National Insurance Increase and Hospitality Recruitment: What Employers Need to Know

The connection between the National Insurance (NI) increase and hospitality recruitment is becoming more apparent by the day. With employment costs rising across the board, hospitality businesses—whether it’s a hotel, restaurant, bar, or event space—are once again having to adjust and keep pace with growing pressures. For a sector still recovering from the effects of Brexit, COVID, and ongoing staff shortages, this latest hike could not have come at a tougher time.

At AA Recruitment Consultants, we speak with hospitality employers daily who are concerned about how to manage the impact of the new National Insurance rates while still attracting and retaining talent. In this blog, we break down what the increase means in practical terms and how employers can stay ahead without compromising service quality.

Understanding the National Insurance Increase

The government has increased National Insurance (NI) contributions to help fund the NHS and social care. While this may serve a broader national purpose, it also places an immediate burden on employers, particularly in labour-intensive industries like hospitality.

What’s Changed in 2025–26?

From 6 April 2025, the following changes apply:

Employer NIC rate: Increased from 13.8% to 15% on earnings above the Secondary Threshold (ST).

Secondary Threshold: Lowered from £9,100/year to £5,000/year (£96/week).

Employment Allowance: Doubled from £5,000 to £10,500, now available to all eligible employers regardless of their prior NI liability.

Employee NI rates remain unchanged:

• 8% on earnings between the Primary Threshold (£12,570/year) and Upper Earnings Limit (£50,270/year).
• 2% on earnings above £50,270/year.

Real-World Impact on Hospitality

Example: £28,000/year salary

Before 6 April 2025:

• Employer paid 13.8% on earnings over £9,100.
• NIC cost = (£28,000 – £9,100) × 13.8% = £2,593 per employee.

From 6 April 2025:

• Employer pays 15% on earnings over £5,000.
• NIC cost = (£28,000 – £5,000) × 15% = £3,450 per employee

Increase of £857 per employee annually

For a business with 25 staff, this equates to an additional £21,425 in annual NI costs—and that’s before considering overtime, bonuses, or seasonal hires.

When running a hospitality business with a large and often fluctuating workforce, these changes can quickly impact cash flow, profitability, and morale.

How the National Insurance Increase Affects Hospitality Recruitment

Hospitality businesses are particularly vulnerable to rises in labour costs. Most roles are people-focused, with limited automation, so costs scale directly with headcount and hours. The 2025–26 increase in employer NI contributions is having a real impact on how hospitality businesses recruit and manage staff.

Rising Staffing Costs

Every hour on the rota now costs more.

Example: A waiter earning £12/hour and working full-time (40 hours/week) earns £24,960/year.

• Employer pays 15% NI on earnings above £5,000
• (£24,960 – £5,000) × 15% = £2,994/year
• Spread across the year: £2,994 ÷ 2,080 hours ≈ £1.44/hour

Total cost per hour to the employer (excluding pension/holiday pay):

£13.44 for a £12/hour worker

No Change in Employee NI Rates — But Take-Home Feels the Pressure

Although employee NI rates haven’t changed, many frontline staff still feel a squeeze on take-home pay due to rising living costs and static tax thresholds. For hourly staff near or above the Primary Threshold, the perceived drop in net income may be £20–£40/month, depending on hours and deductions.

This often triggers:

• More frequent wage review requests
• Greater demand for additional shifts

More Cautious Hiring

Smaller venues are becoming more selective with recruitment:

• Some are freezing new roles
• Others are reducing hours per role
• Many are consolidating responsibilities to manage overhead

This pressure is especially significant for SMEs that lack dedicated finance or HR teams to monitor the cost impacts.

What This Means for Employers

Hospitality businesses must now:

• Accurately budget employer NI at 15% on earnings above £5,000
• Rework rota planning to avoid inefficiencies
• Rethink employment contracts, shift models, and benefits

Taking proactive steps now helps protect both service quality and long-term profitability.

Adapting to the Cost Shift: Practical Responses

Instead of freezing recruitment or stretching existing staff, many businesses are re-evaluating workforce structures. If the NI increase and hospitality recruitment are both at the front of mind, consider the following:

Shift Optimisation

Several of our clients have saved up to 15% on weekly payroll by realigning rotas to match actual demand, avoiding unproductive hours.

Use of Part-Time or Temporary Staff

Hiring under the NI threshold can reduce costs.

Example: A part-time cleaner working 12 hours/week at £10/hour earns £120/week—below the £123/week Secondary Threshold, so no employer NI is due.

Retention Focus

Each recruitment cycle costs £750–£1,200 (recruitment, onboarding, training). Improving retention by even 10% can yield significant savings over time.

Outsourcing Specific Roles

Partnering with staffing agencies can increase flexibility and predictability.

At AA Recruitment Consultants, we’ve helped clients reduce administrative overheads by up to 20% by outsourcing roles such as kitchen porters and bar support.

Rethinking Recruitment Strategy

When faced with a structural cost increase like this, it pays to plan for the long term. The NI increase is not just a short-term burden—it’s also a prompt to improve recruitment strategy, staffing structure, and forecasting.

Some of our clients are already:

• Rebalancing teams with a mix of full-time, part-time, and seasonal workers
• Forecasting total employment cost per role (not just salary)
• Turning to specialist recruitment agencies to maintain standards and navigate cost shifts

Conclusions

The rise in National Insurance contributions is another challenge in an already demanding recruitment landscape. But with precise planning, a flexible mindset, and the right recruitment partner, it’s entirely possible to adapt and thrive.

At AA Recruitment Consultants, we help hospitality employers navigate change with clarity and confidence. Whether you’re looking for temporary cover, permanent hires, or a more efficient staffing model, we’re here to support your success.