SWINDON, UK. September 25th, 2024 - Businesses must prepare for several potential economic shifts that could significantly impact recruitment, workforce planning, and general business operations ahead of the October budget.
In preparation, CMD Recruitment has been closely tracking the upcoming budget and proposed legislative reforms to ensure it is well-prepared to support businesses through these changes.
While these developments may introduce challenges, they also offer opportunities for those who are ready to adapt.
One of the most pressing concerns for businesses in the upcoming budget is likely to be increased taxation. The government may introduce higher National Insurance contributions and Corporation Tax to raise revenue, adding pressure to businesses’ payroll and operational costs.
For example, a 2% increase in National Insurance contributions could add an average of £1,000 per year to the cost of employing a full-time worker.
These additional costs may force businesses to become more selective with their hiring, focusing on candidates who provide significant ROI and avoiding roles that do not offer enough value to justify higher costs.
In addition to tax increases, the UK government is considering several employment law reforms, which could impact hiring, dismissal, and overall workforce management.
Dan Barfoot, Operations Manager at CMD recruitment, said: “One of the most significant changes under discussion is extending unfair dismissal protections to the first day of employment. Under current law, employees must complete two years of service before they can bring an unfair dismissal claim.
“If this protection is granted from day one, businesses will need to rethink how they manage probation periods. The traditional approach of “trying out” a new hire may become much riskier, potentially leading to more cautious hiring practices and stricter performance management protocols.”
Proposed changes to Statutory Sick Pay (SSP) could see SSP provided from day one of employment, coupled with a rise in the SSP rate.
The removal of the lower earnings limit would mean that all employees, regardless of their earnings, are entitled to sick pay. This could further increase financial burdens, especially if an employee’s absence spans several weeks.
Recruitment is already becoming increasingly difficult for businesses, and the anticipated legislative and budget changes will only exacerbate these challenges.
Dan explained: “Businesses will face rising costs related to taxation, wages, and employee benefits. For example, a 2% increase in National Insurance contributions, coupled with a 5% rise in the National Minimum Wage, could increase the cost of employing a full-time worker by around £1,500 per year. Companies may need to adjust hiring budgets and be more selective about filling vacancies.”
Preparing for Change and What Businesses Can Do
Given the scope of these potential changes, businesses should start preparing now to mitigate any adverse effects. CMD Recruitment suggests:
- Review Current Employees: For employees with less than two years of service, now is the time to evaluate performance and decide whether changes are necessary before new unfair dismissal protections come into effect.
- Budget Adjustments: Businesses must prepare for the likely increases in National Minimum Wage, Statutory Sick Pay, and National Insurance contributions. These adjustments will directly impact financial planning for 2025 and beyond.
- Improve Recruitment Processes: With recruitment becoming more challenging, it’s essential to refine your hiring process. Employers should focus on clear job descriptions, probationary goals, and pre-employment screening to ensure the right candidates are selected from the start.
- Update Contracts and Policies: The anticipated changes in employment law will require updates to employment contracts, policies, and handbooks. Once the final details of the changes are confirmed, CMD Recruitment can assist with these revisions.
Dan added: “The October budget and proposed legislative changes present a complex mix of challenges for businesses, particularly regarding hiring and workforce management. Rising operational costs, stricter employment laws, and increased compliance requirements will require businesses to adapt quickly.
“By considering these potential scenarios and taking proactive steps now, businesses can better navigate the challenges and opportunities presented by the upcoming budget and legal reforms. At CMD Recruitment, we are ready to help you stay ahead of the curve.”
To find out more about the services on offer at CMD Recruitment, and their predictions, click here.
- Share This Article
Got News You'd Like To Share With The World? Our Press Release Distribution Starts At Just £95
