Led by a record plunge in self-employed workers, there were 220,000 less people employed in the second quarter, the Office for National Statistics said.
Separate tax data for July showed that the number of staff on company payrolls had fallen by 730,000 since March, sounding the alarm about a potentially much bigger rise in joblessness.
Mounting job losses are expected as Britain winds down its job retention scheme which protects employees. It is due to close at the end of October.
“The cracks evident in the latest batch of labour market data are likely to soon turn into a chasm,” said a senior economist.
British finance minister Rishi Sunak said the figures showed the government’s support programmes were working but job losses were inevitable.
The unemployment rate unexpectedly held at 3.9% but that reflected an increase in people who had given up looking for work and who were therefore not considered to be unemployed, and people who said they were in work but were getting no pay.
The number of self-employed people fell by a record amount in the three months to June, led by older workers, while the number of employees rose – something the ONS said was partly accounted for by workers reclassifying themselves as employed.
Pay fell by the most in more than 10 years in the April-June period, down 1.2%, reflecting how workers on the job retention scheme receive 80% of their pay. Excluding bonuses, pay fell for the first time since records began in 2001.
However, there was a small increase in job vacancies in the three months to July.