How to minimise the cost of employing people

In April 2025, the national minimum wage, national insurance contributions and business rates all increased – as a result, the cost of employing people is going to become undoubtably more expensive.

Employers will be looking at ways to cut costs associated with people – including putting a freeze on recruitment and potentially even considering redundancies.

So, what can you do to minimise the impact of the upcoming cost increases on your business?

Manage performance

With the increasing cost of employing people, you can’t afford to carry underperforming team members.  If you have an individual that isn’t performing as they should be, it’s time to deal with it.  A performance management process starts by exploring why the individual is struggling to perform so that you can take appropriate action.  For more on performance management, read our guide to managing poor performance at work.

Tackle absence issues

Whether it’s individuals that call in sick more than most, holding up work or missing deadlines, or someone on long term sick leave that you’re having to pay extra to provide cover for – implementing effective absence management practices such as proper tracking systems or engaging an occupational health service provider, could save you money.

Invest in staff training & development

Develop your existing team to prevent them from leaving the business.  If you have good people in your business, you will want to keep them, not least to avoid the cost and time of having to replace them.  For optimal cost-effectiveness, talk to your team about their skills gaps and career goals and align a training plan to suit.

If you do have a vacancy you need to fill, consider your recruitment options carefully.  Recruitment can prove expensive, in terms of both time and money, if you don’t choose the right strategy.

There is a misconception that doing your own employment is the cheapest option but what that fails to take into consideration is the value of your time in the process.  Recruitment administration can be time consuming – how much new business could you be generating in that time?

Successful recruitment is also a skill – poor recruitment choices could lead to the costly mistakes of employing the wrong person, or not filling the role at all.

Whilst outsourcing recruitment may seem counter-intuitive when you’re trying to save money, there are cost-effective solutions available.

Our Fixed Fee Recruitment service is a great example of cost-effective outsourced recruitment.  We handle all the admin of promoting your vacancy across multiple relevant job boards, managing applications and short-listing candidates, saving you so much time.  You pay a one off fee of just £995 per role – no hidden costs, no salary-based commission.  Find out more about our Fixed Fee Recruitment service here.

If you’ve offered your employee multiple benefits in order to attract and keep them, it’s possible you are spending quite a lot of money.  How often do your review the benefits you provide and evaluate how often they’re being used?  How often do you compare providers or ask your team what they actually want?

You might be able to make a saving by removing benefits that no one wants or uses.  You might also find alternatives that cost less but are deemed more valuable to both your current and future employees.

Whilst there has been much debate about hybrid and home working since covid, reducing mandatory attendance in the office could allow you to cut overheads associated with your workplace, or even to downsize the workspace entirely.

Whilst each business should evaluate their options regarding flexibility in line with their own business needs and goals, ‘costs’ should play a factor in any decision.

Get support

If you’d like to discuss ways that you could minimise the impact of the increasing cost of employing people, or need advice on making redundancies, contact us.

We can provide advice and support on a pay as you go HR basis, with no long-term commitment or unnecessary on-going costs.  You only pay for what you need, as and when you need it.

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