Hiring
Contractor misclassification
Treating someone as a contractor when the law would call them an employee.
Definition
The situation where a person engaged on a contract for services is, in substance, working as an employee: fixed hours set by the client, integrated into the team, working under direction, with no other clients. Authorities look at how the relationship actually operates, not at what the contract calls it.
Why it matters
The exposure lands on the buyer, in the form of back taxes, social contributions and penalties, sometimes years later. If you want a long-term person working your hours under your direction, use an employer of record or a provider that employs them properly. A cheap contractor invoice is not a saving if the classification is wrong.
Related
Read next
Employer of record (EOR)
A company that legally employs someone abroad on your behalf.
Read the definition ›Staff augmentation
Adding external people to your own team, under your management.
Read the definition ›Notice period
How long you must keep paying after you decide to stop.
Read the definition ›Subcontracting
Your provider passing part of the work to another company.
Read the definition ›Next step
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