Hays Travel IG agents warned of rising labour and inflation costs

Hays Travel Independence Group agencies have been warned to comply with the most significant changes in employment law for a generation in the wake of mounting cost pressures.

Hays Travel finance director Ken Campling said businesses faced major cost hikes as a result of the new Employment Rights Act 2025 and higher inflation, and could not “wait and see” what happens.

Speaking at the Hays Travel IG conference in Chester, he outlined implications of changes to statutory sick pay (SSP); paternity rates; unpaid parental leave; redundancy consultations; probationary periods and new sexual harassment laws on businesses.

He urged agencies to update their HR policies to ensure they meet the new regulations, which are weighted in favour of employees, and consider ways to mitigate the increased costs.

“Employment compliance is a must-do, it’s not negotiable. Look at your HR policies you have got to be up to date and you have to be able to support workers and make sure you do this right,” he said.

Citing SSP as an example, he said: “The big change here is that people are going to qualify for SSP from day one of absence not day three. Instantly you are trebling the amount of SSP if you work a standard retail scheme. That’s a significant cost for any business.”

He added: “Perhaps some people might be less inclined to come to work. Have you got a back to work policy? Have you got a trigger system for looking for persistent absence? These kinds of things are going to become more important.”

Many costs were rising faster than sales, he said, noting: “That trend will continue as far as this latest crisis goes on. Inflation and labour costs are here to stay. We have to look at things now. Inflation is going higher and we’ve had National Living Wage (NLW) increases higher than average inflation of wages for the last five or six years.”

From April 1 this year the statutory NLW for UK workers aged 21 and above increased by 4.1% to £12.71 per hour.  

He stressed increased wages for staff were “really great” but said businesses were “highly exposed” to the changes and had “limited ability to absorb these kinds of costs”.

“We need to look forward to where the NLW may go in future. These costs will not go away and we really need to think about what happens in the next two to three years; higher payroll, higher overtime costs, even seasonal workers have to come in at the right rate of pay,” he said.

“Are we going to try to react to this by selling more holidays? Discounting more to sell more? Or are we going to look at our product mix? That’s a major consideration in how we offset these cost increases.”

He suggested agents invest in productivity and automation such as artificial intelligence to improve business processes and consider different scenarios to cope with the national living wage increasing “faster than we’re selling”.

“Don’t be afraid to plan,” he said.

Referring to Hays Travel’s decision to introduce a moratorium on spending on February 28 due to the Iran war, he said: “We took action straight away to control our costs and that is absolutely vital in times of uncertainty.”