One in three employers more likely to hire contractors this year

32% of UK employers plan to hire more contract workers this year – over a quarter (29%) report being encouraged by the upcoming IR35 offset rule.

The findings come from a recent report on Contractor Hiring from specialist recruitment company Robert Walters.

Not only that, but a January report from KPMG & REC found that demand for temporary professionals continued to increase softly across the private sector towards the end of 2023 – boding well for this year’s hiring.

Lucy Bisset, Director of Robert Walters UK said, “In the wake of tighter budgets, headcounts being streamlined and other cost-cutting incentives – we’re seeing employers increasingly turning to skills-based temporary hiring.”

Talent pool increases for in-demand skills

Within IT, job advertisements for contractors with skills in DevOps and Project Management has increased a third (+33%) on the same time last year. Whilst in Finance and Accounting, job ads for contractors with skills in Business Analysis have seen a +25% increase.

Lucy comments: “We are seeing encouraging growth in job ads for niche technical skillsets – reflecting wider market demand and showing employer’s need to quickly address skills shortages in the current dynamic hiring market.”

Upcoming offset rule

Despite over a quarter (29%) of employers feel the upcoming offset rule will encourage them to hire for more contract roles this year – 2 in 5 feel unsure on the upcoming rule and how it will impact their business.

From April 6, the new offset rule will allow HMRC to offset the taxes already paid by the contractor against the PAYE tax liability they claim from the fee-paying client (usually recruitment agencies or end-clients) – in essence, eradicating the risk of double taxation for employers.

Lucy comments: “Gaps in knowledge or confusion surrounding the new IR35 rule presents a huge challenge to employers trying to plug pressing skills gaps. It is important now more than ever, for employers to educate themselves on the upcoming changes in order to not miss out.”

Challenges for hiring contractors in 2024

Indeed – a quarter of employers stated issues with compliance and regulations as a key challenge to hiring contractors this year. Whilst just over two-fifths (41%) cited issues with sourcing skilled contractors as the main challenge.

Lucy said, “Issues with compliance and regulatory change do pose a clear deterrent to contractor hiring – and highlight the need for employers to get to grips with the legislation.

“However, +16% more employers cite issues with sourcing skilled contractors as their main challenge – and this can addressed in a range of ways:

• Clearly listing all required skills on job descriptions and ads,
• Where possible ensuring hiring processes last a maximum of 2 weeks,
• Offering competitive day rates
• Consider adding a short skills assessment into the application processes to screen for suitability.”

Lucy added, “The current market conditions in the UK are forcing employers to adopt a more strategic approach to hiring – temporary talent could be pivotal in this.

“Despite inflation and interest rates predicted to drop towards the end of the year – the wisest course of action for employers to take is to address existing skills gaps and engaging specialised assistance on a project-to-project basis to help optimise their current offerings and services.”