UK SMEs are hiring again – but getting it wrong has never cost more.
After months of turbulence, there is cautious optimism across UK businesses. Employment growth reached 5.3 per cent year on year in March, building on the 4.9 per cent recorded in February.
These figures, sourced by HR software company Employment Hero from its platform data, are drawn from real-time records across more than 100,000 employees at UK SMEs. They reveal an encouraging trajectory, but they do follow a sharp contraction of -1.1 per cent in April 2025, when a flurry of new employment laws hit simultaneously and slowed growth to a halt.
Recovery is real. But it isn’t yet secure.
Rising costs, persistent market uncertainty and the mounting complexity of employment law are giving business owners good reason to stay cautious. National insurance contributions have risen, the Employment Rights Act has been enacted, inflation continues to climb and every hiring decision carries more weight than it used to. The SME sector is showing signs of life, but it hangs in a fine balance.
Employment Hero’s research found that six in ten business leaders say they’ve made a bad hiring decision, and the financial damage is well documented. CIPD data puts the average cost of filling a vacancy at 6,125, rising to 19,000 for managerial roles. For an SME already absorbing higher operating costs, that’s a hit that lands hard.
Beyond the money, there’s the disruption. In a small team, one wrong hire...
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