The True Cost of Employment: How The Best Connection Can Help You Stay Ahead
In today’s evolving business landscape, managing staffing costs efficiently is more important than ever. With upcoming changes to the National Living Wage (NLW) and increased National Insurance Contributions (NICs), businesses are facing significant increases in employment expenses. Beyond these direct costs, there are also hidden expenses that many employers overlook when hiring permanent staff.
At The Best Connection, we specialise in helping businesses navigate these challenges by providing flexible staffing solutions that save time, reduce costs, and improve operational efficiency. In this blog, we’ll highlight some of the costs you might not have considered and discuss how partnering with us can help you develop a flexible staffing solution.
Understanding the Rising Costs of Employment
National Living Wage (NLW) Increases
From April 2025, the National Living Wage in the UK will increase to £12.21 per hour, up from £11.44. This 6.7% rise means higher payroll expenses for businesses, making it crucial to evaluate cost-effective workforce solutions.
Failing to comply with NLW regulations can result in severe penalties for employers, including backpay obligations, fines of up to £20,000 per worker, and potential legal consequences.
Changes to National Insurance Contributions (NICs)
Starting in April 2025, employers will experience two key changes to National Insurance Contributions (NICs):
- The employer NIC rate will rise from 13.8% to 15%.
- The earnings threshold for NICs will drop from £9,100 to £5,000 per year, meaning a larger portion of wages will now be subject to contributions.
These changes will further increase employment costs, leading many businesses to reassess their staffing strategies.
The Hidden Costs of Hiring Permanent Staff
Beyond wages and NICs, there are many other expenses associated with hiring permanent employees, including:
Direct Costs
- Holiday Pay (Working Time Directive compliance)
- Employers’ National Insurance Contributions (ENICs)
- Pension Contributions
- Apprenticeship Levy
- Parental Leave Costs
- Employee Benefits and Bonuses
Indirect Costs
- Recruitment & Advertising Costs – Posting job ads, screening candidates, and interviewing all take time and money.
- Payroll & Administrative Overheads – Managing wages, tax compliance, and HR paperwork adds to operational burdens.
- HR Costs – Staff training, onboarding, and handling disciplinary procedures require additional resources.
- Employee Turnover Costs – The time and expense involved in replacing employees who leave, including offboarding and rehiring.
- Sickness & Absenteeism – Permanent staff are more likely to take paid leave, adding extra costs for replacement workers.
Given these rising costs, businesses should explore alternative staffing models to remain competitive. Temporary staffing offers a flexible, cost-effective solution that allows employers to scale their workforce according to demand while avoiding many of the hidden costs of permanent employment.
How Temporary Staffing Can Save You Money
Given these rising costs, businesses should explore alternative staffing models to remain competitive. Temporary staffing offers a flexible, cost-effective solution that allows employers to scale their workforce according to demand while avoiding many of the hidden costs of permanent employment.
Key Benefits of Temporary Staffing with The Best Connection
- Cost Savings – Avoid long-term payroll commitments and only pay for staff when you need them.
- Faster Hiring Process – Gain immediate access to a large pool of pre-vetted workers.
- Reduced HR & Admin Burden – We handle payroll, pension contributions, holiday pay, and compliance.
- Flexibility & Adaptability – Scale your workforce up or down based on business demand.
- Lower Recruitment Costs – Save time and money on advertising and recruitment processes.
Bespoke Cost Calculator: Making Informed Staffing Decisions
To help businesses assess the real cost of employment, The Best Connection has developed a bespoke Cost Calculator. This tool provides a tailored breakdown of employment costs, comparing permanent and temporary staffing solutions based on factors such as:
- Pay rates & shifts
- Hours worked
- Annual leave
- Pension contributions
- National Insurance costs
- Bonuses & benefits
- Sickness & parental leave
Our recruitment experts can help assess your specific costs to ensure you can see the full picture.