[desas]

In the UK both employer and employee pay payroll taxes (national insurance) at about 13% of salary, additionally employers must pay a minimum of 3% of salary to a pension.

Contractors paid themselves a minimum salary to avoid the payroll taxes. They then took the rest of their earnings as dividends from their personal services company instead, the combination of payroll taxes + income taxes being higher than taxes on dividends.

Since that ruse has been heavily restricted, employers have had to increase contractor pay to make-up for contractors having to pay more income tax + national insurance.