Autumn Budget 2025: what it means for employees, wellbeing and workforce health 

The Chancellor’s Autumn Budget (Wednesday 26 November 2025) set out tax and spending plans aimed at balancing growth ambitions with tight public finances. For workers, the most immediate changes relate to take-home pay, the cost of living, pension arrangements and access to training. For employers, the Budget continues the focus on workforce participation, skills and productivity, but offers limited new investment in areas directly linked to wellbeing. 

We’ve pulled together reactions from leaders across HR, workplace wellbeing, learning, pensions and workplace policy to learn what is means to them and share some insights to better understand the implications for workforce health and planning as we head into 2026 and beyond. 

Skills, young workers and the missing Youth Guarantee 

Dominic Holmes, Principal, Value & Strategy EMEA at Cornerstone, says the absence of the Youth Guarantee was a missed opportunity at a time when the number of young people not in education, employment or training continues to rise. He said:  

“It would have been good to see the Youth Guarantee referenced in the Budget, particularly around how it will give the growing number of young people not in education, employment or training (NEETs) access to learning, apprenticeships and paid work placements. Helping young people survive and thrive in the world of AI is one of the defining challenges of our age. Supporting them to get to grips with this still-emerging technology, especially through the personalised support and coaching AI enables, is essential. It’s particularly important with reports of some entry-level roles being replaced by automation.

The challenge the government is grappling with mirrors that faced by Chief People Officers in many of the world’s biggest organisations, some of which are successfully delivering growth while balancing the books. One of the things those successful organisations are doing is staying laser focused on building an AI-ready, skills-centred workforce, so it was encouraging to see some recognition of this in today’s Budget.“

Whilst, the Career Development Institute (CDI) says the Budget missed an opportunity to strengthen careers guidance as a lever for economic growth. David Morgan, Chief Executive Career Development Institute, the UK’s professional body for the careers sector said:  

“We urge the government to follow up on its announcements by recognising the critical role career development can play in growing the economy, increasing opportunity and meeting the skills challenges of the future. Without a strategic commitment to the UK’s careers infrastructure, the government will be missing a key lever in achieving its ambition to drive long-term, sustainable growth. The Autumn Budget had to balance driving growth within a tight fiscal environment. It’s imperative we look at ways to grow the economy, to increase the funds for investment, in a financially prudent way. This is why the Career Development Institute urges the Government to ensure all-age careers guidance is an integrated part of the economic plan. 

The Government rightly points to the Gatsby Benchmarks as providing a world-class framework for careers guidance in schools, and the valuable support the National Careers Service provides to adults. But careers services are woefully underfunded and would have a positive return for greater investment.   We call for the government’s economic and opportunity plans to include much greater investment in careers guidance for young people and adults. Support in early years and through education can help young people make better choices first time around, reduce NEET rates and ensure their aspirations match the skills needs of the economy. Support for adults not only helps them move towards and into work, but also helps them develop skills throughout life and respond better to career shocks, such as redundancy.” 

Pensions and salary sacrifice: warnings for savers 

The Budget confirmed that national insurance will apply to salary sacrifice pension contributions above £2,000 a year from April 2029. While the government says this brings “fairness”, legal and financial specialists warn employees not to make quick decisions. 

Paul Ashcroft, Senior Associate at Wedlake Bell LLP, says employees should seek advice rather than abandon salary sacrifice arrangements. 

“Obviously, this is bad news for savers receiving pension contributions into their pension scheme via salary sacrifice, where pension contributions are taken from pay before tax. However, employees should think carefully and consider taking advice before opting out of salary sacrifice arrangements completely in favour of “relief at source” schemes, where pension contributions are taken from pay after tax. The first £2,000 of annual pension contributions from April 2029 will still be exempt from national insurance contributions and employees still benefit from paying less income tax on their salary under a salary sacrifice arrangement. In other words, salary sacrifice arrangements remain tax efficient schemes, just less so from April 2029.” 

And Vivan Shridharani, Co-Founder & CCO at Raindrop, said: 

“The salary sacrifice cap is hugely worrying for pension savers. With over £31 billion in lost pension savings across the UK, it’s now more vital than ever that savers track down these lost pots and take back control of their retirement savings. Whether they wish to then consolidate these pots to reduce fees and maximise value or just gain a fuller understanding of whether they’re on track to secure the retirement they want, the first step people need to take today is to ensure they know exactly where all their pension savings are.“

Pay, affordability and pressure on employers 

The government confirmed that the national living wage will rise by 4.1 per cent. Many employers face a difficult balancing act as pay expectations increase while affordability tightens. 

Sheila Attwood, HR Insights and Data Expert at Brightmine, says the increase outstrips what most organisations have budgeted for. 

“Data shows that 92 per cent of organisations set their pay budgets based on what they can realistically afford, and 73 per cent say affordability will push next year’s pay awards down. This is an issue when the April 2025 increase in employer national insurance contributions are already adding pressure, with 57 per cent citing this as a downward influence.   At the same time, many employers are still grappling with upward pressures, particularly the need to keep pace with pay levels in their own industry. That remains the strongest factor pushing awards higher – leaving organisations caught between competing demands from the business and their employees. When pay budgets are squeezed, employers tend to lean more heavily on other areas of their reward strategy. The challenge now is to find the right balance between managing rising wage expectations while keeping reward structures fair and sustainable in what is still a constrained environment.”

Liz Stevens, Professional Support Lawyer in the employment team at Birketts LLP adds: 

“Increases to the national minimum wage rates will directly benefit many workers, but employers – most notably those employing a high volume of lower paid workers – will face significantly increased payroll costs and will have to consider how these additional costs will be offset, particularly against a background of significant increases to employer NICs earlier this year. 

HR professionals are already faced with the significant challenge of keeping on top of the wide-ranging reforms being introduced under the Employment Rights Bill. Measures being introduced in the Budget plus the NMW rise will increase financial pressures on employers and this will no doubt add to the existing burden for HR teams.”

Meanwhile, looking at the impact on SMEs specifically, Clare Lusted, Head of Product Proposition at Unum added: 

“The Autumn Budget was a missed opportunity to reinforce the role of the protection and health industry in supporting workforce wellbeing and economic resilience. We were disappointed to see no reduction in Insurance Premium Tax, which would have eased costs for SMEs and enabled greater investment in employee benefits – directly supporting the ambitions of the Keep Britain Working Review. 

Our recent survey revealed that nearly two thirds (63 per cent) of SMEs said rising employer National Insurance contributions have limited their ability to invest in benefits, while 46% cite increases to the minimum and living wage. Higher employment costs mean higher prices, fewer jobs and less money in people’s pockets. At the same time, businesses need the financial headroom to invest in health and wellbeing support that keeps employees healthy, engaged and productive. SMEs employ nearly 17 million people, so if they are squeezed, not only does growth stall, but the workforce risks losing access to the very benefits that underpin resilience and long‑term economic security.”

Michael Doolin, CEO of Clover HR said:

“For organisations, especially SMEs, these fiscal changes land on top of existing pressures around minimum wage increases, skills shortages and tighter margins. HR functions will be under pressure to balance cost control with competitive, fair packages that support attraction and retention. This is where well-designed HR support and digital solutions are critical: automating onboarding, right-to-work and other verification checks; maintaining up-to-date records for compliance; and freeing practitioners to have higher‑value conversations about workforce strategy rather than chasing paperwork. Streamlined processes also reduce friction for new starters, helping them feel welcomed rather than overwhelmed by admin.”

Paul Schreier, Chief Executive Officer, Simplyhealth and Denplan added:  

“We welcome the Chancellor’s Autumn Budget commitment to continue prioritising the health of our nation. The investment in digital capabilities to improve productivity within healthcare, alongside the rollout of neighbourhood health centres bringing GPs, nurses, dentists, and pharmacists together, represents an important step towards delivering more accessible and integrated care. 

“The need for a prevention-first approach to healthcare is an important step change, as economic inactivity due to sickness is projected to exceed four million people by the end of this government and employees are taking 9.4 days absence per year on average. The recent Keep Britain Working Review rightly reinforces this approach and the vital role employers can play. Recommendations such as risk pooling for SMEs to improve access to health provision are pivotal to ensuring all employees have the support they need to stay in work. However, the cost of doing business continues to rise. While we welcome calls to remove disincentives, such as tax, from the system, any delay to the next spending review risks missing opportunities to embed prevention, setting us on the wrong path and adding to inactivity numbers. Resetting incentives now would boost economic contributions and help reverse the trend of rising sickness-related inactivity.“

Financial wellbeing, parents and mental health 

With the cost of living still a concern for many workers. Paula Allen, Global Leader, Research & Client Insights at TELUS Health says the government have missed an open goal to focus on policy that eases the cost-of-living pressures on parents and helps them remain productive members of the workforce. 

“With the UK Budget, the cost-of-living squeeze and worries about financial security are at the forefront for many parents. Our TELUS Mental Health Index reveals that individuals without children are 30 per cent more likely to feel confident they can comfortably meet their needs, while parents are 70 per cent more likely to reduce their spending than non-parents.  Prioritising the financial wellbeing of parents is essential to family stability and children’s outcomes and has clear implications for the workplace. Financial strain is closely linked to mental health and shows up at work through reduced focus, higher absence and lower engagement. Supporting parents through enhanced benefits, providing access to childcare and continuing education are some of the ways that employers can offer practical assistance to ease the pressure. 

This doesn’t have to be a significant change to already existing practices. In fact, practical steps employers can take include embracing flexible work to accommodate different family circumstances, offering predictable scheduling, enhancing childcare and carers’ support, and providing financial wellbeing resources such as budgeting tools, financial consultation and access to mental health services. 

With two-thirds of workers lacking confidence in their financial future. Governments, employers and individuals have an opportunity to be intentional in their steps to improve this picture, to the benefit of society as a whole.” 

And Ray Law, Co-founder of moneyappi adds:  

“The government’s recent financial inclusion strategy makes it clear that employers are expected to play a bigger role in supporting employees to understand and manage their finances. This is a chance for organisations to review support programmes, from financial wellbeing platforms and payroll-linked benefits to advice services, so staff can better manage budgets, debt, and essential living costs. While salary sacrifice remains a useful tool, today’s changes mean that only the first £2,000 of pension contributions remain National Insurance-free, so employees and employers will need to review schemes to understand the impact on take-home pay.  Some gaps remain, such as targeted support for employees facing persistent financial vulnerability. By embedding practical financial education and support in the workplace, organisations can boost resilience, engagement, and overall workforce wellbeing.”

Summary from Natalie Shears, CEO of The Well Crowd 

The Well Crowd CEO, Natalie Shears says the Budget highlights how closely financial stability, skills, wellbeing and workforce participation are now linked – but also how exposed many workers remain. 

“The budget delivers some important measures for household finances, but it offers limited clarity on the issues that matter most for long-term workforce health: access to skills, secure incomes, affordable support and stable public services. The pressure on employers will continue to grow as wage expectations rise, national insurance changes take effect, and the cost of living remains tight for many families. What we see across the sector is a workforce still carrying high levels of financial and mental strain, especially younger workers and parents. Employers are doing what they can, but they need a policy environment that supports skills development, quality jobs and early intervention on health and careers. Without that, the burden continues to fall on already stretched HR, occupational health and wellbeing teams. 

“The Well Crowd will continue to track how these measures land in real workplaces and what they mean for people leaders planning for 2026.” 

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