Contractor vs employee decision tree (Toolfy edition)
Answer 8 yes/no questions to decide between contractor or employee, log evidence in Toolfy, and hire the right way every time.
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Contractor vs employee decision tree (Toolfy edition)
Hiring fast doesn’t mean guessing at employment status. Use this decision tree to decide how to onboard someone, then document the reasoning inside Toolfy so accountants and lawyers nod in approval.
1. The 8-question flow
- Do you control day-to-day schedule? (Y → employee)
- Do they use your tools/van? (Mostly Y → employee)
- Can they send a substitute without asking? (Y → contractor)
- Are they paid per job or per hour? (Per job → contractor)
- Do they carry their own insurance? (Y → contractor)
- Are they on your rota for more than 3 months straight? (Y → employee)
- Do they work exclusively for you? (Y → employee)
- Who fixes defects? (They do at their cost → contractor)
2. Logging the answers
- Create a Toolfy form called “Engagement decision” with the questions above.
- Store responses in the candidate’s customer record (or a dedicated “People” space) with timestamp + approver.
3. Next steps based on outcome
| Outcome | Actions | | --- | --- | | Contractor | Collect UTR, insurance, contract, add to job board with limited access. | | Employee | Start HR onboarding checklist, issue employment contract, add to payroll export. |
4. Review cadence
- Re-run the decision tree every quarter for long-term contractors—you may need to transition them to payroll.
- Keep all decisions in one Toolfy list so auditors can review quickly.
Need the form + workflow templates? Email support@toolfy.io and we’ll share them.
⚠️ Important Disclaimer
This guide is for general informational and educational purposes only. It does not constitute professional advice of any kind (legal, financial, tax, insurance, or otherwise).
Before making business decisions: Consult with qualified professionals (solicitors, accountants, insurance brokers, etc.) who can assess your specific circumstances. Laws, regulations, and industry standards change frequently and vary by location and situation.
Toolfy and the article authors accept no liability for decisions made or actions taken based on information provided in this guide. You are solely responsible for ensuring compliance with all applicable laws and regulations.
Frequently Asked Questions
What's the main difference between a contractor and employee?
How often should I review contractor status?
Where should I store employment status decisions?
Need this workflow in Toolfy?
Spin up the exact checklist, scripts, and automations from this article inside your workspace.
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