UK employer guide

Contractor vs temp worker: what's the difference?

These two arrangements can look similar on the surface, but they are used for different reasons and often create different cost structures for an employer.

In short

A contractor is usually hired directly for a specific piece of work or a short project. A temp worker is usually supplied through an agency and tends to stay on assignment for months or more.

Direct contractor

Direct contractors are usually engaged for a specific job, often with a clear end point. They commonly charge a day rate, bring their own tools and cover their own business overheads.

Temp worker through an agency

Temp workers are usually supplied by an agency or staffing business. They often fill office cover, seasonal peaks or longer short-term gaps, and the agency usually adds a markup or fee on top of the worker's pay.

Why employers separate them

The two options can have similar headline rates but different practical costs, different flexibility and different administrative steps. That is why it helps to separate the comparison before you budget.

Use the salary vs contractor or temp worker calculator to compare the costs, or the temp worker cost calculator if you want a dedicated agency budget. For general employer cost rules, see HMRC's 2026/27 employer rates and thresholds.