The UK has experienced changes in 2025 employment law and tax reforms, which seem to be hitting businesses where it hurts most – their bottom line. With National Insurance contributions (NICs) spiking, the National Living Wage (NLW) climbing, and a raft of new worker protections piling on costs, UK companies are staring down a financial gauntlet. While some may argue the humanitarian benefits are worth it, the reality is that irrespective, for HR and finance teams, it’s a wake-up call: adapt or face substantial additional costs.
Enter HR workforce planning, supercharged by Enterprise Performance Management (EPM) solutions, as the antidote to this regulatory onslaught. By leveraging data-driven insights, businesses can optimise staffing, streamline costs, and turn these reforms into an opportunity to outsmart the competition. Here’s how EPM can make these changes pay for themselves without falling foul of the approach currently being taken.
2025 Reforms: What’s changed?
The Employment Rights Bill, introduced in October 2024 and progressing through Parliament, is an attempt to reshape the workplace. While workers will celebrate, businesses are bracing for the impact, with many already citing the impact on their own performance, and wider economic impacts already potentially being felt. To kick off, here’s a brief rundown of some of the key changes, effective from April 2025 unless stated otherwise:
- National Insurance Contributions (NICs): Employer NICs jump from 13.8% to 15%, with the threshold slashed from £9,100 to £5,000 per employee. For a worker earning £30,000, this adds £600 annually per head. Small businesses get a token £10,500 Employment Allowance.
- National Living Wage (NLW): The NLW for those 21 and over rises 6.7% to £12.21 per hour, with 18-20-year-olds seeing a 16.3% hike to £10.00. For a 37.5-hour week, that’s £23,795 annually – pushing employers to rethink wage structures or face penalties for non-compliance.
- Collective Redundancy Rules: Redundancies of 20 or more now trigger consultation obligations across the entire workforce, not just per site. Protective awards for non-compliance double from 90 to 180 days’ pay, potentially costing tens of thousands per employee.
- Zero-Hours Contracts: Workers gain rights to guaranteed hours based on regular patterns, plus reasonable shift notice and compensation for cancellations. Hospitality and retail, reliant on flexibility, are left scrambling.
These reforms don’t necessarily help reduce the burden on those running and growing business – which is the lifeblood of the UK economy. The CIPD’s Winter 2024/2025 survey found 79% of employers expect these changes to inflate costs, with 30% planning redundancies or hiring freezes to cope. The vision might warm hearts, but it’s seemingly chilling balance sheets.
The Cost Crunch: Businesses Under Siege
Let’s put the Reforms in pounds and pence to show just how deep the knife cuts in some crucial sectors:
- Retail Example: A chain with 50 full-time staff on minimum wage faces £48,250 in extra NIC costs (£966 per employee, based on £4,100 more taxable salary). Add NLW increases (£1,401 per worker for a 37.5-hour week), and the bill hits £118,250 annually. For a sector already battered by online giants, this is a brutal squeeze. No one is debating this is better for the individual employees, but there can also be no debate that those additional costs must be found from somewhere by their employers. For businesses unable to fund the additional costs, either a reduction in headcount or slashing other economic activity will likely need to come into play.
- Manufacturing Woe: A firm with 100 employees planning redundancies risks triggering collective consultation across all sites. Non-compliance could mean 180 days’ pay per worker – £25,920 for 20 employees at the UK median salary of £28,800. That’s £518,400 in penalties for a single misstep.
- Hospitality Headache: A restaurant group with 30 zero-hours workers must now offer guaranteed hours and pay for cancelled shifts. Estimates suggest a 5-10% payroll hike, or £75,000 – £150,000 extra for a £1.5m wage bill. Flexibility, once a lifeline for an industry dedicated to seasonal and variability, is now a liability.
The Office for National Statistics notes a 13.8% drop in job vacancies since 2024, a clear sign businesses are battening down the hatches. The Reforms potentially risk turning a cautious recovery into a hiring drought, with SMEs and labour-intensive sectors hit hardest. Yet, amidst this regulatory storm, there’s a way to not just survive but thrive.
EPM-Powered HR Workforce Planning: The Smart Counterpunch
HR workforce planning, when turbocharged by EPM platforms like Pigment, Anaplan Planful and the like, transforms these potential cost burdens into a strategic advantage. Here’s how EPM delivers efficiencies that can offset these reforms and make the investment pay for itself:
- Scenario Modelling: EPM tools let you simulate the impact of NIC and NLW hikes across staffing scenarios. For instance, modelling part-time versus full-time roles can cut NIC liabilities by £200-£400 per worker while maintaining output.
- Workforce Analytics: Real-time data pinpoints overstaffing, skill gaps, or high-turnover roles. By optimising headcount, a retailer could shave 5-10% off payroll – £75k – £150k for a £1.5m wage bill. That’s saving every year for a still-relatively small business.
- Cost Forecasting: EPM integrates HR and finance data to predict SSP, neonatal leave, or shift compensation costs. A hospitality chain forecasting a payroll rise can adjust budgets proactively, avoiding cashflow crunches.
- Compliance Automation: Track probation periods, redundancy consultations, and pay gap reporting to stay compliant and out of tribunal claims. A business avoiding a sizable protective award can recoup or offset EPM costs through enhanced compliance.
- Efficiency Gains: Cross-train staff to reduce agency reliance, now costlier under zero-hours rules. A factory cutting agency spend can sees EPM solutions pay off within a year.
Unlike possible one-size-fits-all reforms, EPM offers tailored solutions. Bolt Consulting’s extensive workforce planning experience means we can bring industry best-practice to your organisation. With decades of cross-industry experience guide businesses to implement platforms that align with their goals.
In combination, leveraging all of these potential saving areas across the business not only makes EPM an attractive proposition, but could become a real source of strength going into the future to ensure the business is optimised to it’s full potential.
For the bigger organisations with sizable payroll costs, these solutions are an absolute no-brainer to ensure they’re able to offset and save against these additional on-costs, by ensuring they’re not only compliant but operating as efficiently as possible and correctly allocating resource in their business to maximise growth and performance.
The Bottom Line: Don’t Let Reforms Sink You
These reforms, while noble in intent, are piling pressure on businesses already stretched thin. The NIC hike, NLW rise, and worker protections aren’t just costs – they’re also proving a test of resilience and a potential inhibitor of growth. HR workforce planning with EPM is your ace in the hole, turning regulatory headaches into efficiency gains. By modelling costs, optimising staff, and automating compliance, EPM can deliver savings that not only help offset these rising costs, but actually serve to boost overall strength and resilience. With Bolt Consulting’s technology-agnostic guidance, you’ll not only navigate 2025 but come out leaner, smarter, and ready to thrive.
