Employment Hero data reveals HR sector boom as employment rises 9.9% amid compliance pressures
Employment Hero, the global leader in HR, hiring and payroll software, has released new sector data from its February Jobs Report, revealing a sharp rise in employment across HR and accounting roles as small businesses prepare for major regulatory changes in the UK labour market.
The data, based on over 4,000 real-time employee records across 130 HR & Accounting small businesses, suggests SMEs are increasingly investing in specialist expertise to help navigate upcoming reforms, particularly ahead of the introduction of the Employment Rights Act.
Compliance drives HR hiring boom
Employment in the HR and accounting sector rose 9.9% year-on-year in February, signalling a significant expansion in roles focused on compliance, payroll and workforce management.
Monthly data shows the trend has been building for some time. In January 2026, employment in the sector rose 7.1% month-on-month, making it the fastest growing industry in the SME labour market that month.
Earlier signs of the trend were visible following the October 2025 Budget, when HR and accounting employment rose 10.9% month-on-month in November, suggesting businesses were already responding to looming regulatory changes.
Demand leads to wage increases
The surge in hiring has been accompanied by a sharp rise in wages. Salaries for HR and accounting roles increased 16.4% year-on-year in February, compared with 8.8% wage growth across the SME economy overall, reflecting a growing demand for expertise.
Separate research from Employment Hero, surveying 1,000 small business leaders, suggests this investment is deliberate. When asked how they plan to prepare for upcoming reforms under the Employment Rights Act, the most common response was investing in HR and compliance expertise.
SMEs shift toward full-time hiring
Alongside increased investment in HR expertise, Employment Hero’s proprietary data reveals a notable shift in how businesses are structuring their workforce.
Full-time employment across all sectors rose 13.4% year-on-year in February, nearly three times the 4.9% growth seen in part-time and casual roles.
One explanation may be the increased complexity surrounding non-standard work arrangements under the Employment Rights Act, which introduces stronger protections for workers. As a result, many employers appear to be prioritising stable full-time roles with clearer contractual arrangements.
Businesses are still investing in human expertise
Despite rapid advances in AI across many industries, the data suggests that HR roles remain resilient. Rather than automating compliance tasks, many small businesses appear to be prioritising human expertise and specialist advice.
Kevin Fitzgerald, UK managing director at Employment Hero said: “Our latest data shows a clear surge in demand for HR expertise across the SME sector. Employment in HR and accounting roles has risen nearly 10% year-on-year, with wages climbing more than 16% as businesses compete for the skills needed to navigate an increasingly complex regulatory environment.
“With the Employment Rights Act on the horizon, many small businesses are choosing to strengthen their HR capability rather than risk falling behind on compliance.
“The data also shows full-time roles are growing faster than part-time, which may reflect a shift towards more stable and predictable employment structures as businesses adapt to evolving regulation.”