Changes to recruitment plans ahead of April NIC hike

The upcoming National Insurance Contributions (NIC) hike is driving many businesses to rethink their workforce strategies, leading to a noticeable shift towards outsourcing, contractor hiring, and flexible workforce models. At The Find Your Flex Group, we’ve observed businesses increasingly relying on outsourced solutions to control rising employment costs while maintaining access to top-tier talent. Demand for contractors and project-based roles is growing, as these provide cost predictability and agility compared to traditional full-time positions. Many employers are blending in-house teams with external talent to navigate financial pressures while accessing diverse skills. This shift signals a broader trend toward adaptive, outcome-focused workforce planning, offering companies an opportunity to innovate and future-proof their operations. If you'd like more insights or examples, we’d be happy to share!

The REC is reporting that permanent hires were down in November and with the other measures in the Employment Rights Bill and the ER NIcs rate rise, employers are likely to look to engage off-payroll.

Recent case law, however, has shown that the current labour supply chain for off-payroll working is fraught with difficulty. Employers are encouraged to ensure that they are using compliant intermediaries such as agencies and umbrella companies so, contractors are engaged through legitimate means.

The hike in employers' National Insurance will undoubtedly push more businesses towards AI and automation to cut employment costs. At First Mats, we’ve invested heavily in emerging technologies, which has allowed us to create new jobs. However, we’ve also seen first-hand how easily this technology could replace humans in certain job roles, a route many companies will turn to as employment costs rise.

The government's lack of business management and innovation experience makes them blind to how AI is already transforming workplaces, and how it will affect them in the future. Instead of adding tax burdens, they should focus on policies that make employing workers more attractive. If they fail to address this, we risk seeing a significant shift towards automation at the expense of jobs, particularly in larger organisations looking to reduce overheads.

A genuinely self-employed workforce isn’t feasible for all businesses. Even businesses that can run with a genuinely self-employed workforce are likely to have to sacrifice some control.

Employers must be careful that they are not passing off 'employees' as ‘self-employed’. If workers don't genuinely fit the definition of self-employment, employers could face costly tribunal claims and be ordered to pay backpay. This could be far more costly in the long run.

Employers considering this approach should seek legal advice to ensure the role is genuinely self-employed, as any mistakes could be very expensive.

Business Owners are very concerned by the Hikes and how they will knock business performance, profitability and future hiring strategy. This NIC increase is forcing them to look at freelancers, outsourcing and offshoring. They really feel that the burdens on employers of the costs combined with some industries also paying higher wages due to minimum wage changes means that unless they can get productivity gains the prices simply cannot always be passed on. Small businesses are in conversations with me really thinking about whether to take on staff or find other solutions. New start up entrepreneurs are wanting to stay agile and many question having employees as a good strategy. This in line with new proposed worker protection rights (which some understand is a good thing but has it gone too far) is rethinking completely the hiring strategy. There are currently high borrowing costs and damp economic forecasts. would you take risks with increased financial burdens when you cannot predict and you know there are choppy waters ahead ?

I work in HR consultancy, and we are seeing many organisations we work with re-considering their hiring and growth plans as an impact of the increase in National Insurance contributions.

In addition to this we are also seeing organisations increase their willingness to outsource tasks such as accounting, IT and HR by using contractors or outsourced services. AI is also being taken advantage of with many companies looking to automate lower level tasks, thus replacing vacancies.