What Is A Contractor?

What Is A Contractor?

A contractor is a person or business hired to carry out specific work or provide specialist services for an agreed period under defined terms. Unlike employees, contractors are not part of a company’s permanent staff. Instead, they work on a contract basis, often for multiple clients, and are responsible for managing their own tax, insurance, and compliance obligations. 

Contractors can be self-employed, operating as sole traders or limited companies, or they may work through an agency or umbrella company, which acts as their employer and handles payments and tax deductions on their behalf. This flexible way of working allows organisations to access skilled expertise when needed while giving contractors control over their workload and business opportunities.

The Difference Between Contractors And Employees

While employees are obliged to complete tasks set by their employer, contractors can choose to accept or decline work. They will be obliged to complete the work if they accept a contract. Once a contract is complete, if the client offers more work, the contractor can take on the additional work or decline the offer. This means they have the freedom to choose their own hours.

Contractors also set the terms of their contracts. This includes the fees involved and when and where the work is completed, so long as the work doesn’t have to be completed at a specific location.

Key Characteristics Of A Contractor

The key characteristics of contractors relate to the way their work is arranged and the level of independence and responsibility involved in delivering their services.

Legal And Operational Characteristics

These define the contractor’s self-employed status and relationship with clients.

• Independence and Control: Contractors decide how, when, and where they work, managing their own schedule and methods.
• Contract for Services: They work under a fixed-term or project-based agreement rather than a continuous employment contract.
• Financial Responsibility: Contractors handle their own taxes, National Insurance, and business expenses, assuming both the risks and rewards of their work.
• No Employee Benefits: Unlike employees, contractors do not receive paid leave, pensions, or sick pay.
• Right of Substitution and Multiple Clients: Contractors can often appoint a qualified substitute and may work for multiple clients simultaneously, reflecting their independent business status.

Personal And Professional Characteristics

Beyond technical proficiency, contractors rely on a range of professional skills to consistently deliver results across various projects.

• Specialised Expertise: Contractors are engaged for their advanced knowledge or niche skills.
• Adaptability and Problem-Solving: They must be able to adjust quickly to new projects and resolve challenges independently.
• Communication and Professionalism: Clear communication and reliability build strong client relationships and repeat business.
• Time and Financial Management: Effective organisation and budgeting are essential for handling multiple projects and maintaining a steady income.

Do Contractors Need To Complete A Risk Assessment?

You will have duties under health and safety law if you are a contractor. You should have already completed a risk assessment for the activities of your own business. When talking to a potential employer, ask for detailed information about the proposed work, and visit the work site, so that you can complete a risk assessment.

When hiring a contractor, you have certain health and safety responsibilities. If you are in construction, this might include a legal requirement to comply with the Construction (Design and Management) Regulations 2007.

First, you must identify all the work required and think of the possible health and safety implications. This should be communicated to the contractor, so they have the information upfront before they begin work.

Next, as the employer, you should check that the contractor you’d like to work with is competent and has the training and qualifications needed to complete the work safely. Don’t assume that someone can safely do the job just because they are offering to do it. You must verify this, particularly if the work involves specialist equipment.

The employer and the contractor should work together to ensure they can complete the work safely. It’s recommended that the employer and the contractor have meetings throughout a project, as often as needed, to ensure you can do the work safely. As an employer, you should think about how you will check that the work is being completed safely. Depending on the risks involved, you may need to arrange some supervision.

Download A FREE Risk Assessment Template

Why Businesses Use Contractors

Many businesses choose to hire contractors rather than permanent employees for certain roles or projects. Hiring contractors can be more cost-efficient — especially for special projects or processes not carried out on a day-to-day basis.

While contractors can cost more per hour or project, they can still cost businesses less than hiring a permanent employee. With contractors, businesses don’t have to cover payroll costs such as payroll taxes, vacation, retirement or insurance benefits.

Hiring contractors also gives businesses a chance to bring in individuals with specialist knowledge who are pre-qualified for safety-critical tasks. Different projects may require individuals with different skillsets, and contracting offers businesses the freedom to hire the specialists they need when they need them. Choosing the best person for the job can result in higher levels of efficiency and increased profitability.

Examples Of Contractors

Contractors cover a wide range of roles across all sectors, providing specialised skills on a project-by-project basis to help organisations deliver work safely and efficiently.

Software Developers/ Coders:Hired by public sector IT teams to develop bespoke applications or digital services on a project basis.

Electricians:Contracted to install or maintain electrical systems in commercial buildings, schools, hospitals, or municipal properties.
Carpenters:Provide framing, cabinet fitting, and door installation for construction firms or local authority projects.

Roofers: Specialise in installing or repairing roofs for public buildings and large-scale construction projects.

General Contractors: Oversee entire construction projects, coordinating subcontractors, managing schedules, and ensuring compliance for both private and public sector developments.

The Benefits of Working as a Contractor

For many, working as an independent contractor is the ideal job because of the freedom it brings. Many contractors can decide their hours and fit work around their personal and family life, choosing when to take holidays. Contractors can also determine which businesses they work with, and the areas they’re willing to travel to for work (or whether they want to work from home).

Working with a variety of businesses can also be very rewarding and allows contractors to build their skills and experience. With every new project, contractors can build their knowledge, and with more skills under their belt, can move up the pay ladder faster than those in regular employment. Contractors tend to earn a higher rate than employees and have more potential to increase their wage. Completing additional training, or health and safety assessments, and becoming accredited are some of the steps contractors can take to increase their rate and attract more clients.

The Contractor’s Health and Safety Assessment Scheme can help match pre-qualified contractors with clients. If you’re a contractor looking to become accredited and reach new clients, become an accredited CHAS member today. Or, if you’re looking to hire pre-qualified contractors, sign up for a free client membership.