0333 444 0165 info@citrushr.com
The difference between employee and contractor
  1. Blog
  2. Day to Day HR
  3. The difference between employee and contractor

Employee or independent contractor/ consultant?

It’s not always apparent which category a person fits into and what company benefits they should or should not have, neither is it always clear whether an employee or contractor would be a better fit for any given role in a company. It’s not unusual for a contractor to work side by side with an employee, and perhaps even on the same kind of work. But there are important differences that effect tax implications, liability and employee benefits.

The differences

There is a third category of “worker”, this sits between employee and contractor. A worker has some employment rights but not all of them, workers are usually zero hours or casual staff.

Consider what your business needs

You may want to avoid the cost of having permanent employees, but it’s certainly worth considering what benefits they can bring.
An employee will get to know your business and will provide you with the flexibility you need to take a holiday from your business.
If your business picks up you will already have help on hand and won’t have to go searching for contractors in a mad rush.
Wages will be lower as employees receive other benefits and also benefit from job security.
They will know the ropes and won’t need continual direction.
Employees can provide more loyalty, certainty and more continuity.

Hiring employees…

You will need to pay wages in full and on time, so make sure you can do this, even during a quiet period.
You will be responsible for completing the legal requirements of payroll, it’ll take a bit of time (although substantially less hassle if you’re using our HR software, since all the information required by payroll is on hand and easy to import to your payroll software).
You will be responsible for any training or licensing your employees require to do their jobs.

Hiring contractors…

A contractor will likely work out more expensive on first look, but a top-notch contractor will likely save you money in the long run and you won’t have to pay them any benefits or commit to a salary.
If you need help fast, someone with specific skills who is ready to do the job can be just the ticket. They won’t need to have an induction (although you will need to cover some basics), get to know the business or undertake any training – they’ll just get cracking with the job.
If it doesn’t work out, don’t hire them again. If you hire an employee and it doesn’t work out, it’s not quite so simple to let them go.

The downside…

A contractor will not have company loyalty, they may not work on site and this could mean that you have less control over the work being done. If you need a different skillset for the next job, then it’s likely you’ll have to find another contractor and if the amount of work increases, you have no guarantee they will continue to work with you, and they can walk away, often with little notice.

Make sure you classify your staff properly from the start, if you don’t you could end up in big mess. If you need a bit more help understanding what your business needs or how to classify a someone please give us a call on 0333 4444 1065 or drop us a line hello@citrushr.com  

Get content like this every month

Join thousands of other businesses and get helpful, practical advice on tricky HR issues delivered straight to your inbox.