What is the difference between an employee and a sub-contractor?

Basically an employee is TOLD what to do, how and when to do it. Is paid by the time doing it and has taxes taken out.

An independent contractor just completes the job, provides his own tools and does it when and how he wants it.

For more details go to then scroll down to the links for more details on independent contractor defintions

The UK

The situation concerning whether someone is an independent contractor or an employee has caused much debate in the UK courts. I have recently won a case involving legal argument on employee status. My arguments followed the principles outlined below.

Under a contract of service a person agrees to serve another - under a contract for services a person agrees to provide certain services for another. A contract of service is normally referred to as a contract of employment.

Contract of employment must contain three elements without which a contract cannot be regarded as a contract of employment:

  1. the contract must impose an obligation on a person to provide work personally
  2. there must be a mutuality of obligation between employer and employee
  3. the worker must expressly or impliedly agree to be subject to the control of the person for whom h works to a sufficient degree to make that person master.

Personal Obligation to provide Work

In Express and Echo Publications Ltd v Tanton[1999] IRLR

The Court of Appeal held that the power to send a substitute meant that this could not be a contract of employment. The irreducible minimum of a contract was for the worker to provide his services personally.

However, where a contract contains a limited power to delegate, that does not lead to an inescapable conclusion that it is not a contract of employment.

MacFarlane v Glasgow City Council [2001]IRLR7. EAT

According to the EAT in Macfarlane, the clause in Tanton allowing the worker to send a replacement was extreme. The worker in Tanton was not under any obligation to attend work. He was always entitled to send a substitute. In MacFarlane the worker was only entitled to send a replacement in the event that he was unable to attend work himself. Therefore the clause was of a far more limited effect and was not sufficient of itself to justify the conclusion that the contract was not a contract of employment.

Staffordshire Sentinel Newspapers Ltd v Potter [2004] IRLR 752

The EAT gave further guidance on the application of Tanton and MacFarlane. The critical question is what is the relevant express term; where there is no clear express term in writing then it may be necessary to look at the overall factual matrix in order to discern that term.

The decision of the EAT in McFarlane v Glasgow City Council, that a contract did not cease to be a contract for personal service simply because, in the absence of an express contractual term dealing with personal service or the use of substitutes, there was, as a matter of fact, a right to substitute in a limited sense, was entirely consistent with the ruling of the Court of Appeal in Express & Echo Publications Ltd v Tanton that an express right to provide a substitute was wholly inconsistent with a contract of service.

Mutuality of Obligations

This means that for the duration of the contract both the employer and the employee must be under a legal obligation to each other. (Carmichael v National Power PLC [2000] IRLR 43) The employee is under an obligation to provide labour for which the employer is under an obligation to provide payment.


This does not mean that the work must be carried out under the employer's supervision, it requires that the ultimate authority over the worker in the performance of her work resides in the employer, so that the employee is subject to the latter's orders and directions.

I hope this is helpful.

I live in Virginia. I had to fight to get my workers comp benefits. There were four criteria which classified me as an employee versus an independent contractor.

1) I was told when to report to work

2) I was told when to quit my day's work

3) I was trained by the person who I worked for

4) They had the ability to fire me

It's not necessary for the person you are working for to take out your taxes. This can already be agreed upon between you and your employer.

If your employer fills out the invoices and you never do, chances are you are an employee.