Employee or independent contractor? 



I’ve been offered a job, but as an independent contractor rather than an employee. What’s the difference?

The main differences are that:

(a) employees:

(b)  independent contractors:

  • are not covered by the ERA or the Holidays Act 2003;
  • are generally contracted to work only for a specific period of time;
  • are responsible for their own ACC payments;
  • may be responsible for making their own tax payments; and
  • may need to be GST registered. 

There is a visual guide to staff types on the business.govt.nz website which illustrates the differences between types of staff.

The contractor's relationship with the person or organisation who is engaging their services is largely governed by what the parties agree to in their contract (generally referred to as a “contract for services”). 

If you’re thinking of working as an independent contractor, it is essential to have a written contract in place which covers the conditions under which you will provide your services.

Before you agree to work as an independent contractor, read our Independent contractors page to get an idea of what's involved.

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My employer and I can't agree on whether I'm an employee or an independent contractor, and I don't have an employment agreement. What can I do?

If you and your employer are in disagreement over your employment status, you can call the Ministry of Business, Innovation and Employment's (MBIE) Workplace Contact Centre on 0800 209 020 for help to resolve the issue. (You can also get in touch with your trade union for assistance, if you belong to one.)

Mediation may also help you come to an agreement on your working relationship.

If the matter isn’t resolved after mediation (or if mediation isn’t possible) you could consider applying to the Employment Relations Authority (ERA) or the Employment Court for a determination (a legally binding decision) on your employment status.  It is generally advisable to seek legal advice if you are thinking of taking this option.

If you can’t afford your own lawyer, you can contact your local Community Law Centre for some initial advice, ask for an appointment to speak to a lawyer through a legal clinic at your local Citizens Advice Bureau. (Note that legal aid may available for cases going to the Employment Relations Authority and Employment Court.)

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How does the Employment Relations Authority or Employment Court determine whether someone is an employee or an independent contractor?

When deciding on the nature of your employment relationship, the employment institutions (the Employment Relations Authority and the Employment Court) will always examine the real nature of the relationship between you and the organisation for which you carry out work – in other words, how that relationship operates (or operated) in day-to-day practice. 

They can also take into account what is common practice in your industry and what both you and the workplace intended the relationship to be - but these factors will not override the examination of the real nature of the relationship.

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I am contracted out by a temp agency – does this make me an independent contractor?

Temp agencies are known as labour hire (or labour brokering) businesses. They hire out workers to client businesses, often to work on a casual basis. The client business pays the labour hire business, which in turn pays the workers (minus PAYE).
 
If this sounds like your employment situation then you are probably an employee of the temp agency, and the conditions of your employment should be detailed in your employment agreement.

This means that during the period covered by the agreement you are entitled to paid holidays, sick leave and other entitlements as an employee.

If you are still not sure of your employment status, or you think the temp agency is not meeting their employer obligations to you, you can call the Ministry of Business, Innovation and Employment on 0800 20 90 20 for guidance.