June 08, 2026
UK Permanent Hiring Falls at Fastest Rate in 10 Months as Uncertainty Drives Shift to Temporary Work
The UK jobs market took another knock in May, amid rising business uncertainty linked to the war in Iran and UK political turmoil.
The latest Report on Jobs, from KPMG and the Recruitment and Employment Confederation (REC), showed UK permanent hiring fell at the fastest rate in 10 months. Placements have fallen for the 44th consecutive month – the longest period of contraction since the survey began in 1997.
REC Chief Executive Neil Carberry summed up the mood: “The clearest story in the economy right now is momentum being held up by uncertainty.” He pointed to higher costs, the Gulf crisis, and what he called “new employment red tape” as reasons businesses are “tapping the brakes on permanent hiring”.
The report, compiled by S&P Global, is based on responses from around 400 UK recruitment and employment consultancies, gathered between 12 and 22 May.
The Shift From UK Permanent Hiring to Temporary Work
Employers are turning to temporary contracts to keep moving, which supported the strongest rise in temp billings for over three years. Temporary vacancies, meanwhile, fell only marginally, and at the slowest rate of decline in 22 months.
Carberry notes that in today’s unpredictable climate “temporary work comes into its own” as it “keeps the wheels turning in challenging times”. Recognising the growing prominence of temporary and contract work, the REC urges the government to prioritise support for these workers, beginning with changes to zero-hours rules.
What the Temp Shift Means for Frontline Experience
Employers leaning harder on temporary staff also need to consider how well they integrate these workers, particularly in customer-facing roles.
The link between engaged employees and customer outcomes is well established. However, support for frontline staff is already patchy even among permanent employees. The Josh Bersin Company reports underinvestment in skills development, with organisations spending roughly $400 per frontline worker annually, compared to over $1,500 for office-based roles. Axonify’s 2026 research found 74% of leaders believed feedback was acted on, but only 41% of frontline workers agreed.
Temporary workers, hired and deployed at speed, are even less likely to receive the onboarding, manager support and cultural integration that good customer service depends on.
The Red Tape Set to Reshape Hiring
The ‘red tape’ Carberry blames for slowing permanent hiring is about to grow, giving employers another reason to favour temporary contracts. From 1 January 2027, the qualifying period for ordinary unfair dismissal drops from two years to six months under the Employment Rights Act 2025. The original plan for day-one protection was abandoned after defeats in the House of Lords, but the six-month threshold still represents a substantial shift in dismissal rights.
A detail employers need to watch is who it covers. The change applies to existing staff, not just new joiners, so anyone hired before 1 July 2026 will already have six months’ service by the end of this year and gain protection automatically. At the same time, the statutory cap on compensation is being removed, raising the financial stakes of getting a dismissal wrong.
Nic Elliott, Head of Employment Team and HR Director at Actons Solicitors, says the change is “hugely significant”. As he puts it: “Millions more employees will gain the protection, and some employers are already planning for the change by amending probation periods and reviewing their performance management processes. It will likely also result in employers facing many more employment tribunal claims and add further pressure on an already failing tribunal system.”
He also points to a tension at the heart of the reform. “The stated aim of increasing protection from dismissal will actually result in more employees being dismissed sooner than they might ordinarily have been, within the first six months, as employers seek to avoid risk. Or it could result in fewer employees being recruited on permanent contracts, as the REC and KPMG report seems to suggest is already happening.”
