Despite the financial pressure from changes to employers’ national insurance contributions and a hike in the national living wage, the number of planned large-scale redundancies is falling, official figures suggest.
In the 12 months to February 2025, 261,223 potential redundancies were disclosed to the Insolvency Service, a 12.9% decrease on the same period a year earlier (299,971).
The data comes from larger employers having to notify the government – using an HR1 form – of proposed redundancies affecting 20 or more employees in one establishment.
A notification to the secretary of state to make a given number of dismissals, however, does not necessarily result in all or indeed any of the proposed dismissals occurring.
Business groups have widely criticised the Labour government’s first budget in October, for an increase in the employer national insurance rate from 13.8% to 15% and a reduction in the threshold at which the tax is paid from £9,100 to £5,000.
Together with a 6.7% increase to the national living wage rate to £12.21 per hour, businesses have widely warned of job cuts in response.
Despite that, the number of proposed redundancies in the three months to the end of February 2025 was down 2.9% on the same period a year earlier, from 74,888 to 72,713.
Under the Trade Union and Labour Relations (Consolidation) Act 1992, employers must give the Department for Business and Trade at least 45 days’ notice of proposed redundancies affecting 100 or more employees, or 30 days’ notice for 20 or more employees.
That means any employer making 100 or more redundancies next month, when the changes to national insurance and the national living wage come into effect, would have done so by now.
Last month, a survey in the hospitality sector found that 70% of businesses expected to cut headcount due to rising employment costs, with trade bodies urging the government to postpone the national insurance increase.
A joint statement from four hospitality trade bodies said: “At a time when hospitality has been one of the top contributors to economic growth, the last thing the government should be doing is piling on costs that will impact employment and cut off our ability to grow.
“They have warned about potential lost earnings, lost jobs, reduced trading hours and, in some cases, business failure. This would mean the loss of essential community hubs that would otherwise drive the local economy and create jobs.”
A spokesperson for HM Treasury said: “Since the general election, there have been three interest rate cuts, real wages are rising at the highest level in six months and working people’s payslips have been protected from high taxes. The world is changing. That’s why the government is going further and faster to deliver our plan for change to kickstart economic growth and put more money in people’s pockets.”
HR Director opportunities on Personnel Today
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
