Employee vs contractor

Start with the relationship in practice

An agreement headed “consultancy” does not settle every employment question. The Supreme Court’s September 2025 decision linked below discusses control, supervision, integration and the facts of the engagement. Classification requires the applicable legal context and the complete relationship; there is no universal points score.

A fixed-term employee, an independent business providing services and a worker supplied by a staffing contractor are different arrangements. Identify which arrangement is intended before preparing the contract. A fixed end date alone does not establish independent contractor status.

Record how the engagement actually works

Prepare a factual brief with the hiring manager and the person responsible for paying invoices or wages. Capture existing practice as well as the proposed contract terms. These records support an assessment; no individual answer should be treated as a guaranteed outcome.

• Who chooses working hours, location and the method of completing the assignment?
• Who approves leave, supervises performance, imposes discipline and can end the relationship?
• Is payment linked to time worked, an ongoing role or acceptance of defined deliverables?
• Who supplies equipment, pays expenses and bears the cost of correcting defective work?
• Can the provider genuinely serve other clients or arrange a substitute, and what happens in practice?
• How is the person represented to customers and integrated into the organisation?

Keep staffing arrangements distinct

When a vendor supplies people, review the vendor relationship and the worker relationship separately. Obtain the statement of work, deployment list, supervisor responsibilities and evidence supporting applicable wage and statutory obligations.

A purchase order and a vendor invoice are not a complete compliance file. Set an owner for checking the vendor’s documents, resolving discrepancies and responding to worker complaints. Assess principal-employer responsibilities under the law applicable to the establishment and period.

Assess the consequences before onboarding

Ask payroll, finance and legal reviewers to identify the obligations affected by the proposed arrangement. Review wage treatment, working conditions, leave, social-security coverage, withholding, invoicing, confidentiality and ownership of work product. Different statutes can require different analyses; a tax treatment should not be used as the sole employment conclusion.

For a genuine services arrangement, write measurable deliverables, acceptance criteria, fees, expense treatment and change control. For an employment arrangement, align the appointment terms with payroll and the applicable workplace policies. Neither document should promise that statutory rights can be waived by a label.

Retain a practical evidence file

• Signed terms, amendments, job or project scope and the commercial rationale for the arrangement.
• Evidence of actual supervision, reporting, deliverable acceptance and payment approvals.
• Invoices or payroll records, relevant registrations and the basis of withholding decisions.
• Access, confidentiality, intellectual-property and return-of-property arrangements.
• A dated review note identifying the facts considered, uncertainties and the responsible decision-maker.

Review changes and correct mismatches

Revisit the assessment when a short project becomes an ongoing role, exclusivity changes, a provider joins the management structure or the business starts controlling day-to-day working methods. Record the event triggering review instead of relying indefinitely on the initial onboarding decision.

If practice differs from the agreed arrangement, assess the affected period and obligations before changing documentation. Preserve original records and make corrections transparently. Do not backdate agreements or replace historical evidence to make the relationship appear different.

Kosha.Services can help organise the engagement facts, coordinate payroll and compliance review, and maintain an onboarding checklist. A contested classification or historical exposure needs advice based on the applicable law and evidence.