Contractor-to-employee conversion is moving an independent contractor onto an employment contract, either directly or through an employer of record. It changes their legal status, pay, benefits and protections, and ends the old contractor agreement.
Through an employer of record a worker becomes a local employee with benefits; as an independent contractor they run their own business instead. EOR adds control and compliance cover, and contracting is lighter and faster but carries misclassification risk.
An employment contract is the agreement between employer and employee that sets out the job, pay, hours, benefits, duties and how the relationship can end. It operates within the minimum rights set by local law.
Contract-to-hire is a hiring model where a person starts as a contractor for a trial period, after which the client can offer them a permanent role. Both sides test the fit in real work before committing to employment.
Contractor misclassification is treating a worker as an independent contractor when, under the relevant law, the relationship is really employment. It can expose the business to back taxes, unpaid benefits, penalties and claims from the worker.
An independent contractor is a self-employed person or business that provides services to a client under a commercial contract, not as an employee. They control how the work is done and handle their own tax and insurance.
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