UK employer guide
Salary vs contractor or temp worker: what changes?
A contractor or temp worker can look more expensive per day, but the comparison is not as simple as salary versus day rate. The real answer depends on tax treatment, unpaid time, hiring risk and the extra costs around each option.
In short
Employees usually bring more predictable cost and more control. Contractors often cost more per billable day, but they can be quicker to hire, easier to scale down and sometimes cheaper when the work is short-term or highly specialised.
The salary side
A salaried employee normally brings employer National Insurance, pension contributions and potentially recruitment or onboarding costs. In exchange, you usually get continuity, availability and a more integrated team member.
The contractor side
Direct contractors are often priced higher because they cover their own business overheads, holidays, gaps between contracts and taxes. They are usually hired directly, work on a specific job and often bring their own tools and software.
The temp worker side
Temp workers are usually supplied through an agency or staffing business and tend to be placed for months or more rather than a single short job. That often adds a markup or agency fee on top of the worker's pay, and the arrangement is commonly used for office cover, seasonal peaks or short-term staffing gaps.
Why the answer is not always obvious
A contractor or temp worker may look expensive if you compare them with a straight salary, but they can still be the cheaper answer if the work is temporary, seasonal or uncertain. That is why it helps to compare the full annual employer cost rather than the headline day rate alone.
Use the salary vs contractor or temp worker calculator to compare the numbers. For general employer cost rules, see HMRC's 2026/27 employer rates and thresholds.