The Line Between Contractor and Employee is Blurring - And employers need to keep up
The old divide between perm and contract used to be simple. Permanent workers were part of the team. Contractors were outside help.
But in 2025, that line is fading fast.
Contractors are joining daily stand-ups, mentoring junior staff, and contributing to long-term projects. Some stay for 6+ months, others return time and again. From the outside, they look like employees. On paper, they’re not.
So why does that matter?
Because when the expectations of your contingent workforce start looking a lot like those of your core staff — but your processes, policies and brand don’t reflect that…friction builds. And with market pressures and legislative scrutiny on the rise, that friction becomes a risk.
Why the divide is breaking down
- Projects are more complex — and contractors are embedded for longer
Specialist contractors are no longer ‘hired hands’ for discrete tasks. In industries like transportation, infrastructure and tech, they’re filling long-term capability gaps. That creates deeper relationships — but also blurred boundaries.
- Cultural expectations are shifting
Today’s professionals want purpose, flexibility, and recognition — regardless of contract type. Contractors are no longer satisfied being left out of team comms, benefits discussions, or even social events.
- Legal grey areas are expanding
IR35 reform put the spotlight on employment status, but the underlying issue is bigger: how do you treat someone fairly, compliantly, and competitively when they’re sort of part of the team — but not technically employed?
What contractors want — beyond the contract
Our Voice of the Workforce [link] survey revealed that many contractors aren’t just chasing high day rates. They’re thinking holistically about their work experience — and comparing it to what employees get.
They want:
- Clear communication and expectations
- A sense of inclusion
- Reliable, prompt payment
- Opportunities to grow and upskill
- Benefits that recognise real-life needs — like time off and healthcare
And in some cases, they’re wondering if going permanent might give them more of what matters.
Holiday pay and health insurance, for instance, were ranked above job security as top reasons for considering a switch to perm.
What employers can do now
This isn’t about offering all contractors a full-time contract. It’s about evolving how you engage and support them in line with today’s realities.
Here’s how:
✔ Rethink onboarding
Contractors often start roles with minimal context or support. A structured, streamlined induction process — even just a 30-minute intro — sets the tone.
✔ Include them in the culture
That doesn’t mean giving them staff perks — but it does mean inviting them to relevant meetings, giving clear goals, and recognising their impact.
✔ Be transparent about engagement models
IR35 status, umbrella vs PSC, payment timelines — it all matters. Ambiguity here causes drop-off and damages trust.
✔ Consider hybrid models
Some employers are introducing contractor ‘benefit banks’ or access to group insurance schemes. These won’t suit everyone, but they reflect the direction of travel.
✔ Talk to your talent partners
Engagement isn’t just your job — it’s ours too. If your workforce strategy is evolving, we can help you shape a compliant, compelling approach that works for everyone involved.
The takeaway
The line between perm and contract isn’t vanishing — but it’s definitely shifting.
The most successful employers will be those that recognise and respond to that shift, blending compliance with culture and process with empathy.
If you're still thinking in binary — perm vs contract — you could be missing out on the best of both worlds.
Stay ahead of workforce trends and access the full Voice of the Workforce report — or talk to our team about tailoring your employer brand to today’s hybrid workforce.