Understanding the distinction between an independent contractor and an employee is essential for businesses to ensure legal compliance, tax accuracy, and proper workforce management.
An independent contractor is a self-employed professional or freelancer engaged to complete specific projects or provide services for a business. They operate independently, set their own schedules, and are responsible for their own taxes, insurance, and benefits.
An employee, on the other hand, works directly for a company under a formal employment contract. Employers control their work, provide benefits, and handle tax withholdings and statutory contributions.
- Control & autonomy: contractors decide how and when work is completed; employees follow company policies and schedules.
- Payment & benefits: contractors are paid per project or invoice without benefits; employees receive salaries, benefits, and paid leave.
- Tax obligations: contractors handle their own taxes; employers withhold and remit taxes for employees.
- Employment rights: employees enjoy protections under labour laws; contractors generally do not.
- Work relationship: employees have a long-term, ongoing relationship with the company; contractors are usually engaged for specific projects or timeframes.
Misclassifying employees as independent contractors can lead to legal and financial risks, including fines, back taxes, and penalties. Correct classification ensures compliance with labour laws, tax regulations, and employment rights.
Mauve Group helps organisations determine the correct classification of workers, manage independent contractor engagements, and handle payroll and compliance across multiple countries.
We support businesses in reducing risk, ensuring legal compliance, and optimising workforce management for both employees and contractors globally.
- Independent contractor services: managing self-employed professionals compliantly.
- Contractor payroll solutions: accurate payment and compliance management for contractors.
- Employer of Record (EOR): employing staff in foreign countries without a local entity.
- Global payroll services: payroll management for employees and contractors worldwide.
- Cross-border payroll: paying international employees and contractors compliantly.