Differences Between Working As An Employee And An Independent Contractor

It’s not always clear what the differences between an employee and an independent contractor are. The kind of relationship that a business owner shares with their employees is one that’s contractual. The employee signs a contract of service in order to work for the business. However, the contract a business signs with an independent contractor is different. With independent contractors, the contract only covers a specific type of task that must be completed within a specific amount of time.

Employees usually work for their employer, as per direction. Independent contractors on the other hand, are owners of their own business. They provide services, for which other businesses might hire them. An independent contractor also has a greater degree of control regarding how they work. They choose their work hours, and typically only put in the time essential to finish a task.

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Employees on the other hand, have to work from 9 to 5, and their work needs to meet the standards of their employers at all times.

How Is Working As An Employee Different From Working As An Independent Contractor?

An independent contractor and an employee are extremely different from each other. While the former works for a business, the latter runs their own business. An employee is usually hired to look after a certain aspect of work. A sales representative focuses on reaching the sales targets of the business. An employee in management will need to ensure that the business goals are being met by the employees.

However, for independent contractors, this is slightly different. An independent contractor usually works alone, but they can hire the services of a subcontractor on jobs where they need additional help. Employees generally can’t hire other people to help them do their jobs.

There are some crucial differences between subcontractors and contractors as well, that you should know about. The contractor is the business owner. They are responsible for negotiating the scope of the work. They decide with the client what the project deadline will be. They decide how many hours of work they’ll be putting in, as well as what services will need to be provided. They also talk to the client to decide what the payment method will be.

How Working As An Employee Is Different From Working As An Independent Contractor

An employee doesn’t do any of these things. It’s the business owner that makes important decisions regarding how the business should be run. They communicate with the management teams on what the company’s goals are, and how they can be reached. The scope of the work is given to the employees, and they have no control over what kind of work is given to them.

Often, contractors will rely on subcontractors, to complete tasks that they are unable to do. Employees are expected to handle all tasks that fall within their domain. A graphic designer should know how to handle all kinds of graphic design work, from making creatives to conceptualizing ideas.

However, employees work as a part of a larger team. Often, there are multiple employees with similar job descriptions, especially for larger businesses. Independent contractors, while they can hire subcontractors to help them finish the work, are still responsible for the work themselves. They are responsible for delivering their projects in a timely manner as well.

What About Workplace Rights?

Employees absolutely have rights in the workplace, and to an extent, so do independent contractors. Consider investing in contractor insurance, if you work as an independent contractor. Independent contractors are exposed to certain career risks, such as being sued by unhappy clients. When you have contractor insurance, you can more effectively safeguard your business and finances. For more information about contractor insurance, then click here.

Independent contractors, as well as their clients, are protected from adverse actions, coercion, as well as abuses related to the freedom of association. This applies if they engage in industrial activities as well. Independent contractors can also negotiate their prices as well as their terms of engagement. While employees are better protected and have greater workplace rights, they don’t have the freedom to negotiate their prices.

Employees work as per the direction of their employers. They receive entitlements from their employers as well, such as allowances, leaves, and more. Independent contractors decide for themselves when they want to take time off, as well as how much they earn.

Conclusion

There are plenty of differences between employees and independent contractors. An employee is someone hired by a business for specific tasks. Independent contractors run their own business and are responsible for managing multiple tasks. If they feel they need additional help, they can hire a subcontractor. Use this guide to learn how working as an employee is different from being an independent contractor.