You have to be pretty careful with this sort of thing. You can't just say someone is a contractor and they become so. This is covered by something called 'IR35'.

What this basically says, is if someone looks like an employee, they're doing the job of an employee, then they are an employee, whether you like it or not.

Most UK IT contractors will be pretty familiar with this situation, and the ways to avoid being caught out by it.

However, as my employee is mostly customer service, admin etc, and doesn't work for anyone else, I don't think there's a way round it for me!