The future of employer support: Detecting financial stress through payroll insights

October 21, 2025

Sara Maginn Pacella

Financial stress impacts all of us. Smart employers understand that there is often a direct line between financial stress and performance in the workplace. They also care about the well-being of their employees. A proactive approach to using payroll insights and data for financial stress detection is one way to help employees in need.

A newly released report from the Canadian Centre for Policy Alternatives (CCPA) explores rental housing wages to assess and compare affordability nationally. The CCPA defines the rental wage as the hourly pay rate required to afford rent while working a standard 40-hour workweek and spending 30 per cent of one’s income on housing.

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The 2024 report reveals that people living in Vancouver, Toronto, Victoria, Kelowna, Ottawa and Calgary must earn over $36 per hour (a salary of nearly $75K per year) to afford one- or two-bedroom rental units in their respective cities. Affordability isn’t much better in other metropolitan areas, such as Halifax, Hamilton, Guelph, London, Edmonton, Saskatoon, Regina, Windsor and Gatineau, where the minimum income is $25 to $36 per hour (a salary of $52K to $75K).

The CCPA data cements the sentiment that not only do federal and provincial governments need to keep housing affordability as a priority because so many Canadian households are spending more than the recommended percentage of their income on housing, but also that employers need to take these numbers seriously to determine if their employees are earning a livable wage.

” Money is a sensitive topic, which is why discretion and privacy are key to creating an environment of trust ”

How can payroll data be used to detect financial stress?

While maintaining employee privacy and keeping sensitive data safe must remain a priority for human capital management (HCM) professionals, comparing statistics like those from the CCPA report to employee salary information can be an effective way to determine if staff are being paid a livable wage, and can be used to build a case to human resources (HR) and senior management to increase employee salaries.

Beyond comparing wages to the livable wage in your region, you can gauge the financial stress of employees in the following ways:

Anonymous employee surveys on financial stress/financial wellness and perceptions of the organization’s support for financial wellness;
Participation rates in optional employee savings programs (if people are living paycheque to paycheque, they will not be able to afford to participate in such programs, even if it would benefit them financially in the long term). This also includes tracking when employees reduce or eliminate their savings program contributions, which could also be a sign of financial hardship;
Frequency of requests (and repeat requests) for salary advances;
Surges in overtime that are not tied to the needs of the organization;
Frequent address changes;
Implementation of payroll garnishees, including child support, taxes owing or debt repayment garnishees; and
Frequency in absences (this could be due to the toll of financial stress or because of working second jobs and side hustles to make a person’s budget balance).

HR guide to reading financial risk signals from payroll

Early detection and mitigation are vital for tackling financial stress among employees, but it is equally crucial to maintain employee privacy when payroll analytics are used for early intervention. Employers should focus on support, not judgment, in financial wellness efforts.

A retired accountant told HCM Dialogue that, with some financial emergencies as an exception, advancing money to an employee or using on-demand payment systems often doesn’t solve financial problems; it just kicks the can further down the road. Financial programs that kick in or flag employees for financial counselling services after a certain number of requests for financial advances could leave employees feeling targeted and alone. Money is a sensitive topic, which is why discretion and privacy are key to creating an environment of trust.

Maintaining privacy of financial risk payroll data

The safety and privacy of confidential employee data is one of the foundations of employees’ trust in their workplace. There are many steps that organizations should be taking to ensure that employee data is secure, particularly when gathering data that could point to financial risk signals, including:

Creating clear and thoughtful data privacy policies, updating them regularly, and training staff based on best practices;
Limiting access to related data to only the people who need it;
Utilizing secure technology and updating it to meet emerging needs;
Anonymizing, collecting and distributing data in a way that prevents individual identification;
Being transparent with employees about how their data (such as in surveys) is collected, protected and anonymized;
Seeking informed consent for the use of staff data for financial wellness initiatives; and
Monitoring for suspicious activity through security audits.

Using payroll data for proactive financial health programs

Obtaining metrics related to payroll or other indicators of financial stress is just the beginning of an employer’s journey toward financial wellness in the workplace. Once the data is collected, it should be used to determine the most effective ways to provide employees with the help they need, as financial health is directly correlated with mental health.

Remember, effective financial wellness programs are offered to all employees, not just those who have opted into the data collection process. Such programs are long-term investments, and employers won’t see returns for some time; however, they are worth it, as they can lead to better financial literacy among staff (which can lead to better-informed business decisions, as well as personal ones), higher productivity, better utilization of employee savings and benefit programs and improved morale and retention.

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