Employees £4k out of pocket each year due to work-related expenses

Decadent client lunches, last-minute meetings, and work trips abroad – it all adds up. Perhaps more than you’d think. 

According to a new study by Airwallex, employees are forking out over £4,000 a year, on average, to cover work-related expenses. 

Coupled with the added frustration of delayed reimbursements, this could lead to financial strain. And during the ongoing cost-of-living crisis and stagnant wage growth, the pressure could be too much for some employees.

Client lunches eat into pay checks

The study by Airwallex surveyed 2,000 UK employees and highlighted the financial strain on employees caused by delayed reimbursements for work expenses.

Data showed that 45% of employees, and 68% in London, are fronting the cost of work expenses with their own cash. 24% of these costs occur at least once a month. 

In total, employees spend an average of £4,255 per year on work-related expenses. This could include client lunches, travel costs, or mobile phone bills. 

According to Airwallex, this figure was found to be particularly tight among staff on less than £30k per year, some of whom are having to borrow money to cover costs.

Among higher earners (those who earn over £100k), work expenses can total up to £20k, or 20% of their salary. Airwallex reports that most of this money is spent on entertaining clients with food, drinks, and events.

Late payments

Not only are employees racking up significant expenses, but they also aren’t being reimbursed on time. 

It’s a problem even for those on larger salaries. Half of those earning over £100k say they feel financial strain while waiting to be paid back. So, even high earners aren’t immune to the pressure that delayed repayments can cause.

Beyond the financial stress, late reimbursements can create tension between staff and management, which may affect morale and make it harder to hold onto top talent.

One real-world example shared on Reddit shows how uncomfortable this can be in practice. An employee was sent on a business trip to Dubai by his new employer. 

Though his flights were covered, he was asked to pay upfront for his travel to the airport and claim it back later. Since he hadn’t yet received his first salary, he couldn’t fund the journey, leaving him feeling embarrassed before the trip had even begun.

It’s an example of how expecting workers to bankroll work expenses can leave people feeling awkward at best, and financially stretched at worst.

Why does it matter for employers?

Employees and employers alike are already grappling with the ongoing cost-of-living crisis. Rising inflation and soaring living costs, paired with stagnant wages, are putting increasing pressure on personal finances.

Against this economic backdrop, asking employees to front up to £4,000 out of pocket is more than just inconvenient, it’s out of touch. Not only does it put staff in difficult financial situations, but delayed reimbursements can also chip away at morale. 

Over time, that strain can lead to reduced productivity, disengagement, and even higher staff turnover, costing businesses far more than a timely repayment would.

In order to minimise the financial burden placed on your employees when claiming back expenses, it may be a wise move to adopt payroll software. 

Adopting payroll software helps ease the financial burden on employees by speeding up expense reimbursements and reducing errors. Payroll software can also provide greater transparency for both employees and employers. Staff can easily track the status of their claims in real time. 

In today’s climate, it’s a smart way to support staff and improve retention. When employees are confident that their out-of-pocket expenses will be reimbursed quickly and accurately, they’re far more likely to stay engaged, motivated, and focused.