Consultant vs Employee
Last updated: February 2025
Quick Comparison
| Aspect | Consultant | Employee |
|---|---|---|
| Engagement basis | Contract for services; deliverable or time-based | Contract of employment; ongoing relationship |
| Control | Consultant decides how to deliver outcomes | Employer controls methods and processes |
| IP ownership | Consultant owns IP unless assigned by contract | Employer owns IP created in the course of employment |
| Tax | Self-employed or through PSC | PAYE with employer NI |
| Integration | External; not part of the organisational hierarchy | Fully integrated into the team and reporting structure |
What Is a Consultant?
An independent professional engaged to provide expert advice or services, typically operating through their own business entity.
Key Features
- • Provides specialist expertise and strategic advice
- • Operates independently with minimal client control
- • Usually engaged for defined projects or outcomes
- • Owns IP they create unless expressly assigned
Best For
- • Strategic or specialist advice not available in-house
- • Transformational projects needing external perspective
- • Interim leadership or niche expertise
What Is a Employee?
An individual working under a contract of employment, subject to the employer's control and entitled to full statutory rights.
Key Features
- • Works under employer's direction and control
- • Employer owns IP created in the course of employment
- • Full statutory rights including pension and leave
- • Integrated into the employer's organisational structure
Best For
- • Core business functions requiring ongoing presence
- • Roles needing deep organisational knowledge
- • Positions where control over work methods is necessary
When to Use a Consultant
Engage a consultant when you need specialist expertise for a defined period, want an independent perspective, and the work is advisory or project-based rather than operational.
When to Use a Employee
Hire an employee when the role is ongoing, requires integration into your team, and you need control over how the work is performed.
Which Does Your Business Need?
If you need ongoing, controlled work as part of your team, hire an employee. If you need expert advice or project-based delivery with an independent perspective, engage a consultant. Ensure the engagement genuinely reflects the chosen model to avoid IR35 issues.
FAQ
Can a consultant be reclassified as an employee?
Yes. If the working relationship involves significant control, personal service, and mutuality of obligation, HMRC or an employment tribunal may determine the consultant is actually an employee, regardless of the contract label.
Who owns intellectual property created by a consultant?
By default under UK law, the consultant owns IP they create. To ensure your business owns the work product, include an express IP assignment clause in the consultancy agreement.
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Get Started FreeThis is guidance for UK businesses, not legal advice. Consult a solicitor for complex matters.
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