action plan towards becoming debt-free.
â- Should anonymity be preferred, the CCCS also provides an online counselling service called Debt Remedy which is completely free of charge and can be accessed at www.cccs.co.uk

Further information
If speaking to employees about debt is difficult, managers could post or hand out the Institute of Hospitality's management guide: Identifying and Resolving Personal Debt.

This guide is free to download by going to www.instituteofhospitality.org and selecting "Management Guides" from the "Information Services" menu.

The guide has been written in association with the industry charity Hospitality Action and the Consumer Credit Counselling Service.

CONTACT
Janine Mills is the head of information services at the Institute of Hospitalityjanine.mills@instituteofhospitality.org

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