Employment​

Budget Changes Impacting Employment

1. Employer National Insurance (NIC) Hike

• • From 6 April 2025, employer NICs increased from 13.8% to 15%, and the threshold dropped from £9,100 to £5,000. This raises employers’ payroll costs substantially.
  • The British Retail Consortium warns that up to 160,000 part-time retail jobs could be lost over the next three years due to rising employer tax and minimum wage pressures.
    Reuters
  • The Guardian reports that businesses in hospitality and retail are bracing for redundancies, layoffs, and reduced hiring.

2. Minimum Wage Increase

• • The National Minimum Wage was raised to £12.21 per hour from April 2025.
  • This, combined with the NIC hike, has added around £5 billion in labour costs for retailers in 2025.

3. Rising Redundancies & Declining Confidence

• • A CIPD survey indicates UK firms are preparing for the largest wave of layoffs in a decade, driven by tax and wage pressures.
  • The Centre for Retail Research forecasts worsening store closures and job losses across the sector.
  • The Hospitality sector, including pubs and restaurants, has seen doubling of venues anticipating closures; 14% are now considering shutting down.

4. Broader Employment Trends

• • UK payroll employment declined in July 2025 for the sixth consecutive month. Employers cut 8,000 jobs and job vacancies dropped by 44,000—a sign of continued economic strain.
  • An S&P Global survey highlights that private sector employment contracted at its fastest pace since 2009—with employer NIC hikes and new employment rules cited as key factors.

5. Employment Law and Workplace Rights Changes

• • The Employment Rights Bill, currently under discussion, is expected to introduce stronger day-one rights, enhanced protection against discrimination, and more robust requirements around workplace environments.
  • The Worker Protection Act (2023), effective since October 2024, imposes new obligations on employers to proactively counter sexual harassment, including from customers and third parties.
  • From 6 April 2025, employees can now avail neonatal leave and pay (up to 12 weeks) and miscarriage bereavement leave (2 weeks), with associated pay entitlements.
  • Starting summer 2025, employees can report Child Benefit payments via PAYE, with High-Income Child Benefit Charge handled through tax code adjustments.

6. Skills & Training Investment

• • The government committed £625 million over four years to train 60,000 tradespeople—such as bricklayers, electricians, engineers—to address skill shortages and support sector grow