Budget to increase cost of full-time employment by at least £2,500 per person

Increases to employer NICs and wages is hitting hospitality hardest, with a 10% rise in the cost of employment per person.

New analysis by UKHospitality reveals that the employment tax measures in yesterday’s Budget will increase the cost of employing a full-time staff member by at least £2,500.

New cost to employ a full-time worker

This new breakdown of costs is based on a typical staff member, aged 21 or older, earning the National Living Wage and working 38 hours per week.

In this example, an employers’ National Insurance Contribution will rise 53.9% from £1,863 to £2,869.

The Institute for Fiscal Studies has said that businesses employing people on the National Living Wage will face the biggest hit from the increase, and as an employer of 3.5m people hospitality is set to be hardest hit.

The costs will hit every part of our workforce:

£2,100more expensive to employ a single parent working 9am to 3pm, five days a week

£1,140more expensive to employ a student working 14 hours at the weekend

'Sleepless night'

Kate Nicholls, Chief Executive of UKHospitality, said: “The increase to employer NICs and, crucially, the lowering of the threshold left hospitality owners with a sleepless night as they came to terms with the enormous cost they will have to bear from April onwards.

“The new cost of employing core members of staff is eyewatering – an increase of at least £2,500 is far, far beyond what anyone’s worst case scenario was.

“The overwhelming feedback from the sector is that this is just not sustainable and will ultimately do real harm to our ability to support employment.

“Hospitality venues will now have to ditch their ambitions to employ more people and do the very opposite – cut hours, scale back recruitment, and, in extreme circumstances, let people go, because they simply can’t afford the scale of these costs.

“We understand the challenging state of the public finances, but balancing the books disproportionately at the expense of high street businesses will ultimately have negative consequences for growth, investment, employment, and our communities.”