Rethinking Recruitment: The Real Cost of Employers’ NI Increases in 2025
As a business owner, Finance Director, Financial Controller or HR professional , you’re no stranger to the delicate balancing act of managing headcount and maintaining profitability. Over the past year, one line on the payroll has become a growing source of pressure: Employers’ National Insurance (NI). But how damaging has the increase really been, and how is it shaping decisions in the recruitment space?
A Sliding Scale of Impact: Why Company Size Matters
Put simply, the impact varies greatly depending on the scale of your organisation. Larger businesses with significant headcounts have borne the brunt of the increase. While a 1.25 percentage point rise may appear marginal, it compounds quickly across a substantial payroll, potentially diverting funds away from investment or innovation.
For SMEs, the effects are no less real. Many smaller employers have been shielded somewhat by the Employment Allowance, but those with growing teams or tight margins are still feeling the strain. The increase has prompted many to scrutinise staffing costs and assess where efficiencies can be made.
The Past Six Months: Recruitment Realities
From our position in the recruitment market, we’ve seen a tangible shift in hiring behaviours. The increase in NI, coupled with broader economic uncertainty, has driven a more measured, strategic approach to recruitment.
Organisations are prioritising hires that directly influence financial performance – particularly roles within finance teams that focus on forecasting, cost control, and commercial strategy. There has been an uptick in interim and part-time roles as businesses seek flexibility without long-term commitment. This trend is supported by data from recent REC and KPMG reports, which have shown increased demand for temporary and contract finance professionals.
For many clients, the question isn’t “Can we afford to hire?” but rather “Can we afford not to hire the right person?” In finance departments especially, a single strong hire can deliver significant returns.
Looking Ahead: Strategy Over Volume
Despite ongoing pressures, there is reason to be cautiously optimistic. Here’s why:
- Economic indicators: Inflation is slowly stabilising, potentially easing overall cost pressures.
- Policy considerations: With new fiscal measures expected following last year’s general election, there may be scope for tax relief or business incentives in upcoming statements.
- Strategic hires leading recovery: Businesses are increasingly aware of the value of targeted investment in key roles, particularly in finance, to help steer them through uncertain waters.
As a trusted recruitment partner, we’re here to support you in navigating these challenges. Whether you’re reviewing headcount plans or scoping a critical finance role, our local market insight and focus on quality over quantity can help you make hires that genuinely move the needle.
In summary, the rise in Employers’ NI has certainly added cost and complexity, especially for larger teams. But rather than stopping recruitment in its tracks, it has ushered in a more considered approach. For the remainder of 2025, aligning recruitment with business strategy will be key. And the right finance talent could be one of your best investments.
Now that the increased Employers’ NI has come into effect and the initial uncertainty has passed, companies can move forward with greater clarity around payroll budgeting. This certainty allows leadership teams to make more confident, strategic hiring decisions – a welcome shift from the reactive planning seen in previous months. With a firmer grasp on financial projections, businesses are better equipped to focus on growth, talent investment, and long-term planning.