A recent survey by 1st Formations reveals that over half of UK small businesses are leaning towards freelance and contractor roles over permanent positions.
This indicates a shift in hiring policies driven by economic factors and evolving workplace expectations. The study, which surveyed 1,055 small business owners, illustrates that many SMEs are prioritising flexibility and cost-effectiveness as they navigate ongoing uncertainty.
This trend towards freelancing comes as the UK government confirms that the vast majority of businesses in the UK are small and medium-sized enterprises (SMEs), highlighting the considerable role these businesses play in shaping the workforce landscape. The survey’s findings indicate that 53% of small businesses now plan to hire freelance or contractor talent, while just 21% intend to seek permanent employees.
Freelance Roles Offer Financial Flexibility
The move towards freelance hiring is largely a response to economic pressures and the high overhead costs associated with permanent employees, such as benefits, office space, and equipment. By engaging freelance and contract-based workers, SMEs gain access to a broad talent pool without the constraints of location or long-term commitments, a valuable advantage in addressing skills shortages.
Alongside the preference for freelancers, 13% of SMEs are expected to hire temporary staff, 9% plan to take on zero-hours contract employees, and only 4% anticipate hiring apprentices. The data underscores the trend among small businesses to adopt adaptable staffing solutions to navigate financial pressures while remaining competitive in a dynamic job market.
Remote and Hybrid Work Policies Dominate
In addition to flexible hiring, many SMEs continue to support remote and hybrid working models. The survey found that 43% of small businesses have implemented fully remote work policies, while 39% have adopted a hybrid model, with employees spending two to three days in the office each week. By contrast, only 18% of respondents plan to return to a full-time office environment, highlighting an enduring commitment to flexible work arrangements.
Graeme Donnelly, CEO of 1st Formations, explains that SMEs are responding to the shifting expectations of today’s workforce by balancing flexibility and productivity. “The results from our study have shown that a large number of SMEs are continuing to implement either fully remote work policies or a hybrid set-up, with only a small fraction pushing for a full return to the office. The findings have also shown that small business owners are now looking to hire more staff on a freelancer or contractor basis, rather than permanently.”
Shaping the Future of Flexible Work
Donnelly emphasises that this shift represents a broader rethinking of productivity and the employee experience. “The theme we can see here is the need for flexibility and adaptability—both for employers and employees. This change reflects a fundamental reevaluation of how we view work and productivity. It is not just about where work happens; it encompasses the employee experience as a whole. Companies are now recognising that flexibility isn’t necessarily seen as a ‘perk’ anymore. It is seen as a core expectation of the modern workforce.”
The study underscores that businesses focusing on flexibility are likely to succeed by aligning with the expectations of the current workforce. As Donnelly notes, “The companies that succeed will be those that balance flexibility with accountability. This shift towards adaptable work arrangements is not just a temporary response to recent global events; it’s a shift in our perception of what work looks like. Today’s business owners have an opportunity here to shape the future of work, benefiting both their organisations and their employees.”
With freelancers and flexible work policies becoming a focal point for many SMEs, UK businesses are poised to play a significant role in redefining modern employment. The rise of flexible and remote work, combined with a continued focus on freelance staffing, also suggests a new direction for the future of work in the UK.
