Key budget takeaways: Health & wellbeing
With the autumn budget reshaping the health and wellbeing landscape, businesses face fresh challenges and opportunities in supporting their workforce. From rising National Insurance costs to higher wages, here’s how companies can adapt and respond.
The recent budget from the new Labour government will undoubtedly increase employment costs for businesses, with knock-on implications for employers committed to supporting their staff’s health and wellbeing.
Understanding these changes, and adapting accordingly, will be crucial for business resilience and employee satisfaction – which are, of course, linked.
Increased cost of employment
Employer National Insurance (NI) contributions have increased to 15%, while the threshold at which employers begin paying NI on workers’ earnings was reduced to £5,000. This places pressure on businesses, particularly those that employ large numbers of low-wage workers. Nick McMenemy, Digital, Strategy & Markets Leader at Mercer Marsh Benefits, advises: “For someone earning £40,000, this translates to about an extra £1,000 per year in employment costs.”
The National Living Wage will also rise for those age 21 and over by 6.7% in April 2025, and the National Minimum Wage for 18- to 20-year-olds by 16.3%. These two changes affect not just wages but also salary-based benefits, including pension contributions and group insurance plans. Paired with high levels of inflation in recent years, the cost of employment has risen considerably.
Employers should review their benefits programmes, prioritising the benefits that are most impactful on their employees’ health and wellbeing. A positive aspect of the budget is that salary sacrifice remains untouched, meaning many of these benefits – from private health insurance to gym memberships to cycle to work schemes – can be accessed while reducing NI contributions. Furthermore, incorporating additional benefits like Car Salary Sacrifice schemes and holiday buy options may lead to valuable tax and NI savings, potentially enhancing employees' financial and mental wellbeing, while also providing advantages for the business.
Major NHS funding boost
One of the standout announcements is the £22.6bn* increase in day-to-day NHS spending, aimed at improving staffing and operations. As George Lawley, Director of Government Relations at Marsh McLennan, notes: “This funding isn’t for new hospitals but for increasing capacity within existing facilities.” It comes alongside a more modest £3.1bn* for capital investment in the health service.
For businesses, the implications may be positive. With shorter wait times and improved access to treatment, employees may take less time off work due to health issues. Employers may see a gradual increase in productivity as a result. Communicating the benefits of these changes to employees, particularly as their tangible impacts become apparent, may be a powerful morale booster.
Prioritising preventative care
The budget hints at a broader emphasis on health prevention rather than merely treatment. With increasing societal focus on mental health and chronic illness, employers can play a role in providing consistent support and access to preventative care, such as through benefits including mental health days, counselling and private cover.
McMenemy highlights a growing expectation from employees: “Supporting mental health, primary care access and prevention aligns businesses with new national health priorities. This not only supports employees in the workplace but builds a foundation for longer-term productivity.”
Adopting a proactive approach to health benefits positions companies as forward-thinking employers, contributing to a stronger workplace culture.