Budget to increase full-time cost of employment by £2,500, UKH reveals

The employment tax measures announced in the Autumn Budget will increase the cost of employing a full-time staff member by at least £2,500, UKHospitality has said. 

New analysis from the hospitality association has revealed that increases to employer NICs and wages will hit the hospitality industry “hardest”, with a 10% rise in the cost of employment per person.

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.

Kate Nicholls, chief executive of UKHospitality, said: “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.”