Autumn Budget 2025: How will it impact you as an employer?

What does the recent budget mean for you as an employer, and what changes, if any, should you be starting to think about? We asked employment law experts and local solicitors, Lawson-West, for their take on matters:- 

The Chancellor’s Autumn Budget has now been delivered, following an unusual start where key details were inadvertently published early by the Office for Budget Responsibility.

While much of the media coverage has centred on household finances, the consequences for employers are far-reaching. Businesses already contending with rising costs and economic uncertainty must now prepare for a new wave of challenges that will influence recruitment, workforce planning, and compliance throughout 2026.

Key Budget Measures Affecting Employers

• National Minimum Wage Increase: From April 2026, the rate for workers aged 21+ will rise to £12.71 per hour, with similar uplifts for younger workers and apprentices. This will significantly impact payroll budgets, particularly in labour-intensive sectors.
• National Insurance and Salary Sacrifice Changes: Employer NIC remains at 15%, but pension salary sacrifice will be capped at £2,000 from April 2029, reducing tax efficiency for benefits packages.
• Frozen Tax Thresholds: Income tax and NIC thresholds will remain frozen until 2031, increasing fiscal drag and putting pressure on employers to raise wages to maintain net pay.

Why Employers Are Concerned

 The combination of higher wage floors, unchanged NIC rates, and looming employment law reforms creates a perfect storm for businesses already operating on tight margins. Employers are pausing hiring decisions amid fears of further tax hikes and increased employment costs.

 While retail and hospitality roles remain buoyant in the run-up to Christmas, sectors such as healthcare, consultancy, and marketing are seeing sharp declines in advertised positions. Many are exploring restructuring options, AI-driven efficiencies, and negotiated settlement agreements to manage costs and mitigate risk.

What Should Employers Do Now?

1. Review Workforce Strategy: Model the impact of wage increases and NIC on your cost base.
2. Prepare for legislative changes by updating HR policies and contracts; review benefits packages (especially pension salary sacrifice).
3. Communicate Early: Manage employee expectations around pay and benefits.
4. Seek Advice: Consider pragmatic solutions such as settlement agreements where restructuring is unavoidable.

At Lawson West Solicitors, their Employment Law team is ready to help employers navigate these changes and protect their business interests. If you are considering restructuring, redundancies, or need guidance on compliance, contact them today on 0116 212 1000. 

www.lawson-west.co.uk

Link to the article can be found here:  https://www.lawson-west.co.uk/autumn-budget-2025-what-employers-need-to-know-now/