The government’s recent Employment Rights Bill is poised to bring significant changes to the workplace, impacting both blue and white collar workers across the UK. In today’s Autumn Budget further announcements have been made that will impact and influence the employment landscape. The recruitment and staffing sector contributes more than £40bn to GDP, so is a fundamental driver of the country’s economic growth, so We Are Footprint is looking at the key issues, and shedding light on how today’s Budget will affect the labour market, employers and workers alike…
Increases in employers’ National Insurance Contributions
Today, the government has announced that employer’s National Insurance Contributions will rise from 13.8% to 15%, and in addition the threshold at which businesses start paying it will be lowered from £9,100 to £5,000. The government expects this to generate £25bn for the Exchequer, but there are questions as to what impact this increase will have. Possibilities include lower pay rises for workers, lower contributions to pensions (in percentage terms), lower profits (and in turn in Corporation Tax) or higher costs for consumers – so it is a balancing act that the government must get right.
While workers may not feel a direct impact on their take-home pay, employers could become more cautious about expanding their workforce or increasing hours for current employees due to heightened costs. The Budget did provide some relief in the form of an increase to the Employment Allowance, which will increase from £5,000 to £10,500, which the Chancellor claims will mean 865,000 employers won’t pay any National Insurance at all next year.
Changes to the National Minimum Wage
As expected, the National Minimum Wage for over 21s will increase by 6.7% in April 2025, rising from £11.44 to £12.21 per hour (the rate for 18-20 year olds will also increase, from £8.60 to £10.00 per hour). For many workers, this is a welcome boost that can enhance financial security, however, as employers adjust to the new wage requirements, there may be challenges, especially in sectors with tight profit margins.
The government has announced that fuel duty will be frozen, and also that personal tax thresholds will be uprated in line with inflation from 2028-29, which the government hopes will increase disposable income, boost the economy and in turn benefit business. However we would have welcomed specific measures for employers, in light of today’s announced changes in employment, to support businesses and employers as they manage the changes announced today.
Changes to zero hours contracts
One of the most notable aspects of the Employment Rights Bill is the tightening of regulations around zero hours contracts. Under the new legislation, employers will be required to provide a minimum number of guaranteed hours, ensuring more predictable earnings. For employers, this means rethinking staffing strategies, which could lead to increased operational costs.
Final thoughts
In today’s Budget, the government set out an agenda to ‘invest, invest, invest’, and announced changes in government policy that will raise taxes by £40bn. The increases in National Minimum Wage and employers’ National Insurance Contributions will have immediate consequences on businesses, and the government’s vision for the Minimum Wage to have a single rate for all adults will mean the right recruitment, training and development are more important than ever.
The Employment Rights Bill represents a crucial step towards enhancing working conditions for all employees and it’s expected to bring widespread societal benefits, but in the short term there is the risk it could bring complexity and costs, particularly to SMES, that may affect confidence and growth.
It's possible too that we will see a shift to more temporary, or temporary-to-permanent contracts, as employers may seek to return to longer trial periods or use this approach for retaining control of labour costs.
As a leading provider of temporary and permanent staffing solutions to the construction industry, the Chancellor’s announcement that the government will invest £100bn in capital spending over the next five years, including £5bn to deliver their housing plan, is welcomed, and will provide significant opportunities for our clients, and for workers seeking new and exciting opportunities in this sector.
We Are Footprint is clear that the country needs to have a clear strategy to enable growth across the economy, and we feel strongly that to do that we must not increase the cost of employment.
As a market leading provider of both white collar and blue collar staffing solutions in the construction industry, it’s essential that we support both jobseekers and employers, and navigating changes in the labour market and how it will impact on our sector is a fundamental part of the service we provide to both sides of our business.
