By Ben Chernoff, Director at Davis Grant
The UK is currently experiencing a labour shortage in many sectors, particularly logistics and hospitality. This has led to many wages rising rapidly, as employers try to fill critical roles.
When hiring for a new role you are likely to be asked by both candidates and employers about salaries.
Typically, an employer will give you an indication of how much they are willing to pay for a position but as a recruiter, there may be advice you can offer that helps them secure the best candidates.
If you are assisting an employer with the setting of salaries, here are a few things to consider:
Offering competitive pay
One of the main aspects of reviewing salaries for a role is setting a competitive salary. Most recruiters will generally have a good idea of what each position should pay, but the sudden surge in salaries means that they should research wage levels regularly for each role.
Increasing the salary offered may require a difficult conversation with employers but ensuring the position is well paid could be the difference between finding the right candidate or not filling the role, which will directly affect whether you earn fees.
Recruiters need to think carefully about the tax implications on employees of raising salaries. While most people are keen to earn more, they do not want to be taxed more heavily as a result.
The marginal tax rate, which determines the amount of income tax paid, has set boundaries. Push an employee’s pay above one of these boundaries and they could end up being taxed more.
Here are the current boundaries (as of April 2024):
|Up to £12,500
|£12,501 to £50,000
|£50,001 to £150,000
With a 1.25 percentage point increase to National Income contributions next April, recruiters also need to think about how this will affect employment costs for their clients.
Other employment benefits
Depending on the role, there may be other incentives that help to reduce the amount of tax that employees and employers pay by offering other incentives to recruits.
These tax- and NIC-efficient benefits include:
- Childcare vouchers
- Company cars
- Income protection
- Gym membership
- Private health and dental care.