BT will face costs of 100 million pounds due to changes in NI and minimum wages

Following the announcement of last week’s budget by the chancellor, BT will face additional costs in excess of PS100 million.

The company stated that the financial burden was due to the increase in the minimum wage and the changes made to the employers’ national insurance scheme (NI).

Allison Kirkby, the company’s chief executive officer, said that the firm will have to offset these costs by increasing its prices and using artificial intelligent to boost productivity.

She said that 70-75% of her increase was due to changes in employers’ NI contributions, and the remaining 6.7% to the rise in the living wage.

BT has also acknowledged that it cut another 2,000 positions as part of a plan to reduce its costs. It plans to eliminate up to 55,000 jobs globally by 2030.

The firm announced a 10% drop in pre-tax profit, which dropped to PS967m in the six months ending 30 September. Revenues also fell 3% to PS10.1bn.

Rachel Reeves announced that employers’ contributions to NI would rise by 1.2 percentages points from April next year, up to 15%. She also lowered the threshold at which employers begin paying NI to staff from PS9100 to PS5,000.

Matthew Newnham is a partner in the employment department at Birketts. He warned employers that they should be careful when dealing with extra costs. “Many employers have already taken action to reduce the effects of budgets and may be thinking about reducing their headcount.” He added. Employment tribunals expect employers to make redundancies as a last resort. Before making this decision, employers must carefully consider other ways of saving money.

This could include, for instance, delaying the annual pay review or introducing an interim recruitment freeze. It is more difficult to make changes to the employment conditions and terms to reduce costs. This requires advance planning.

He said that, if redundancies were the only option, employers would need to consult with employees affected, including a collective consultation when proposing more than 20 redundancies.

Newnham said: “This is a long-term project, so planning early will help you avoid costly mistakes.”

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