There are a few patterns common in Australia:
1. Person directly employed on an ongoing basis. The employer pays all insurances, professional memberships and generally contributes to the professional development of the employee.
2. Person directly employed on a fixed-term basis. The employer must offer employment on an ongoing basis if the employee has been engaged for a certain period of time. The employer pays all insurances, professional memberships and generally responsible for professional development of the employee (but generally more limited than what is available to employees under option (1)).
3. Person contracted from a consulting firm, where the consulting firm directly employs the person on an ongoing basis. Once one client engagement ends, the consulting firm try to place the person with a different client as quickly as possible, and will keep paying the person during this process. The consulting firm pays all insurances, professional memberships and generally responsible for professional development of the employee.
4. Person contracted from a labour hire firm, where the labour hire firm directly employs the person on a _casual_ fixed-term basis. The labour hire firm may be required to offer employment on an ongoing basis if the employee has been engaged for a certain period of time with a regular pattern of work apparent. The employee doesn't have to accept (and it typically wouldn't be in the persons or labour hire firms interests to do so). Labour hire employment agreements will typically specify a base rate and then a casual loading on top, so it is clear what the remuneration changes would be if casual employment is changed to ongoing employment (including if this occurs retrospectively). This option is generally used by professionals in unregulated professions such as ICT. Labour hire firms pay insurance, taxes, etc and clients and/or employees generally provide facilities and tools of the trade.
5. Person directly contracted through that person's "personal services income" "business" (note: it's technically not considered a business). This option is generally used by professionals in highly regulated professions such as medicine. The person's "business" pays the person wages, insurances, professional memberships, and more commonly than (4) also facilities and tools of trade.
For total remuneration benefits from highest to lowest, it's generally (5) > (4) > (3) > (1) > (2). Ongoing employment of (1), (2) and (3) are generally detrimental versus casual employment of (4) and (5) because a person could be employed for 6 years and have accumulated months of personal/sick leave and be close to having long service leave payable, and be forced out of their employment arrangement for an external reason such as a bad boss, a spouse needing to relocate or a family member some distance away needing care. When the person leaves their employer, they lose all accumulated benefits and start from scratch with their new employer. Options (4) and (5) ensure the person is no worse off when changing employers as the person has been paid the benefits upfront on a continuous basis, rather than waiting for a day that may never occur to obtain those benefits.
For job security, there isn't much difference. Sometimes directly employed persons are made redundant before labour hire persons. Sometimes it's the opposite and labour hire persons are first to go. The main difference is whether a person gets 1 day notice and pay (casual employees of labour hire firms), 4 weeks notice and pay, or longer if a person has worked for the same employer for over a year. As employees have to change jobs every few years to grow a career and gain higher remuneration, the redundancy payouts for extended service are minimal compared to missed opportunity cost of not changing jobs. 1 day or 4 weeks notice and pay is negligible in the grand scheme of things, and most of the time labour hire employees would get much more than 1 day notice anyway to avoid the client gaining a bad reputation amongst the pool of labour hire employees.
For the order in which people progress through these options in a professional career, it's generally (2)|(1) > (3)|(4) > (5).
For overall employment preference of professionals, I'd suggest perhaps most to least preferred of (4) > (5) > (3) > (1) > (2). (4) has less overhead and distraction of (5) as one can focus on their profession without having to worry about frequent changes to tax laws, changes to insurance policies, etc. But eventually to grow further, a professional would be required to switch from option (4) to option (5) and then may need to switch focus away from their profession and towards business priorities such as hiring support staff, engaging other professionals such as accountants, lawyers, insurance brokers, etc. (3) generally provides better remuneration and career growth over (1) and (2) because client engagements are shorter and more varied. But sometimes (1) is a good way to get a foothold into an industry or move into more senior positions (particularly management roles), and may make more sense than options (3), (4) and (5).