Reply to post:

Wrt being let go at short notice: "So can employees (albeit with notice pay, but many contractors have notice periods in their contracts too)"

Under employment law or is very difficult to get rid of someone for no reason. The employee has various avenues to deal with this. Also, contractor notice periods are meaningless as a client has no obligation to provide any work during the notice period: they can give, say, 2 weeks notice then provide no work for those 2 weeks. No work = no pay.

Wrt liability for mistakes: "So can employees. It's very rare that either are actually sued"

The bar is much higher for being able to sue an employee, basically requiring gross negligence or criminal behaviour. However, I know a few contractors whose previous client has demanded they come back and fix a bug, free of charge, after their contract has ended. This has left them out of pocket, but they are contractually obliged to do so.

"the majority of contractors are insured against the risk so there's no actual risk."

As stated below, that is a mitigation of the risk not a removal of it. I have car insurance to cover me in case my car is stolen. That doesn't remove the risk, it mitigates it.

Wrt changing market conditions benching us: "This happens to employees too."

Again, it is much more difficult to get rid of an employee. In this case, it would be redundancy, which would give a payout and stop them hiring someone else to fill that role in the near future. Most firms will keep an employee on if they only expect a month or 2 without work for them (they'll find something for them, but they are not really needed to cover the workload), sometimes longer. A contractor who is no longer needed is gone.

Wrt client deciding not to pay: "Happens to employees too. In both the contractor and the employee case it rarely happens."

Again, there are strong protections against this happening to employees, and it happens more often than you are aware to contractors. I've had a invoices paid over a month late at times, and I know more than one contractor who has had to end a contract due to non payment and ended up having worked for free for over a month.

As for a client going bust, employees are top of the list when it comes to getting paid on insolvency. Contractors are at the bottom with all the other suppliers. It is likely that an employee will get paid, it is unlikely that a contractor will.