New rights, new risks | Looming employment rights could create more contract & temporary work, expert warns

New research reveals that one in five (20%) small businesses plan to increase their use of contractors or temporary staff ahead of the Employment Rights Act.

Employment Hero, a global provider of HR, hiring and payroll software, has released new research warning that the Employment Rights Act, set to come into effect in April, could push more workers into these kinds of precarious temporary and contractor roles, potentially undermining the very protections the legislation is designed to deliver.

One in five (20%) small businesses say they plan to increase their use of contractors or temporary staff in response to the reforms, according to new survey data from Employment Hero. While this may help businesses manage costs and complexity in the short term, it risks creating a two-tier labour market, where a growing number of workers fall outside the protections that the Employment Rights Act is intended to provide, including sick pay, guaranteed hours and employment benefits.

Employment Hero’s proprietary data suggests a shift is already happening. The data, based on more than 120,000 employees across around 4,500 businesses on their platform, shows that month-on-month employment growth in part-time roles fell by 0.3% in February, dropping even further to -3.6% for Gen Z workers. At the same time, however, growth in full-time roles across the nation rose 0.9%. This could suggest that employers are beginning to transition part-time roles into a temporary or contractor type model.