How will the 2024 UK budget impact employers and their recruitment strategy?

The long-awaited UK Autumn 2024 Budget, delivered by Chancellor Rachel Reeves at the end of October, undoubtedly presents significant changes and challenges for many businesses. From higher labour costs and a potential increase in employer National Insurance Contributions (NICs), to investments in public infrastructure and changes to Capital Gains Tax (CGT), there was a lot to digest, but how exactly could this budget impact your hiring habits as an employer? 

Here, we explore the key measures that could impact employers when recruiting new team members, and how you can best adapt to these changes.  

1) Employer National Insurance Contribution increase may mean employers face higher payroll costs 

From 6th April 2025, employer National Insurance Contributions (NICs) will increase by 1.2 percentage points to 15%. This could mean employers face higher payroll costs earlier, impacting their ability to afford new hires. This is likely to hit smaller businesses and sectors that operate on tighter margins.  

Over time, the lower threshold for NICs could suppress employment by around 0.2% over time as some businesses may delay hiring due to the increase in costs. 

2) Minimum wage increases will increase the salary costs for employers  

One of the key changes announced was the increase in minimum wage, with rates rising to £12.21 per hour for those 21-year-olds and older and a 16.3% increase to £10 per hour for those aged 18-20. While this supports workers’ income, it will also increase the amount employers will need to set aside for wages, especially in industries such as retail and hospitality which are more reliant on minimum-wage staff.  

3) Employers may need to embrace flexible and contract work 

The budget changes could make hiring full-time employees costly, which could increase demand for freelancers and self-employed professionals looking for contract work, especially given recent changes to IR35 rules. 

Due to higher NICs and wages, permanent employees may prove more expensive for businesses, so hiring temporary or contract roles could be more cost-effective.   

4) Employment rights and benefit changes could mean more admin for businesses 

The introduction of the Employment Rights Bill will expand flexible working right from day one, provide more security against unfair dismissal, and eliminate sick pay waiting periods. While this is great news for employees, it could mean additional administration and adjustment for employers who may need to review and revise policies to ensure they are compliant.  

5) Expensing rules could encourage business investment 

Companies who are investing in new technology or machinery will benefit from “full expensing” until 2026. This could allow businesses to offset 100% of qualifying expenses against tax, supporting business growth and development. This could also support businesses who are hoping to offset employment costs by investing in productivity improvements, for example, investments in artificial intelligence to help streamline tasks and processes.  

While some of the upcoming changes announced in the UK Autumn budget could prove to be advantageous for businesses, there’s no denying that employers will face challenges. From higher payroll costs and minimum wage increases impacting business budgets, to permanent roles becoming more expensive to fill, companies will need to review their current finances and develop a recruitment strategy that incorporates these changes. 

If you need support with your recruitment strategy post-budget, we can help. Our talented consultants can help you define the essential roles for your company and can support you to find the right hires to help grow your business. 

Take a look at the services we offer and our areas of specialism, and get in touch!