There is the additional factor of course... why do you have contractors? More often than not, it's to outsource a speciality, rather than having the overheads of employing staff, maintaining those staff etc. In my case a client could say, pay for less than one employee a year, but have the benefit of multiple technicians but not full time.
Ultimately, the law is stupid. There is already law in place for companies that want to abuse the structure to take advantage of people... and as said, contracts by their very nature don't have to be renewed (so they're not going to make it difficult to their client)... but perhaps that's another law in the works?
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