Different ways you can ‘hire’ people and how this is changing under Labour’s new Employment Rights Bill

Hiring the right people has always been a challenge for small businesses.

But with the new government introducing major changes to employment law, it’s about to get even trickier.

One of the biggest shifts is the proposed end of zero-hours contracts.

If your business relies on flexible, ad-hoc workers, you’ll need to rethink your hiring strategy.

On top of that, agency workers, casual staff and freelancers could all see stronger legal protections—meaning more obligations for employers.

The biggest employment law changes for SMEs

1. No more zero-hours contracts

Zero-hours contracts gave businesses the flexibility to bring in staff as needed without committing to guaranteed hours. Under Labour’s proposals, businesses may be required to provide predictable contracts with minimum hours.

What to do now: If you’ve relied on zero-hours contracts, consider moving to part-time contracts or flexible fixed-term arrangements. These still give you some agility while keeping you compliant.

2. Stronger rights for casual and agency workers

Casual workers and agency staff may gain the right to request guaranteed working hours after a set period. If you regularly use temp workers, you may need to offer them more stability.

What to do now: Review your use of agency and casual staff. It may be more cost-effective to hire part-time or permanent employees rather than constantly training and replacing temporary workers.

3. Tighter rules on fixed-term contracts

Businesses often use fixed-term contracts to manage seasonal demand or project work. But new rules may limit back-to-back fixed-term contracts to stop businesses avoiding full employment rights.

What to do now: Plan ahead. If you regularly use fixed-term contracts, consider whether permanent hires or flexible part-time contracts could be a better long-term solution.

4. Stricter freelancer and contractor rules

Hiring freelancers and consultants can be a great way to bring in specialist skills without adding to your payroll. But under tougher IR35 enforcement, some freelancers may now be classed as employees—meaning you could be responsible for tax, National Insurance and employee rights.

What to do now: If you work with freelancers regularly, review how they operate. Are they truly independent or do they work under conditions similar to employees? Getting this wrong could lead to unexpected tax bills and penalties.

Need help in navigating the new hiring rules?

Employment law is changing fast and getting it wrong can be expensive. If you’re unsure how these new rules impact your business, let’s talk.