When hiring people for your business, there is a distinction between employees, workers and contractors. Many businesses often turn to contractors, especially during peak season when their regular workers cannot handle a sudden influx of jobs. However, not many realise that who you hire will impact your business model and payment system. To learn more about this, keep reading below.

What Is a Contractor?

A contractor is an individual or a company that provides services to another company or individual. A contractor is usually hired to provide specific services or to complete a specific project.

A contractor is different from an employee in that a contractor is not an employee of the company to whom they provide services. A contractor is usually hired for a specific task or project and is not an ongoing company employee.

How Is a Contractor Different from Workers?

The main difference between contractors and workers is that contractors are usually hired for a specific project or task, while workers are employed on a full-time, permanent basis. This means that contractors typically have more control over their work schedules and are not bound by the same rules and regulations as workers.

Another key difference between contractors and workers is that contractors are typically paid by the project, while workers are paid by the hour. This means that contractors often have the opportunity to make more money than workers, but it also means that they may not have the same job security as workers.

What Is a Sub-Contractor?

In business, the term “subcontractor” refers to an individual or organisation that performs a specific task or service as part of a larger project. A subcontractor is hired by the main contractor, who is responsible for the overall management and completion of the project.

Subcontractors are common in many industries, including construction, manufacturing, information technology and more. In construction, for example, a subcontractor may be hired to perform tasks such as electrical work, plumbing or painting.

Why Does Worker or Contractor Status Matter?

There are a few key reasons why worker or contractor status matters:

1. Taxes

As a business owner, you are responsible for withholding taxes from your employees’ paychecks and paying taxes on their behalf. However, you are not responsible for withholdings or paying taxes on contractors.

2. Benefits

Employees are typically eligible for health insurance and paid time off, whereas contractors are not. Employees are also typically entitled to certain protections under employment law, such as minimum wage and anti-discrimination laws.

3. Liability

The business may be held liable if an employee is injured on the job. If a contractor is injured, the business is not typically held liable.

4. Employment Laws

Several employment laws protect employees, but not contractors. This can be confusing for workers who are unsure of their status, and it can be difficult for employers to know which laws apply to which workers. Employees are generally protected by laws that guarantee certain rights and benefits, while contractors are not.

5. Termination

Employees can be terminated at any time, for any reason. Contractors can only be terminated if they fail to meet the terms of their contract.


Knowing the difference between contractors and workers is important to avoid any potential legal issues. Contractors are considered to be self-employed, while workers are considered to be employees. This means that contractors are not entitled to the same rights and benefits as employees, such as vacation pay, sick pay, and health insurance.

If you are seeking a construction agency in London, you can contact us at Philip Shaun Construction. We provide industry-focused recruitment services, whether it be for a worker or contractor. Get in touch with us to learn more.