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Recruitment & HR

More than half of UK firms say employing staff has become more complex

New research from Employment Hero found growing concerns among UK employers around rising costs, compliance pressures and the impact of new employment law changes.

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More than half of UK firms say employing staff has become more complex
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More than half of UK businesses believe employing staff has become more complex over the past 12 months, according to new research from Employment Hero.

The AI-powered employment platform, working with YouGov, surveyed more than 1,000 UK business leaders shortly after the latest employment law changes came into effect on 5th April.

The findings showed 56% of businesses felt employing staff had become more complex, with 19% saying it had become much more complex. Respondents rated the complexity of hiring at an average score of 6.2 out of 10, compared with 4.7 three years ago.

The research also highlighted growing concern around compliance risks. More than half of firms (53%) said they were worried about unintentionally breaching new employment laws, while 78% reported that employment changes had affected their ability to grow during the past year.

Smaller firms appeared particularly concerned, with 19% saying new employment laws significantly discouraged them from hiring, compared with 11% of larger businesses.

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Employment Hero said rising costs remained one of the biggest pressures facing employers. Business leaders reported full-time employment costs had increased by 9.6% over the past year, driven largely by higher salaries and increased National Insurance Contributions.

Two-thirds (65%) of firms said they had experienced increased costs as a result of new employment laws, while 51% reported higher HR administration, payroll processing and recruitment costs.

“Higher salaries were cited as the biggest cost driver by 71% of businesses, rising to 84% in retail, hospitality and leisure sectors.

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Kevin Fitzgerald, UK managing director at Employment Hero, said: “SMEs are the engine room of the UK economy, but too many are now being asked to grow with one hand tied behind their back.

“Hiring should give business owners confidence, yet this data tells us that it’s actually what’s keeping them up at night as concerns grow around cost, admin and risk to their business and livelihood.”

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Fitzgerald added: “We hear from employers every day who want to do the right thing by their people as well as grow and contribute to the economy, but they need clearer support and better tools to keep pace with change.

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“The concern is that good businesses delay hiring, pause investment or stay smaller than they want to because employment has started to feel too difficult. That is bad for businesses, bad for workers and bad for growth.”

Elissa Thursfield, specialist employment lawyer and managing director at HRoes, said: “The data here reflects what we hear from SME employers every day.

“The concerns from business owners are very real, and these aren’t just conversations about how tough the landscape is. We are also hearing genuine fear from some employers about how sustainable it is to continue operating.”

Thursfield added: “It has been no simple task getting to grips with the new day-one obligations on paternity leave and statutory sick pay, whilst also trying to absorb the reduction in the unfair dismissal qualifying period from two years to six months from January 2027, and the highly complex rules coming in around zero-hours contracts and fire-and-rehire, all whilst running a business day to day.

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“The answer for SMEs is not to step back from hiring, which is too often the response we see. The answer is to put the right tools in place, take guidance in bite-sized chunks, and make sure you have a trusted team around you.”

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