03.03.2025

The business landscape is constantly evolving, and with the upcoming rise in National Insurance Contributions (NICs), HR professionals must take a proactive approach. The increase in NICs will have a direct impact on staffing costs, meaning businesses will need to rethink workforce strategies, recruitment plans, and retention efforts.

What’s changing?

From 6th April 2025, employers will see an increase in their NICs:

  • The employer NICs rate will rise from 13.8% to 15%.
  • The threshold at which NICs become payable will drop from £9,100 per year to £5,000.
  • The National Minimum Wage and National Living Wage will also increase from 1st April 2025.

These changes mean businesses will face significantly higher employment costs. HR teams need to assess the impact and develop strategies to mitigate risks while maintaining engagement and productivity.

Key HR considerations

HR professionals will play a central role in helping businesses adapt to these changes. Here’s four areas you need to focus on:

Workforce planning and cost management

  • Assess how the NICs increase will impact your total employment costs.
  • Consider workforce planning strategies to offset rising costs without resorting to redundancies.
  • Explore internal talent development to reduce reliance on external recruitment.

Employee retention and engagement

  • With potential pay freezes, review non-financial benefits and career development opportunities to retain staff.
  • Communicate clearly with employees about changes and provide reassurance where possible.
  • Ensure pay and reward strategies remain competitive despite cost pressures.

Recruitment strategy

  • Evaluate whether your hiring plans need adjustment based on the increased costs.
  • Consider upskilling existing staff to fill skills gaps rather than hiring externally.
  • Explore workforce flexibility, such as alternative working patterns to improve efficiency.

Compliance and policy updates

  • Ensure your HR policies align with new legal requirements, including wage increases.
  • Prepare for potential union discussions or employee consultations if changes impact terms and conditions.
  • Conduct an internal audit to ensure compliance with evolving employment regulations.

How Make UK can help

At Make UK, we support HR leaders in navigating these workforce challenges with:

  • Strategy workshops to align business goals with people plans.
  • Internal talent development to upskill employees and offset recruitment costs.
  • Compliance guidance to ensure restructuring, redundancies, or workforce changes meet legal obligations.
  • Now is the time to act. Let’s build a workforce strategy that ensures resilience, retains top talent, and keeps your business competitive in a shifting economic landscape.

Our experts can help you navigate the legal and employee relations issues you might face. Give us a call on 0808 168 5874 or drop us an email at [email protected].

Are you struggling to keep up with employment law and HR responsibilities? With constantly changing regulations and evolving workplace priorities, it can be challenging. That's why we've developed this essential HR and Employment Law Compliance Checklist – your guide to staying compliant, proactive and prepared.