From higher National Insurance bills to bigger energy costs, many businesses are facing a squeeze right now. This can be especially true for SMEs, who need to make sure every pound is accounted for. So when it comes to retaining and rewarding the best employees, increasing salary can be tough, especially when that comes with associated costs in terms of tax and pension contributions.
That’s why many companies are seeking alternatives to pay rises to make sure employees feel appreciated, without breaking the budget. In fact, 80% of businesses started 2025 planning to give their staff a lower pay increase than in 2024. So, we’ve put together this guide to some of the ways you might support employees financially, without stretching your SME too far.
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Why do finances matter for retention and morale?
It may sound like an obvious point, but when employees are compensated well, they feel valued and are more likely to perform effectively and stick around. Conversely, we know that financial stress can have a big knock-on effect on employee wellbeing and consequently their performance and productivity.
Raising salary is one way to improve employees’ financial situations and make them feel valued and rewarded for their work. But it’s not the only way to make a tangible difference to their financial wellbeing, nor to show your support.
In this blog, we’ll detail some popular options which employers can use to expand the level of support they provide to their employees.
Using salary sacrifice to unlock funding for employee benefits
Before we dive into some of our suggestions, let’s first of all touch on an important point. As a small business, finding money to invest into employee benefit schemes can be challenging. If this is holding you back, do you know how to use salary sacrifice to reduce your NI costs and free up money for other rewards?
Salary sacrifice schemes see the employee agree to ‘sacrifice’/give up part of their salary in exchange for a particular benefit – which might include pension contributions, nursery fees, or cycle equipment, amongst other options. These three, specifically, are exempt from tax. This means you and your employee will save on National Insurance through the reduction in employee salary. Your employee ends up better off, financially, which can act as a form of small pay rise. Your NI savings as an employer can also be reinvested into other benefits for your team.
Setting up a salary sacrifice scheme can involve some logistical planning, but choosing the right provider can help make it smooth sailing.
Benefits that help employees thrive financially
With your cost savings from salary sacrifice in hand, you might consider investing in some of the following options that can help improve employee finances at the same time as making them feel valued:
Employee discounts
An employee discount scheme provides your team with vouchers, deals or cashback options that can save them money on everyday or big-ticket purchases. These can include savings on grocery shopping, gym membership, cinema tickets, or even holidays. With a small investment from you in setting up a discount platform, employees can cut their cost of living. To maximise the potential of the scheme, make sure you help employees engage with the platform and make the most of available deals.
Bigger pension contributions
If you’ve set up a pension salary sacrifice scheme, you could pledge to return your NI savings to employees in the form of bigger employer contributions. Because pension investments compound and grow over time, even a few extra pounds today could make a big difference to employees’ final pension pots. If you do opt for this route, make sure you help employees appreciate the value of the benefit.
Financial coaching
Providing financial coaching for employees can help them make the most of their salary and take useful steps towards their goals, whether that’s working on budgeting, saving, investing or preparing for the long-term future. It can have benefits for both low and high earners, supporting both to reduce their financial stress.
Financial education
Do your employees understand how to use their salary wisely? There’s a serious deficit of financial education in the UK, leaving many employees confused about how to plan their spending, save their money and manage day-to-day needs. Providing financial education can go a long way to helping your team feel more confident with their money and even end up with more left in the bank at the end of the month.
The all-in-one solution
With lots of ideas on the table, is there a solution that covers all of these? Maji can help you introduce helpful salary sacrifice schemes, provide financial coaching, set up a discounts benefit, educate your employees – and more. With everything in one place, employees get a holistic financial support system which can help them feel valued AND make the most of their salary, for a fraction of what it would cost you to give everyone a pay rise. To talk through your options, set up a demo call with Maji.
FAQ
Can I return my employer salary sacrifice savings to employees?
Yes, you can return your employer NI savings from salary sacrifice to employees in the form of extra pension contributions or by investing in other employee benefits.
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Why should I care about supporting employees’ financial wellbeing?
Financial stress can lead to poor performance and productivity at work. Supporting employees’ financial wellbeing can help them become happier and healthier, as well as showing them that you care and value them as team members. You can also make a tangible difference to their daily lives, even if you’re not able to give a large pay rise.
