I think 'contractors are paid more' generally (and in fairness somewhat necessarily) ignores that it's to compensate for other employee benefits. But it's ultimately a kind of pointness/trivial truth - 'the value of holiday and sick leave and job security and life assurance and pension contributions and [...] is non-zero!' - yes, of course it would be.
Contractors do get paid more but they don’t earn more at least not anymore after IR35 since they have a tax rate that is over 50% as they are also liable for the 15.5% employer national insurance contributions now.
Overall contractors are far cheaper in the UK even at day rates of over £1000 and replacing people that earn high 5 to low six figures.
They aren’t paid any bonus, there is no pension contribution there are no benefits and there is no liability for redundancy.
I have seen mid level jobs where the contractor is paid twice what the full time staff are, no bonus on either side.
Your point about long term incentives is very dependent on company. I wish I had a scheme like that!
Stock options are usually available at most large traded companies, bonus top ups are usually for directors+ or senior managers in FAANG or other large US companies that tend to have more grades than UK ones.
Then there are ofc various retention bonuses and allowances, but these tend to be pretty much just a pay increase without the social contributions liabilities to the employer.
The risk falls completely on the company these days. IR35 is a very nasty piece of legislation it’s difficult to even hire remote contractors outside of the UK with it without going through an established firm.
If HMRC catches you in violation of IR35 they can open the book and inspect any contracts over the past 10 years and retroactively penalize you. And by you I mean the “employer” in this case as in the company that hired you under contract.
No one is taking the risk today.