The biggest redundancy surge in a decade – what it means for UK businesses

UK businesses are facing a challenging labour market as hiring confidence plummets and redundancies reach their highest level in a decade, excluding the pandemic. According to new research from the CIPD, a third (32%) of employers are preparing to reduce headcount, either through redundancies or by slowing recruitment. The reasons behind this trend are clear: rising employment costs, economic uncertainty, and an increase in employer National Insurance contributions (NICs) set to take effect in April 2025.

With the employer NI rate rising from 13.8% to 15% and the secondary threshold (the income level at which employers start paying NI) reducing from £9,100 to £5,000, businesses are facing significant cost pressures. Many are responding by cutting investment in workforce training, delaying expansion plans, and re-evaluating their hiring strategies. The net employment balance—a measure of hiring sentiment—has dropped from +21 last quarter to just +13 this quarter, with the private sector experiencing a notable decline.

While cost-saving measures may be necessary in the short term, HR leaders must tread carefully to avoid long-term damage. Cutting staff too aggressively could lead to skill shortages, productivity declines, and increased employee dissatisfaction.

Rather than reacting to immediate cost pressures with job cuts, businesses should adopt a long-term, strategic approach to workforce planning. Investing in upskilling and reskilling existing employees can mitigate the impact of hiring freezes, ensuring that organisations retain critical skills and maintain productivity.

hr inspire works closely with organisations to develop tailored workforce strategies that balance cost control with long-term sustainability. Our expertise in HR consultancy, redundancy management, and talent development helps businesses navigate turbulent times while keeping their workforce engaged and productive.

As redundancies rise and job security becomes a growing concern, HR teams must be vigilant in monitoring employee wellbeing. Stress and anxiety levels are likely to increase, which can impact morale and overall performance. Employee assistance programmes (EAPs), mental health support, and clear communication are essential to maintaining a positive workplace culture during periods of uncertainty.

The CIPD has urged the government to provide clearer support for businesses, including accelerating consultations on skills policies and productivity-enhancing initiatives. With hiring confidence at its lowest point in a decade, business leaders need clarity and actionable support to navigate these changes. For businesses facing difficult HR decisions, now is the time to act strategically.

If you’re concerned about the impact of rising employment costs and redundancies on your business, contact hr inspire today at support@hr-inspire.com or call on 01296 325720. Our expert HR consultants are ready to support you through these uncertain times and help you build a resilient workforce.