Almost a third of UK startups now use freelancers or part-time specialists instead of relying solely on permanent staff, according to new research from Startups.co.uk.
The survey, carried out in October 2026, found that 29% of small businesses already use freelance or fractional workers, while a further 28% are considering doing so.
The research involved 295 UK businesses that had been trading for up to ten years.
Hiring someone permanently is a big commitment for a small business, especially when the available work doesn’t necessarily justify a full-time role. Freelancers offer another option, letting businesses bring in people with specific skills as and when they need them.
Why are small businesses using more freelancers?
Many jobs don’t require someone to work five days a week.
A small company might need an experienced finance director for a couple of days each month, or someone to manage its marketing without employing a full-time staff member.
This is often described as fractional hiring, although the principle is hardly new. Smaller businesses have always used outside specialists when they couldn’t afford, or didn’t need, someone permanently.
The difference is that fractional roles are now being used across a wider range of professional services, including finance, HR, marketing and technology.
For business owners, the appeal is accessing experienced people without committing to a permanent salary, employer National Insurance contributions, and pension costs.
Businesses still need to consider responsibilities when bringing in outside help, particularly around contracts and insurance. Read our guide to insurance when hiring freelancers or subcontractors.
Businesses using freelancers are less likely to ban side hustles
The survey also looked at how employers feel about staff running businesses or taking on extra work in their spare time.
Among businesses that use freelance or fractional workers, just 9% said they explicitly ban employee side hustles in their contracts.
That compares with 28% of businesses that favour full-time employment.
The research also found that businesses using flexible workers were twice as likely to actively support employees with outside business interests.
Zohra Huda, editor of Startups.co.uk, said:
“Our data shows how small businesses are rewriting the rules of employment. Facing rising operational costs and recruitment risks, startup leaders are swapping rigid 40-hour contracts for agile, fractional talent.”
Of course, there’s a difference between letting employees earn extra money elsewhere and encouraging them to start their own businesses. Employers may also have legitimate concerns about conflicts of interest or staff working for competitors.
If you’re thinking about earning money outside your main job, you might enjoy our guide to starting a business in the evenings.
Permanent employees still have an important role
Despite the interest in freelancers, 42% of the businesses surveyed said they prioritise full-time employees.
Permanent staff offer continuity and can be particularly valuable when a business needs people who understand its customers, systems and day-to-day operations.
Freelancers, meanwhile, can make sense for projects, specialist work or roles where there simply isn’t enough work to employ someone full-time.
The survey is relatively small and covers only businesses up to ten years old, so the figures shouldn’t be taken as representative of every UK employer.
Even so, the findings suggest that many smaller businesses are prepared to look beyond traditional recruitment when they need additional help.
If you’re planning to expand your business, read our guide to taking on your first employee