Independent Contractors vs Employees

Knowing the difference between an independent contractor and an employee is crucial when in the hiring process. Not only can the right choice save a company time and money, it can ease the burden of staffing. No matter if you’re looking to hire a full time employee or need a contractor for a quick 2-hour shift, knowing the difference between the two positions is crucial.

Most people in today’s business industries know that there is a difference between a contractor and an employee simply due to how they are paid – but it gets much deeper than that. Being paid as an employee, it is the employers responsibility to deduct taxes from the employees’ wages BEFORE they receive pay. This is unlike contractors who are paid a full rate upfront, later having to pay the taxes out of pocket for what was earned.

Employees are defined as “an individual who works part-time or full-time under a contract of employment, whether oral or written, expressed or implied, and has recognized rights and duties (businessdictionary.com).” This means they have specific rules to follow and their jobs are clearly defined. Precise hours and deadlines are often necessary of employees. They have much stricter requirements, but they also receive the benefits of being part of the company. Employees are eligible to receive maternity, paternity, and adoption leave and pay, minimum notice period should they be dismissed by and employer, time off for emergencies, and statutory redundancy and sick pay (www.icsuk.com).

Contractors, or freelancers, are self-employed workers who often times are only on a job for a designated period of time (or until the job is complete). They are defined as “free from the control of the client, able to exercise his or her judgement as to the manner and methods to accomplish the end-result, and are responsible for the end-result only under the terms of the contract (businessdictionary.com).”  Contractors do not have set hours to abide by and generally do not have to follow strict guidelines. They are hired for a task and it is up to the contractor to know how to complete the job.

The two different lines of work/hire can vary significantly, or not much at all – depending on the task at hand. The important factor in the hiring process is knowing the difference in the two positions. Which will be a better fit for the job you are trying to fill?