Family Business Report 2024: Could salary sacrifice help your recruitment challenges?


Recruitment continues to be a major issue for many employers with more than a third of businesses reporting that they find it ‘very difficult to recruit’.

Recruitment challenges

Armstrong Watson’s latest Family Owned, Privately Owned and Owner-managed business survey found 34% of businesses find recruitment very difficult - an increase of 8% from the previous survey in 2018 - and a further 50% sometimes struggle to recruit new talent.

With a lack of suitable candidates and inability to find people to carry out the roles listed as the key reasons, many (65%) have implemented changes to help encourage candidates to apply; 71% have increased salaries above inflation and just under half of respondents have introduced flexible working arrangements, along with 43% having introduced improved benefits packages.

The survey, which was completed by 300 businesses, including 39% based in Cumbria, found that the county seems to be facing a bigger issue when it comes to finding suitable and skilled candidates, with 74% claiming this is the main reason recruitment can be difficult, compared to 66% nationally. Staff retention on the other hand does not seem to prove such an issue, with 69% of businesses who say they don’t find it difficult to keep employees.

Offering salary sacrifice opportunities is one of several ways many businesses can incentivise their current and prospective workforce, but a large proportion of those with eligible employees don’t offer this and – according to our survey - some employers don’t know what it is.

What is salary sacrifice?

Salary sacrifice – also known as salary exchange -  is an arrangement where an employee agrees to forego part of their salary in exchange for certain non-cash benefits, which might include contributions to pensions or fully-electric company cars.  In the case of pensions, salary sacrifice increases the amount contributed to the eligible employee’s pension without it affecting their take-home pay, and, it can reduce National Insurance Contributions for employers too.

Salary sacrifice schemes can work well, both for employers and employees, however, they are not suitable for every business or every employee. There can be a significant administrative burden implementing such schemes, along with ensuring regulatory compliance – not all employees will be eligible – and where some staff members aren’t eligible, this could lead to potential employee relations issues. From an employee’s perspective, reducing cash salary can also have consequences when it comes to securing credit or future entitlement to state benefits.

Whilst offering salary sacrifice opportunities/schemes could be seen as a great tool in an employer’s armoury to help with continuing recruitment issues, seeking professional and independent financial advice – both from an employer and employee perspective – is always recommended.

If you are an employer looking for advice on setting up a new pension scheme for your employees or want to discuss the viability of offering salary sacrifice through an existing scheme, please don’t hesitate to get in touch.

View the full report.

If you would like advice and support about salary sacrifice, or would like to know more, please call 0808 1445575 or email

Get in touch

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