From 6th April 2025, the Class 1 National Insurance Contributions (NICs) Lower Earnings Threshold and the National Insurance employer contributions rate will change, directly impacting the construction sector.
The Lower Earnings Threshold will be reduced from £9,100 to £5,000, and the Employer NIC rate will rise from 13.8% to 15%.
For construction employers, these changes are expected to lead to higher staffing costs, particularly for medium and larger firms with substantial payrolls. It is also anticipated that they will impact plans for hiring, wage increases and rewarding or incentivising staff.
At Strategic Resourcing we strongly advocate proactive cost management as key to combatting the direct impact of rising employment expenses. In this article we will provide an overview of the legislation, discuss the challenges for construction employers, and suggest proactive ways to reduce the impact of the changes on recruitment costs.
Overview of the NIC legislation
Lower Earnings Threshold
In the 2024-2025 tax year, employers pay NICs on earnings starting at £9,100. From April 6th 2025, this threshold will be lower at £5,000, resulting in a significant increase in employer NICs.
NI contribution rate increase
In the 2024-2025 tax year, the employer Secondary Class 1 NIC rate is 13.8%. This contribution will rise to 15%. Class 1A and Class 1B rates that employers pay on employee expenses and benefits will also rise to the same rate.
Employment Allowance relief
As a sweetener, the Government has increased the relief on NI costs from £5,000 to £10,500 per business. This, however, only applies to employers whose NI liabilities have been less than £100,000 in the previous tax year.
The Gov.uk policy paper for the legislation can be viewed here.
According to the Chartered Institute of Taxation, it is expected that these combined changes will generate a net revenue for the government of around £24 billion in 2025 – 2026, rising to just under £25 billion in 2029 – 2030.
Challenges for construction employers facing Employer NIC changes in 2025
A construction employee on UK average earnings of £36, 036 will now cost their employer 25% more in employer NICs, rising from £3,715 in this tax year to £4,655 in the next tax year 2025-2026.
The changes will hit hard across the construction sector, not least because of the labour-intensive nature of the industry. According to the Winter Market View report from consultancy, Arcadis, the employer NIC changes will increase construction costs by up to 1%.
It is widely expected that the changes to employer NICs will also directly impact the recruitment and retention of staff. This is a pressing concern to construction companies who rely on a committed workforce, but may have no choice but to make changes:
- Construction employers may reduce their plans for hiring full time roles, opting to hire part time or temporary staff instead. If this how you plan to address the issue, the Strategic Resourcing platform allows subscribers to recruit for temporary or permanent roles, Moreover, it’s free to upload an unlimited amount of vacancies to our platform.
- An increased reliance on self-employed contractors could give construction firms greater protection against spiralling employment costs, but this inevitably impacts economic and operational stability.
- Employers who have to pull back on offering attractive salaries, wage increases and employee benefits may struggle to retain staff who are likely to be attracted to larger companies that can afford to offer those perks. Higher turnover rates are expensive and disruptive.
Proactive ways construction firms can save on recruitment costs
Here are some practical strategies construction employers can adopt to manage recruitment costs effectively:
- Firstly, review the setup of your current workforce.
- Identify where specialist roles could be outsourced
- Use data to support recruitment decisions and determine where savings can be made
- Evaluate the cost of resources allocated to recruitment. These costs and resources can be considerably reduced by using the Strategic Resources platform which is free to sign up
- Consider implementing a salary-sacrifice scheme: Also known as a salary exchange scheme, a portion of employees’ pre-tax salary is redirected to non-cash benefits such as pensions which are not subject to National Insurance. By reducing employees’ taxable salaries, this benefits both employers and employees.
- Make use of technology
Adopt technology to:
- Automate recruitment processes through software and apps
- Automate repetitive tasks across the business.
- Consolidate your hiring process through one platform like Strategic Resourcing to conduct your recruitment activity. The Strategic Resourcing platform is designed to save Company Directors and HR professionals time and enhance productivity.
Prioritise staff retention
At Strategic Resourcing we strongly advocate prioritising staff retention to save on recruitment costs.
Employees with technical skills and experience are hugely valuable to construction firms. Losing and having to replace them through traditional channels like paid advertising is costly and inconvenient. Recruitment specialists Randstad claim that each lost employee costs a company one third of the employee’s salary.
In cases where the departure of an employee cannot be avoided, a more speedy and cost-effective approach to recruitment is needed, otherwise the recruitment and onboarding process will significantly impact productivity.. On the Strategic Resourcing platform, our specialist recruiters within the construction sector will find the very best candidates to help you reduce staff turnover.
According to the 2024 Employee Retention Report published by equity management platform Vestd, construction is currently the second highest sector for staff retention behind manufacturing, with employees averaging 4.4 years in a role. This is partly attributed to the industry having an older workforce. The changes in employer NICs have the potential to impact this ranking if staff retention isn’t prioritised.
Upskill and retrain existing employees
Investing in training programmes for current employees reduces the need for external hiring. Creating career development pathways to retain talent and fill internal skills gaps benefits both employee and employer in the long term.
How Strategic Resourcing can help to build a proactive approach to minimising recruitment costs
Strategic Resourcing connects construction employers with a valuable, specialist network of regional construction recruiters.
- Strategic Resourcing’s specialist regional recruiters for the construction sector find the best candidates, allowing you to develop a workforce perfectly suited for your roles
- We offer tailored recruitment solutions, saving employers time and money compared to traditional methods such as job boards and paid advertisements
- With a focus on specific construction industries and roles, Strategic Resourcing has access to pre-vetted candidates through our network which saves time and costs
- We help employers to reduce their dependency on paid recruitment advertising platforms which are notoriously inefficient when it comes to finding the most suitable construction candidates.
- Strategic Resourcing offers several cost and resource saving benefits:
- Our expert recruiters only send you 3 of the best qualified candidates for your open position. Saving you time, energy and resources.
- You can upload an unlimited number of vacancies onto the platform
- No sign-up fees
- No fixed monthly cost
- No hidden costs, you only pay per placement.
Minimise employment and recruitment costs from April with a proactive approach
Construction employers can be proactive and navigate the upcoming changes to employer NI contributions by getting ahead of the curve and adopting the above cost-saving strategies.
Get in touch with Strategic Resourcing to explore how we can help you streamline your recruitment processes and reduce costs. You can download a brochure, email info@strategicresourcing.co.uk, or call 0333 577 7575. We’d be delighted to help. For more information on the benefits of our services, please visit our website.

Deborah is a visionary leader and strategist at the helm of Strategic Resourcing. With over a decade of both technical and resourcing experience, she possesses a deep understanding of the evolving landscape of talent acquisition and management.