The reasoning seemed solid for a long time. When you could call an agency and have employees leave by Friday, there’s no reason to keep them on your books during a slow quarter. With no pension contributions, no sick pay obligations, and no awkward conversations when a project dried up, the contractor model provided flexibility that full-time employment could never match.
Industries put a lot of effort into it. The math began to change somewhere between the compliance scandals, the skills shortages, and the unsettling realization that no one knew how to do anything anymore.
| Trend Name | Gig-to-Salary Conversion |
| Origin Period | Post-2020 labor market correction |
| Primary Sectors Affected | Construction, Tech, Logistics, Healthcare |
| Key Driver | Skills erosion, compliance failures, workforce instability |
| Global Workforce Share (Gig/Self-Employed) | Approx. 36% in construction; 13% economy-wide average |
| Regulatory Pressure | Increasing — IR35, PAYE misclassification scandals, NICs hikes |
| Notable Case Study | Danny Sullivan Group / Balfour Beatty / HS2 (UK, 2024) |
| Training Gap | Only 10% of self-employed workers plan training vs. 51% of direct employers |
| Reference Authority | International Labour Organization (ILO), CITB, Resolution Foundation |
| Trend Direction | Reversing — shift back toward direct employment and permanent contracts |
There’s a growing feeling that something has changed. Companies are subtly turning gig work into salaried positions in a variety of industries, most notably construction but also logistics, technology, and some areas of healthcare. Not loudly, not through press releases, but gradually. In HR meetings and procurement offices, the gig-to-salary conversion is taking place through the rewriting of contracts and the covert shortening of preferred supplier lists.
Perhaps the best way to understand why this is occurring is through the construction sector. Approximately 36% of the two million construction workers in the UK were self-employed in 2024, which is almost three times the average for the entire economy. The number of truly stable jobs in the industry significantly decreases when you include the employees who are technically on agency payrolls but live project to project on precarious contracts.
That arrangement worked well for everyone for many years. While main contractors could staff up for a large infrastructure project and then scale down again without the HR headache of mass layoffs, agencies handled the paperwork, including right to work checks, health and safety compliance, tax documentation, and even audits of modern slavery.
Without the scandals, it’s possible that no one would have given any of this much attention. A whistleblower claimed that workers had been classified under the Construction Industry Scheme rather than employed on PAYE, which put the Danny Sullivan Group, a labour supplier involved in some of the largest infrastructure projects in the UK, including HS2, at the center of a dispute with Balfour Beatty in 2024.
In the end, Balfour Beatty cut all connections. HS2 requested formal guarantees in a letter to its civil contractors. BAM came next. Regardless of the specific legal details, the incident exposed agency labor, which it had been able to avoid for years.
There were other incidents. Four individuals were previously imprisoned for paying bribes to Keltbray, a specialist contractor, in order to obtain labour contracts valued at £15 million. Two distinct cases that arrive within the same brief period of time raise the same awkward question: if no one truly owns the workforce, then who is in charge of it?
As it happens, the truth is that there isn’t much of anyone. Beneath all of this is a structural issue. In general, main contractors don’t want to train employees that a competing agency might hire the following month. Agencies don’t want to pay for credentials that increase the appeal of their temporary workers to rival vendors. Additionally, the workers themselves have little incentive to invest in certifications when no one is offering a better job on the other side of them.
They move between eight or nine different sites in a year and are never quite sure when the next contract begins. Compared to 51% of direct employers, only 10% of self-employed construction workers intend to pursue formal training, according to the startling CITB statistics. It’s not a subtle difference. It’s a chasm.
You can sense the conflict between short-term financial reasoning and longer-term operational anxiety when you walk through the hallways of practically any large contractor at the moment. One of the few voices in the industry who has truly attempted to create a direct employment model—investing in apprentices and giving priority to permanent staff—is Nicola Hodkinson, the owner of the family contractor Seddon. She intended to increase the number of apprentices and increase direct labor by ten percent.
Then national insurance contributions increased, the October 2024 Budget was released, and the plan shrank virtually overnight. The number of apprentices was reduced from 27 to 18. The growth goal was put on hold. She didn’t want to make that choice. The economics just stopped functioning.
However, whether the financial case for contractor reliance is as strong as it appears on a spreadsheet is still up for debate. The obvious savings—no pension, no holiday pay, no employer NICs—are genuine, but it’s simple to underestimate the hidden expenses. Main contractors are effectively using agency agreements as a cash flow mechanism as much as a staffing one because agencies are usually paid 30 to 60 days after they pay their employees on a weekly basis.
Although it’s a sophisticated financial tool, its purpose is to mask instability rather than address it. The financial risk can outweigh any savings accrued over time when compliance fails, as it did in the Danny Sullivan case.
This has a human component that is frequently obscured by the commercial framing. A peer who entered a direct employment arrangement early in their career is in a fundamentally different position than an experienced construction worker who has spent ten years moving between agencies and sites, never developing relationships, never receiving formal feedback, and never accruing sick pay or holiday entitlement.
Some people may find it effective, especially those who value independence and are able to handle uncertainty. Others, however, truly feel alone. According to Hodkinson of Seddon, “you work for a whole year and you might have been on eight or nine different sites.” It’s not a small annoyance that you don’t know anyone at work. That’s a career that never quite clicked for many people.
Wherever it takes hold, the gig-to-salary conversion trend appears to be fueled in part by compliance pressure and in part by a more difficult-to-explain realization that the skills crisis currently plaguing construction, logistics, and some sectors of the tech industry wasn’t created overnight.
An employment model that asked no one to invest in anyone helped to build it gradually and incrementally. The agencies received no investment from the contractors. The employees received no investment from the agencies. Reasonably, the employees stopped making self-investments.
The consequences are now apparent in ways that they weren’t ten years ago. The lack of skilled craftspeople is causing projects to be delayed. Enforcing safety regulations is more difficult when it’s unclear who hired whom. Additionally, regulators are paying more attention than they used to after witnessing the public unfolding of the Danny Sullivan situation.
Flexibility is frequently cited by proponents of the gig economy as its greatest asset. That might be accurate. However, it turns out that flexibility has a cost, and industries are beginning to realize what they’ve been paying—possibly a bit late.
