Minimum wage and National Insurance Contributions analysis

Major changes to the costs of employing staff were announced by the Chancellor Rachel Reeves in the October 2024 budget. Our detailed analysis assessed the potential impact on practices. Since October, there is mounting evidence that the changes have affected hiring decisions (1) .

Our initial analysis suggests that the changes are likely to increase staffing costs by at least £10,306 per practice annually (2). This is based on an average practice having two receptionists on minimum wage, a practice manager and four nurses with varying experience.

Our analysis indicates that the greater the number of dental nurses working at the practice, the bigger the increase in the cost of NICs. Additionally, following the post-pandemic spike in inflation, pay in general and the minimum wage have both risen at faster rates since 2021 than in the previous decade. Larger practice groups may find it easier to absorb costs, by way of finding efficiencies compared to smaller single-handed businesses.

These changes are also likely to drive economic behaviour, hampering staff recruitment. Practices may choose to invest, if they can, in other cost-saving methods or even turn to technology to drive efficiency in house, especially given recent price rises.

Changes in the Employment Rights Bill

The Employment Rights Bill, a key manifesto commitment of the Labour party in 2024’s election, seeks to improve the standard terms and conditions of workers in regulatory terms.

There will be an expansion of paternity rights and rights for those experiencing bereavement or miscarriage.

Statutory sick pay will now apply to employees from day one. Zero hours contracts have not been fully abolished, but employees now have much more power to ask for a full employment contract.

The Government has said that most of the changes will not take effect until 2026, however the following new rates took effect on 6 April 2025. (3)

Statutory maternity, paternity, adoption and shared parental pay went up from £184.03 to £187.18 a week.
Statutory sick pay rose from £116.75 per week to £118.75.

Key provisions of the Employment Rights Bill (4)

Bereavement leave

"Parental" is removed from bereavement leave and "bereaved parent" is changed to "bereaved person". This extends the right to bereavement leave as it is no longer limited to parents who have lost a child. This will be a day one right to protected time off for employees to grieve the loss of a loved one.

Collective redundancy

Collective consultation requirements will be triggered where 20 or more redundancies are proposed at one establishment (as is the case under existing law); or if redundancies reach a defined threshold across the organisation.

Dismissal

Employees will be given the right not to be unfairly dismissed from their first day of employment.

Equality action plans

Large employers (with 250 or more employees) must publish action plans showing steps taken to:

Improve gender equality (including pay); and
Support employees through the menopause.

Extension of time limits for bringing tribunal claims

Time limits for bringing tribunal claims, including discrimination and unfair dismissal, will be extended from three to six months.

Fire and rehire

It will be automatically unfair to dismiss an employee for refusing a contract variation or if the employer dismisses the employee to replace, or to re-engage them on varied contractual terms
Dismissal and re-engagement on new terms or replacing existing workers with new workers on new terms will be allowed if the employer can show evidence of financial difficulties affecting its viability, the contractual changes will mitigate the effects of those difficulties and are unavoidable.

Flexible working to be the default

Refusal of a flexible working request on one of the current prescribed grounds must be reasonable
Employers must explain in writing their grounds for refusing the request and why their refusal is reasonable.

Parental/paternity leave

Removal of the qualifying periods of employment to take paternity leave and unpaid parental leave, enabling employees to give notice of their intention to leave from the first day in a new job.

Protection against dismissal for pregnant employees and those on or returning from statutory family leave

Employees are protected from dismissal during pregnancy, while on maternity leave or statutory family leave, and during the six-month return to work period, other than in specified circumstances.

Protection from harassment

Employers will be liable for all third-party harassment, unless the employer can show it took all reasonable steps to prevent it.
Employers are required to take "all" reasonable steps to prevent sexual harassment. Regulations may specify steps to be regarded as "reasonable" to prevent sexual harassment
Allegations of sexual harassment will be disclosures qualifying for protection under the whistleblowing provisions.

Repeal of minimum service levels during strikes

The minimum services legislation, which provides for minimum service levels to be in place during any period of strike action in certain services, is repealed.

Sector wide collective bargaining

Establishing collective bargaining for school support staff and adult social care workers.

Statutory sick pay reforms

Removal of the waiting period so that statutory sick pay is paid from day one of sickness and removing the lower earnings limit to qualify for sick pay.

Tips and gratuities

Employers will be required have a tips and gratuities policy where appropriate, and are to consult with a recognised trade union, worker representatives or workers before producing the first version of the written policy
The policy must be reviewed every three years.

Trade union rights

Trade unions will be able to access workplaces in a regulated and responsible manner, on appropriate notice, to meet, represent, recruit or organise workers and to facilitate collective bargaining
Employers must give workers a written statement that they have the right to join a trade union at the same time as a s.1 statement
Union recognition will be made easier
Industrial action ballots will be simplified
Workers will be protected against detriment for taking industrial action.

TUPE/outsourcing

Strengthening protections of transferring workers in public sector outsourcing contracts.

Zero-hours contracts

Workers will have the right to:

Guaranteed hours if they work regular hours over a defined period;
Reasonable notice of a shift;
Reasonable notice of cancellation of, or change to a shift; and
Compensation for cancelled, moved or curtailed shifts.

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