More companies are reportedly looking for self-employed contractors since the rise in employers’ national insurance four months ago.
There are 326,068 jobs for contract workers listed on Adzuna, the job search engine, a fifth more than at the beginning of April.
James Neave, head of data science at Adzuna, said employers had been “increasingly favouring contract workers” since the government raised the amount of national insurance paid by employers. The rate rose from 13.8% to 15%, from 6 April 2025, while the threshold at which they begin was reduced.
To help small businesses offset the increased NIC costs, the Employment Allowance, which helps eligible employers reduce their NIC liability, has risen from £5,000 to £10,500, and the £100,000 eligibility threshold has been removed.
For a worker earning the average UK salary of £39,000, employers are having to pay an extra £973 a year in NICs.
Neave told The Times that companies’ growing preference for temporary workers could reflect a “knee-jerk reaction to rising employment costs”, although he added that there were likely to be other factors at play.
Labour market
Companies focusing more on hiring contractors rather than permanent staff has been a feature of the jobs market for the past two and a half years. Neave said it was usually quicker to bring in a freelancer on a fixed-term contract while there has also been an element of “try before you commit”, he said.
The big recruiters have blamed the enduring geopolitical and economic volatility for bosses not wanting to commit to permanent increases in headcount. With Donald Trump’s flip-flopping on tariffs, the outlook for many companies has only become more uncertain in recent months.
“[Temporary hires offer] a little bit of flexibility where someone’s not so confident, so they’ll bring in a temp for six months and see how it goes,” James Hilton, chief financial officer at recruiter Hays, said recently.
Neave added that business owners needed to be mindful that contractors were “typically [on] higher rates” and could lead to “lower levels of control and knowledge retention in the business”.
Overall, the Office for Budget Responsibility (OBR) has estimated the changes will add 2% to employers’ payroll costs. It forecast that, in the 2025-26 tax year, firms will pass on 60% of the higher costs to workers and consumers, via lower real wages and higher prices, and absorb 40% themselves in lower profits.
Adzuna has reported that UK vacancies rose to 875,546 in June – the strongest annual growth since July 2022, as figures signal a ‘potential turning point’ for the jobs market.
Monthly vacancies also increased (+1.99%) for the first time since March, although total listings remain below pre-pandemic levels.
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