Francesca Smith, Research Assistant, Money and Mental Health Policy Institute

What can employers do to break the link between money and mental health problems?

26 July 2023

  • There is a strong link between money problems and mental health issues, with financial stress and difficulties exacerbating mental health problems, and vice versa.
  • Employers can play a crucial role in breaking this cycle between money and mental health problems by implementing supportive measures for their workforce.
  • Steps employers can take include paying at least the Living Wage to improve financial resilience, addressing stigma through training and creating a culture of support, proactively sharing information on financial wellbeing, and providing access to Employee Assistance Programmes.
  • Offering flexibility in working arrangements and reasonable adjustments can also assist people in managing mental health problems and retaining work.
  • Employers should also consider sick pay policies to ensure employees have the time and space to prioritize recovery without fear of financial repercussions. With the recent rise in living costs impacting mental and financial health, it’s more urgent than ever for employers to support their employees in these areas

It’s perhaps unsurprising that those of us with money problems are more likely to be struggling with our mental health. The stress and worry that can come from not having enough to make ends meet, or having to make difficult financial decisions such as heating or eating, can all take a massive toll. But this relationship works both ways: having a mental health problem can also mean we’re more likely to be in financial difficulty. People with mental health problems can face barriers to a good income, and some of the common symptoms associated with many mental health conditions can make it trickier to manage our money and spending.

This vicious cycle between money and mental health problems has a big impact on our ability to find and stay in work. If you’re struggling with your mental health, searching and applying for jobs can be challenging, and everyday tasks that would otherwise be manageable in your role can seem impossible. Looking at the other side of the cycle, two thirds of employees who are struggling financially report at least one sign of poor mental health that could affect their ability to function at work, such as loss of sleep, poor concentration and reduced motivation.

As the Greater Manchester Employment Charter’s Mental Health Toolkit recognises, employers have a huge role to play in breaking the toxic cycle between the two. At Money and Mental Health, our work has explored the steps employers can take to support their workforce with their mental and financial health, including:

Paying at least the Living Wage

Our income is intimately related to mental health, since lower living standards and poor financial resilience can make it more difficult to stay mentally healthy. As a fundamental first step for employers seeking to break the toxic cycle between money and mental health problems, they should be paying at least the real Living Wage.

Tackling the stigma and creating a culture of support

Unfortunately, there is still a significant amount of stigma surrounding mental and financial health problems. Employers have a role to play in addressing this, by ensuring the workplace is a safe space in which staff are encouraged to talk openly about any challenges they face. As a key step to achieving this, employers should implement mandatory training for all line managers on identifying, discussing and supporting employees experiencing mental and financial health difficulties.

Proactively supporting employees

Stigma can also discourage people from accessing support with their mental and financial health. Employers should proactively share information around financial wellbeing and provide services such as Employee Assistance Programmes. Employers are also well-placed to discreetly point staff in the direction of external sources of support, such as debt advice, where necessary, for example when they know an employee is experiencing a reduction in their income due to moving onto Contractual (CSP) or Statutory Sick Pay (SSP).

Flexibility as standard

Reasonable adjustments, like working from home or flexible working patterns, can be extremely effective for assisting people to both manage their mental health problems and retain employment. For those of us with mental health problems, inflexible employers who fail to advertise or  meaningfully consider reasonable adjustments can make finding and staying in work feel like an overwhelming challenge. Employers should actively develop a list of reasonable adjustments for the workplace and routinely offer these to employees, helping to ensure employees are both aware of what adjustments are available, and feel able and encouraged to request these.

“I was off with anxiety for four weeks… When I returned I asked to reduce my working hours and  asked for an unusual working pattern of three weeks working and one week off. My employer agreed and I have been doing this for about two years and it has greatly helped.” Expert by experience.

Ensuring people can afford to get better

When we’re unwell, paid sick leave can be a vital way of ensuring we have the time and space to prioritise recovery. Staying at work because we’re worried about the impacts of taking time off on our income or ability to progress can lead to our mental health deteriorating and longer term absences.

“Receiving Statutory Sick Pay was a lot lower than I was expecting, so with that in mind you have to return to work long before you are ready.” Expert by experience

Employers should consider how their sick pay policies might impact on staff willingness to take sickness absence, and support those experiencing mental health problems to attend to them at the earliest opportunity by increasing the flexibility of sick pay to allow preventative, part-time sick leave as well as phased returns to work.

More urgent than ever

With the recent rise in the cost of living taking a big toll on people’s mental and financial health – and 1 in 5 people saying they have felt like they’re unable to cope due to these rising costs – it’s more urgent than ever that employers are supporting the mental and financial health of their employees. The Greater Manchester mental health toolkit for employers offers good examples of where these opportunities are already being seized, such as the excellent flexible work policies offered by Castlefield and the mission to create cultural change and tackle mental health stigma in the workplace at Electricity North West.

The steps outlined above are not exhaustive, and our best practice checklist for employers provides a more extensive overview of the steps employers can take to support the mental and financial health of workers.