2nd July 2025
In today’s flexible workforce, hiring contractors can be a smart move for businesses looking to scale quickly or access specialist skills.
However, without a proper contractor agreement in place, what starts as a temporary solution can lead to long-term legal and financial headaches.
Sarah Everton, the Head of Employment Law at Myers & Co, explains the key differences between contractors and employees, highlighting what businesses need to know for their operations.
Understanding the distinction is crucial. Employees work under your guidance, follow set hours, and are entitled to benefits like holiday pay, sick leave, and pension contributions.
Contractors, on the other hand, are self-employed individuals or businesses who provide services under a contract for services. They control how and when they work, use their own equipment, and are responsible for their own tax and National Insurance.
Misclassifying a contractor as an employee can lead to serious consequences, including backdated tax liabilities, fines, and employment tribunal claims.
A contractor agreement is more than just a formality; it’s your legal safeguard.
It clearly defines the relationship, scope of work, payment terms, confidentiality obligations, and intellectual property rights. Without one, disputes can arise over deliverables, deadlines, or ownership of work produced.
In the UK, if a contract exceeds £10,000 or spans more than a year, a written agreement is legally required under the Supply of Goods and Services Act 1982. But even for smaller projects, a written contract is strongly advised.
A well-drafted contractor agreement should cover:
Without a clear contractor agreement, you risk:
At Myers & Co Solicitors, our employment law team can draft bespoke contractor agreements tailored to your business needs. We’ll help you navigate IR35, clarify employment status, and ensure your contracts are legally sound and commercially practical.
For further information on employee rights and how understanding them can benefit your business, please contact Sarah Everton, Head of Employment, on 01782 491025 or email sarah.everton@myerssolicitors.co.uk. Myers & Co has offices in Stoke-on-Trent, Staffordshire.
