It has been a tough first quarter for the recruitment and outsourcing sectors, dealing with their own additional costs driven by the NICs increase which took effect this month, and their clients’ reticence to hire until this April’s changes to NICs and NMW bed down. Our revamped APSCo Bullhorn Recruitment Trends Snapshot for April 2025 shows a positive increase in contract vacancies and placements year on year of 31.8% and 3.1% respectively. In addition, recruitment conversion is improving with contract placements per CV increasing 19.3% month on month and permanent increasing 6.% . This may be evidence of more use of technology or more mature sales teams, as junior sales recruitment has been put on hold. Improvements are modest but with the economy’s unexpected growth increase of 0.5% in February we hope that vacancies and placement numbers continue to improve next month.
Just as the economy starts to reboot after a tough few years the Government are subjecting it to the stress of the “once in a generation” Employment Rights Bill. Members are telling us that their clients, the UK’s employers are ignorant of the extent of the reforms. The measures include a ban on “exploitative zero hour contracts” which is translating into huge legislative overreach with the new Schedule 1 to the Act, made up of unspecified definitions. There should be sufficient clarity in the Act for the mechanism to operate, as Regulations are subject to much less Parliamentary oversight and easier for successive governments to tinker with.
Although draft regulations once published will be subject to consultation later in the year and are unlikely to come into effect until late 2026-2027, the die will be cast when the Act is given royal assent in the summer. We are strongly defending the flexible labour market, and trying to educate a Government with little commercial experience on the realities of red tape, administrative burden, and employment risk. The reforms, rather than a Plan for Jobs, might well result in a surge in technology dependency versus hiring people and a massive growth in people outsourcing – “Statement of Work” arrangements, -neither of which are likely to have been intended consequences of the Employment Rights reforms.
The Law of Unintended consequences is a well-known (and feared) phenomenon in the recruitment and outsourcing sectors – particularly in contracting. Successive taxation laws have driven workers into and out of personal service companies, umbrella companies and consultancy arrangements. The uncertainties around employment status and IR35 Off Payroll Reform has led to high tax takes for the government but overcautious decision making by UK Plc leading to false employment and reduced productivity. The Employment Rights Bill may well play out as the final straw for some SMEs in our sector and our client base. SMEs are lauded by politicians of all parties as the backbone of the economy, but are subjected to bafflingly complex regulations and onerous red tape, all set to increase.
We will continue to fight for our members and the professional recruitment sectors as a whole. Over Easter we revised our Parliamentary briefing paper following meetings with members and Parliamentarians, to assist with Peers’ amendments. What we ask of our members and the wider sector is that we make ourselves heard, by writing to MPs and by alerting clients to the risk coming downstream.
Members can find the resources they need to run their businesses, educate their clients and join our policy work in our hub. For those looking to play a part please get in touch.