// NEWS //
One in five UK SMEs rethink hiring under the Employment Rights Act
Employment Hero, a global AI-powered employment platform, has launched HeroForce, a new fully-managed employment model designed to centralise and automate the world’ s most complex regulatory landscapes.
HeroForce is the evolution of the Employer of Record( EOR) model, a structure that has long helped businesses hire internationally without establishing local entities. Where traditional EOR solved the complexity of hiring across borders, HeroForce applies the same principle regionally and gives small businesses in the UK a way to take on new employees without absorbing the full UK payroll and compliance obligations that come with it.
The Employment Rights Act is fundamentally changing the cost and complexity of employing people in the UK. Research commissioned by Employment Hero found that one in five SMEs have already planned to increase their use of contractors or temporary staff to help mitigate the risks the legislation introduces, while for many others the ERA has triggered a more cautious approach to hiring altogether – a trend with serious consequences for business growth and job creation. This comes against a backdrop of rising regulatory burden: the annual cost of compliance for SMEs already stands at £ 36 billion, consuming 379 million working hours every year.
Where the Employment Rights Act and increased compliance burden adds complexity, HeroForce helps absorb it. Employment Hero becomes the legal employer and in doing so, manages a broad spectrum of UK payroll and HR elements on behalf of the business, from PAYE and National Insurance contributions to auto enrolment pensions, holiday pay, Statutory Sick Pay and Statutory Maternity and Paternity Pay.
British small businesses face‘ challenging months ahead’ as sales growth slows to two-year low
UK small businesses experienced a challenging start to
2026, according to the latest Xero Small Business Insights( XSBI) data from Xero, a global small business platform.
Anonymised and aggregated data from 440,000 UK small businesses using Xero found that sales rose just 2.9 % yearon-year( y / y) in the March quarter( January to March), marking a slowdown from 5.2 % y / y in the December quarter( October to December).
The weakness in sales was concentrated in the first two months of the quarter, with sales growing by just 1.4 % y / y in January and 2.4 % y / y in February, with some improvement in March.
Sectors relying on discretionary spending struggled the most. Retail(+ 0.5 % y / y) and hospitality(+ 1.4 % y / y) small businesses recorded growth well below the national average in the March quarter, reflecting ongoing pressure on consumer demand. By contrast, less consumer-sensitive sectors like professional services(+ 4.7 % y / y), healthcare(+ 4.6 % y / y) and manufacturing(+ 4.6 % y / y) experienced more positive growth.
March showed some improvement, with sales growth reaching 5.0 % y / y – however, this remained below the long-term average of 8.5 % y / y. The latest CPI data shows prices paid by consumers rose at the fastest pace in almost a year in March, at 0.7 % m / m. However, this was almost entirely due to petrol prices(+ 2.4 % m / m).
Small business jobs growth continued to recover in the March quarter but remained below the long-term averages. Jobs rose 2.1 % y / y, up from 1.6 % y / y in the December quarter.
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