Can the Budget deliver the resilience, motivation and health we seek as employers?
UK plc is dealing with the ongoing economic impact of low growth and rising costs, with record levels of long-term sickness and rising healthcare-related absenteeism, posing a serious threat to productivity, staff retention, and business growth.
The Budget provides a critical opportunity for the Government to respond to these concerns with a plan that offers relief, certainty and support. Employers do not want any nasty surprises.
A combination of tax incentives, targeted funding, and regulatory reform could ease the burden on businesses while supporting healthier, more resilient workforces - this is the message we are hearing from employers.
So, what could be on their wishlist (especially around reward and compensation)?
No tax hikes/employer cost increases
Following the last Budget, employers want stability. They don’t want to see an increase in tax, national insurance contributions (NIC), or any wider employment costs such as minimum wage or mandatory pension increases under auto enrolment rules.
A recent Barnett Waddingham survey showed that the top three detrimental actions in the budget would be hikes to the minimum age, removal of salary sacrifice, and a cut to the apprenticeship levy.
Salary sacrifice is seen to make certain benefits more affordable for both employees and employers, and to increase engagement and take up. Following tightening of the rules over the last few years, employers do not want to see any more changes to this in the current climate.
No mandatory pension contribution increases
Many industry groups, like the Pensions and Lifetime Savings Association, are pushing for current auto-enrolment rates (8% minimum: 3% from employers and 5% from employees) to increase gradually to 10–12% total. This could be achieved either through a phased increase (for example, +1% per year) or by rebalancing (for example, putting more burden to employers).
Our survey showed that an increase to employer pension contributions would result in the need to freeze hiring or cut other benefits (taking account of a total reward approach), with a third reporting it could push them to the brink of insolvency.
Any significant increase in employment costs could result in possible redundancies, a hiring freeze, lower future wage increases, inability to pay any bonuses and even cuts to existing benefits.
Better support around employee wellbeing
With many people out of work due to long‐term sickness or health issues, employers are interested in policies that reduce workforce inactivity – for example, better subsidised occupational health support, tax breaks on wellbeing initiatives, and improved access to NHS services for employees. These would help manage absenteeism and retention issues currently facing employers.
Expanding or clarifying tax relief for employer-provided occupational health, mental health support, counselling, and related services - and making these exempt from employer NICs and benefit-in-kind tax - would be high on any wish list.
This would help employers reduce the cost of providing access to private healthcare, screenings, physio, employee assistance programmes (EAPs) and more. It would also encourage greater investment in proactive employee wellbeing, and in turn hopefully reduces absence by tackling the problems before they result in actual periods of absence.
Our survey showed that health-related tax breaks was one of the top three interventions that would help businesses most (alongside better childcare solutions which can also impact reward and compensation strategies).
In addition, many employers - especially those in the SME bracket - would like to see a subsidy for those who want to offer these benefits and early intervention services but are currently unable to due to cost constraints.
This could include training mental health first aiders, resilience coaching, or adopting workplace wellbeing programmes. These lower-cost, non-clinical interventions can reduce stress and absenteeism, particularly amongst younger and mid-career workers.
Support for training and development
Employers increasingly see investment in training and development not only as a means of closing skills gaps, but also as a core element of their employee value proposition (EVP).
Providing clear pathways for professional growth enhances an organisation’s attractiveness in a competitive labour market, supporting recruitment as well as retention. By signalling long-term commitment to employee development, businesses can demonstrate that they value their people as much as their output.
This emphasis also provides the cornerstone of a robust total reward strategy, where financial and non-financial elements combine to create a holistic package. Alongside pay, pensions and wellbeing benefits, opportunities for personal and professional growth are a differentiator that many employees would consider not only valuable but, in many instances, non-negotiable.
Employers would therefore welcome incentives or funding that make it easier to embed structured training, reskilling, and career progression support into their overall reward framework.
The need for a balanced Budget
In conclusion, employers are calling for stability, fairness, and investment in areas that drive productivity, engagement, and long-term growth. They want a Budget that avoids adding further costs, while enabling them to strengthen their total reward offerings, support workforce wellbeing, and provide meaningful opportunities for training and development.
Such measures would help businesses build resilient, motivated teams and contribute to a healthier economy overall.
Supplied by REBA Associate Member, Barnett Waddingham
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