In the eyes of the law, employees and contractors are as different as apples and oranges. Hence numerous legal issues turn on whether a person is another's employee or, alternatively, an independent contractor.
The distinction is critical for ownership and protection of copyright and other intellectual property. It is also vital for legal compliance considerations under workers compensation, superannuation, insurance, taxation and other legislation.
A good contract prepared by a competent business lawyer will help remove legal doubts. However, take care. Consider the bias of the person preparing the contract. "Creative lawyering" involves genetic engineering ("GM") to modify the distinction between employee apples and independent contractor oranges. What you see in some contracts is not necessarily what you get.