Contractor or employee status turns on independence: a contractor runs a business selling services, an employee works under your direction in yours. The status decides who pays tax and contributions and which legal protections apply.
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.
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.
A contractor agreement is the contract under which an independent contractor provides services to a client. It sets scope, payment, intellectual property, confidentiality and how either side can end the arrangement.
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.
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.
Total cost of employment is everything an employer spends to keep someone on staff, beyond gross pay. It adds employer social contributions, mandatory benefits, insurance, equipment, statutory leave and any EOR or admin fees.
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