As we reflect on the recent Budget and government announcements, we highlight key changes that will significantly affect employment legislation and associated costs. The UK’s Budget introduces crucial adjustments, including increases in employer National Insurance contributions and the National Living Wage. These changes will have substantial implications for financial planning and workforce management. Additionally, the government is enhancing the regulation of umbrella companies to protect workers’ rights and ensure compliance.

Ethical recruitment agencies, like ours, are vital partners in guiding businesses through these transitions, promoting compliance and operational efficiency.

**Impact of the Budget on Employment Costs**

**Employer National Insurance Contributions** The most notable change is the rise in Employer National Insurance contributions from 13.8% to 15%, projected to raise £25.6 billion. This increase will significantly strain business budgets. For instance, a business employing 100 minimum wage workers may incur an extra £20,800 annually. Many businesses may pass these costs onto consumers or limit pay raises, raising concerns over potential job losses, especially among low-paid workers.

**National Living Wage Increase** The National Living Wage is set to increase by 6.7% to £12.21 per hour on April 1, 2025. This increase aims to support workers amid rising living costs, granting millions an additional £1,400 annually. However, it may further burden businesses and contribute to rising unemployment rates.

**Government Regulation of Umbrella Companies** The government is stepping up regulation of umbrella companies to ensure compliance and protect worker rights. Over 700,000 workers were employed through such companies last year, with many being unaware of their tax obligations. Starting April 2026, the responsibility for Pay As You Earn (PAYE) tax will shift from umbrella companies to recruitment agencies and in cases without agencies, to end clients.

Bennett Staff do not use umbrella companies, we have a dedicated payroll team on site who takes care of our temporaries’ payroll and holidays.

We support these changes and prioritize compliance.

**The Role of Ethical Recruitment Agencies**

Agencies like Bennett Staff play an essential role in helping businesses adapt to regulatory changes. Our commitment to transparency and compliance ensures our clients and candidates are well-informed. We offer consultative services to assist organizations in managing employment costs while upholding ethical standards. Employment costs consist of more than just salaries.

Our Total Costs Analysis covers aspects such as

• Quality Recruitment
• Candidate attraction including a good benefit package
• Performance, and more.

Improving employee retention can help offset the unavoidable increases in National Insurance and the National Living Wage, making these changes cost-neutral for businesses.

**Our Conclusion** The recent Budget introduces vital measures that will significantly impact employment costs and regulatory compliance. Proactive adaptation is crucial for maintaining competitiveness. Partnering with ethical recruitment agencies like Bennett Staff provides valuable support as businesses navigate these challenges and maintain compliance in an evolving landscape.