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Subcontractor vs Employee

Subcontractor vs Employee

Posted on 2023-09-10 by Zsolt Katai

It seem like an age old question, which one is better: a subcontractor or an employee?

The answer looks as varied as it can get and since lately I have come across this problematic question – again – I thought to lay down a few lines about it in the hopes to shed some light on this old dilemma – as much for the reader as for myself.

To start out I’d compare these two main categories of workforce in a number of aspects. What are the main differences between a subcontractor and an employee?

Some think the employee doesn’t have their own work vehicle or tools but actually, in trades at least, they definitely can and often should have those. So that isn’t a key difference.

It can often be misconstrued that an employee is more dedicated than a subcontractor because an employee is (assumed to be) fully committed to the company they are working for. But has anyone seen a lazy or incompetent employee? - I think we all have. And on the opposite, doesn’t a subcontractor’s future work (or even their payment upon completion) depends on doing a fine job?

I have seen both employees and subcontractors doing low quality work or being unreliable and generally a liability as well as seen the opposite, excellent work ethic and an asset to the business, hence so far this isn’t a deciding factor either in my personal opinion and experience.

Technically speaking the key difference between an employee and a subcontractor is their legal responsibilities, a subcontractor having much higher level, and their control over their own schedule where an employee is subordinate to the company and the subcontractor largely retains control over their schedule.

There are other differences of course, such as subcontractors being responsible for their own deductions (though this could be categorized under having more responsibilities) but that takes me to the real (for me) qualifying question: who is better (sub or employee) for whom?

Is one of them better for the employer or the client?

This merits a whole other discussion though in my experience it isn’t as different as it may seem.

A client wants a great (or at least good) job done, expectations met to their satisfaction.

An employee wants jobs well done also so the clients are happy, profit should be made while the staff is well compensated and also happy. At least, I found this to be key to the long term success of any business. Opinions may differ but happy clients, well paid staff and profit making can easily be seen to hold true – among other things. They are like a triangle, one affects and controls the others: client happiness increase raises profit and (if compensation/benefits are fair) in turn staff is happier also. Leaving this simplistic example behind and getting back to the main question:

Will a subcontractor or an employee do a better, more satisfying job for the client?

Will a sub or an employee satisfy the employer’s needs better?

The answers will differ by region and the current times, of course, thus I can only speak from subjective experience which focuses on trades, especially home services (window cleaning & gutter cleaning, pressure washing, gutter repairs, roof moss removal) and its sister and connected trades (which are many: roofing, framing, etc.).

Having employed both subcontractors and employees over two decades I have come to a few conclusions. They both have an expiration limit, subcontractors having the shorter one so far though this can be mitigated or individually different. I would have thought employees will last longer but in reality it didn’t turn out so. They may turn into self employed entrepreneurs thinking that they’ll make more money (but they soon find out they don’t) or switch for other reasons (often times only after mere months).

Quality of work is an interesting aspect: while personally training an employee has it definite advantages, it takes months or realistically a year for a fully trained and apprenticed worker, having gone through that many times just to find yourself losing the new worker after a few months one tends to lose enthusiasm after a while. On the other hand a subcontractor may have a different habit or quality than the work giver has (and its clientele is used to) so that has its challenges. But if the sub is really an asset they can be molded to your needs – some easier than others – and the business owner doesn’t have to go through the grueling training and apprenticing routine (or only an easier version of it).

The list could go on but to keep it relatively short and sweet, I draw my conclusion: from the viewpoint of the employer it all depends. I know, it’s a disappointing and sobering conclusion. And from the client’s viewpoint: it doesn’t really matter because the burden of quality work falls on the shoulders of the company owner/manager (depending on size of company but ultimately the owner, the employer). A client may not even notice whether the staff or crew is subcontractor or employee, and that is the real test and maybe a more satisfactory summation: does the client or employer notice any significant difference of having a sub or an employee working for them?

If the answer is “No” then I say there is no dilemma, no question to be answered. You got what you wanted, you’re happy with it so why go into splitting hair?

Hence I stop doing it here as well in the hopes I was able to give some food for thought, nothing much else I could hope since there are as many opinions as people and their experiences on this subject.

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