Educate Candidates
Many contractors won’t be aware of how the National Insurance changes will affect their earnings. Getting ahead of any industry gossip and addressing the changes early with your candidates will ensure you maintain their trust and loyalty. There is also an opportunity to engage contractors from your competitors who may have changed their compensation.
Offer Creative Solutions
Consider developing innovative solutions to help candidates mitigate the impact of the NIC changes. For instance, explore flexible payment structures, bonuses, or alternative benefits to offset potential earnings reductions.
This approach not only demonstrates your agency’s commitment to candidates but also helps retain top talent in a competitive market.
Manage Expectations
Recruitment agencies will also face challenges with candidates who feel the financial burden of lowered rates or altered contracts. Proper communication can mitigate any knee jerk reactions from candidates that may cause backouts from roles or moving to your competition.
Provide Support and Resources
To build trust and maintain strong relationships with candidates, offer resources to help them adapt to these changes. This could include financial planning tools, budget templates, or access to expert advisors who can guide them through personal finance adjustments. By showing genuine concern for their well-being, your agency strengthens its position as a reliable and supportive partner.
Along with speaking to clients, its crucial that recruiters spend time with their candidates. This is essential in maintaining strong relationships and engagement for existing roles and for contract work in the future.
Candidates will likely need to be educated about the upcoming changes and it presents a great opportunity to strengthen bonds or even poach disgruntled candidates from the competition.
Agencies should proactively address contractor concerns about reduced take-home pay by exploring solutions like umbrella arrangements and the additional benefits that this model can bring.
Chris Fahey
CEO, AGPayroll
Highlight your value
Open conversations early
When introducing cost revisions, frame your discussions around the broader value you deliver rather than the specific numbers. For example:
Examples include:
- Reducing clients’ time-to-hire.
- Sourcing top-tier talent they couldn’t easily access themselves.
- Ensuring compliance with all legal and payroll obligations.
Clients often view agency costs as fixed, so it’s important to address these changes proactively to foster trust and collaboration. Being transparent about how the increase in NICs will affect service costs is the best way to engage with clients whilst protecting your own rates. Here's a couple of conversation starters you could use:
Protect Margins with Structured Negotiations
Examples include:
- Offer breakdowns explaining the additional statutory costs.
- Explore multi-role discounts or long-term contracts to offset increases while ensuring profitability.
"How are you planning to deal with the NIC changes in terms of managing your contractors and adjusting your hiring budget?"
OR
"Have you had a think about how these changes might make it harder to attract and keep the best contractors?"
Transparent conversations with clients about cost-sharing or them absorbing the cost are vital. Renegotiating charge rates and emphasising that this is a mandatory government increase should be the first thing you do.
Chris Fahey
CEO, AGPayroll
If your clients are hesitant to accept any increase in rates , emphasise the unique value you provide. Recruitment agencies save businesses significant time and resources in sourcing and vetting candidates, as well as taking on the burden of calculating and paying any NIC increases. Show how your services transcend the financial impact by underscoring the return on investment clients gain by working with you.
Accelerating sustainable growth for Recruitment Agencies
Both recruitment leaders and agencies need to approach the NIC changes strategically. The key isn’t just to adapt but to ensure these changes drive smarter decision-making, stronger client relationships, and sustainable growth. Here’s a quick recap of strategies that will help you get ahead:
- Hold open, transparent conversations with clients to address cost adjustments.
- Keep candidates informed while offering proactive solutions to ease transitions.
- Optimise payroll management with automated systems or outsourced solutions like AGPayroll.
- Use data-driven modelling to identify areas for future efficiency gains.
By educating your team and taking a proactive approach, you can protect your agency’s margins and maintain key relationships in the face of this legislation.
The Broader Picture
Putting data at the heart of your recruitment agency.
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The 2025 National Insurance changes, outlined in the government's Autumn Budget, involve two major adjustments that will affect your agency's payroll costs:
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- The current rate of 13.8% for Employer NICs will rise to 15%.
Employer NICs Rate Increase
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- The point at which employers start paying NICs on employee earnings will drop from £9,100 to £5,000 per year.
Lower Secondary Threshold
What this means:
Clients may squeeze your rates to keep hiring costs down.
You may have to adjust your rates to retain your margins.
Contractors may see adjustments to contract value and length in the wider market.
These changes mean you’ll be paying NICs on a larger portion of your workforce’s earnings at a higher rate, significantly increasing payroll costs.
To put it into perspective, a worker earning £30,000 annually will cost an employer an additional £865.80 per year in NICs under the new rules. For agencies managing payrolls across multiple contractors, the financial impact can be substantial.
What Are the 2025 National Insurance Changes?
The financial landscape for recruitment agencies is about to shift significantly. From April 2025, changes to Employer National Insurance Contributions (NICs) will introduce higher costs, impacting temp and contract recruitment agencies and businesses of all sizes. As a recruitment leader, understanding these changes and how to adapt is vital to protecting your agency’s margins, maintaining client relationships, and supporting candidates through this period of transition.
What to expect
Topics Include:
- What are the National Insurance changes?
- How to talk to clients about NI changes.
- How to talk to candidates and how it may impact them.
- How to prepare your business operationally.
This guide will provide an overview of the changes, their implications, and effective strategies to manage their impact. By preparing now, you can ensure that your agency not only navigates these challenges but thrives in a competitive marketplace.
The NIC rate increase to 15% and the reduced Secondary Threshold will undoubtedly put a strain on agency temp/contract margins. Agencies must balance absorbing costs with maintaining competitiveness.
Chris Fahey
CEO, AGPayroll
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Preparing your recruitment agency for the 2025 National Insurance increase
With insights from
Include the selling points on the CV itself, as it may be forwarded to others.
How to Talk to Clients About the NIC Increase
How to talk to candidates and how it may impact them
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The 2025 NIC adjustments require not only financial planning but also operational agility. Recruitment agencies will need to update internal processes, systems, and strategies to ensure compliance and efficiency.
Train Your Team
Educate your staff about the upcoming changes and their implications. From consultants to payroll managers, everyone should understand how these adjustments impact the agency’s operations, clients, and candidates. Training ensures your team is informed, aligned, and prepared to address questions or concerns confidently.
Forecast and Budget Strategically
Use financial forecasting to evaluate the specific impact of the NIC changes on your profit margins. Identify opportunities to cut non-essential expenses or optimize resources to maintain profitability. A forward-thinking approach to budgeting will help your agency remain resilient in the face of rising costs. By taking these measures, recruitment agencies can adapt to the changes ahead and position themselves for long-term success.
The Benefits of Outsourcing Payroll
Outsourcing your payroll ensures accurate calculations of NIC rates and thresholds without the hassle of managing it in-house. It reduces errors, improves compliance, and saves time, allowing your team to focus on core priorities like client and candidate engagement. Let the experts handle payroll while you focus on growing your business.
Preparing Your Agency for Operational Challenges
Start Building Smarter Solutions
Navigating legislative changes like the 2025 NIC update can feel daunting, but the right strategies, technology, and partnerships can turn challenges into opportunities. AGPayroll and Firefish can future-proof your recruitment business.
Explore how Firefish can optimise your CRM processes to support smarter hiring or get expert payroll advice from AG Payroll by booking a consultation today.