NI Changes: Impact and strategies for recruitment businesses
The UK business landscape is bracing for significant changes with the upcoming National Insurance (NI) changes. From 6th April 2025, the Secondary Threshold for Class 1 NI contributions will be reduce from £9,100 to £5,000 per year. The secondary rate NI will increase from 13.8% to 15%, which means employers will begin paying NI contributions sooner and at a higher rate.
This change also comes alongside an increase to National Living Wage (NLW), which will be increase by £0.77 to £12.21 per hour from 1st April 2025.
What does this change mean for recruitment businesses?
The Office for Budget Responsibility (OBR) estimates that the changes will add just under 2% to employers’ payroll costs, one of the biggest costs for many SMEs, which will undoubtedly lower real wages and profits.
There are other challenges that businesses will be facing, such as:
Changing recruitment plans – Higher costs may reduce budgets for new staff, altering recruitment and growth plans or putting them on hold altogether.
Pay structure and reviews: Planned pay reviews and increases may be put on hold due to the added cost.
Layoffs – Increased costs can sometimes, unfortunately, necessitate layoffs. According to the CIPD, one in four (25%) employers planned to make redundancies in the three months to March 2025, the highest number seen in the last 10 years outside of the pandemic.
Higher costs – Businesses will likely need to raise prices to offset higher costs, which will drive clients to seek cheaper alternatives.
How recruitment businesses can adapt
The upcoming increases will necessitate a strategic response. Instead of simply reacting to rising costs, recruitment businesses must embrace and prepare strategies to ensure long-term sustainability.
- Instead of broad recruitment drives, focus on identifying and filling roles that directly drive revenue and operational efficiency.
- Implement robust needs assessments to prioritise critical positions, making sure your hires contribute meaningfully to the bottom line.
- Concentrate on permanent placements where possible, this will move the cost burden to the client business.
Of course, there are various other approaches that can be taken, such as upskilling and training existing staff, leveraging technology such as AI to automate repetitive tasks, and improving your services to build and retain clients.
We know these increases will be felt by everyone. It’s a big bump in the road, but it’s also a chance to work smarter, not harder. At 24-7 Staffing, we’re focused on finding ways to be more efficient, offer more value, and build stronger partnerships.
by 
