Why Are London Firms Seeing More Permanent Staff Move to Contract Roles


New figures have emerged that paint a picture of the jobs landscape in London, and it seems that the shift towards contract roles in the capital is now higher than ever. According to research carried out by Sonovate, 56% of London’s small and medium sized businesses have seen permanent staff put in a request to transfer over to a contact role in recent years. Post-pandemic, this is the largest shift we’ve seen in the UK, with the national average of moves like this sitting at 35% overall.  So why are more London staff making the move from the relative security that comes with a permanent role, and switching it for a contract role instead?

The answer could lie in flexible working. Sonovate report that more London businesses are showing dedication towards their employee benefits packages, and are much more open to the range of skills, experience and expertise that freelancers can bring to their company. 73% of London firms say that taking on contractors helps to positively influence the workplace, compared to just 66% elsewhere in the country.

Add to this the fact that 29% of businesses in London are actually more wary of employing permanent staff right now. This is due to not only the financial commitment involved, but the complex legal and regulatory compliance laws that are now in affect too, all adding to the ever-growing admin that places a burden on small businesses. Many are also turning their backs on permanent staff simply due to the current economic turbulence we’re experiencing. Taking on temporary staff helps to alleviate the pressure that comes with a volatile jobs market, and business are choosing to avoid taking on staff they may need to let go sooner than planned.

The way that London business are opting to recruit right now reflects the current attitude of the candidates actively seeking for work too. A 2022 report from the Policy Institute and King’s College London found that 75% of those working in London weren’t intending to return to the office full time post Covid, and stated that travel expenses was a major reason why. So are all these factors combined the reason why London workers are choosing to move to temporary roles? It seems very likely.

Flexible working is here to stay, and for many reasons. Post-pandemic, we’re now more aware of the need for a work-life balance. We’ve shown that hybrid working and home working can, indeed, work. We’ve shown that trusting employees to work on a flexible basis can bring great results, boost productivity and increase profits. Now, job seekers are looking to work for employers who take all of this into account when building their employee benefits packages, and with the current cost of living crisis, flexible working is a much-needed option for many- particularly, it seems, for those living in the capital.

Will we see this trend move further afield than London in the future? Very possibly. So employers need to be prepared, and willing to make the changes their business need to make in order to keep up. Changes also need to be made to ensure the entire process- from recruitment to training, to the paying of wages- is as smooth as possible too.

Those businesses who really work to facilitate the move from permanent to temporary are definitely more likely to benefit from the shifts in the workplace. They will not only recruit more top talent, but they will retain them too- and that’s key in today’s market. Being able to accommodate flexible working and to offer an attractive benefits package is essential- and helping workers to maximise their income is most likely a trend that we will see in other parts of the UK sooner rather than later.

Posted by: Branwell Ford