Independent Contractors 

I’m starting out as an independent contractor. What do I need to know?

Organisations usually choose to engage an independent contractor rather than an employee in situations where:

  • the work is occasional, short term or one-off;
  • the work involves an area of expertise outside of the organisation’s core business;
  • the organisation has insufficient resources to employ an appropriate person within its budget for employees.

As an independent contractor (a “self-employed” person), you aren’t covered by the Employment Relations Act. However, you are covered by health and safety legislation. All businesses are responsible for the health and safety of their employees, contractors and sub-contractors, as well as all clients and visitors on the work site.

Your contract
As you are not covered by the Employment Relations Act 2000 or the Holidays Act 2003, you’ll have no entitlement to sick leave, bereavement leave, or annual leave, nor can you raise a personal grievance if a dispute arises between you and the client you do work for.

For this reason the agreement or contract between you and any person or organisation that you do work for, should cover things like:

  • your hours of work, including whether you will work outside of normal business hours;
  • how much you will be paid – because you aren’t entitled to paid leave, aim for an hourly rate that is about 20% greater than the hourly rate of an employee doing similar work as it needs to cover you for days when you are unable to work due to illness, injury or bereavement, or just want to take time off; 
  • when and how you will be paid;
  • what expenses you will be reimbursed for;
  • the term of the contract (the period it runs for);
  • how disputes will be resolved; 
  • under what conditions the contract can be terminated;
  • who will own any intellectual property (e.g. software code) you develop while under the contract.;
  • whether you can do work for the business’s clients, employees or competitors after your contract ends;
  • whether you can sub-contract any of the work to another person.

It would be a good idea to have a lawyer look over the contract before you sign.


You may be responsible for paying your own tax and GST, but on the other hand can claim some work-related expenses from the Inland Revenue.
If you will be paying GST, paying your own income tax or claiming work-related expenses you’ll need to keep thorough accounts of your earnings and work-related out-goings, and record all of your business costs. Consider finding an accountant to give you advice, do your book-keeping and/or do your tax return for you. 

Read more about your tax obligations on our Self-employment and Tax page.

Inland Revenue recommends that you open a separate bank account which is just for your business income (what you earn from contracting) and expenses. Depending on the type of work you do, it could also be worth having a separate credit or debit card which is only used for work-related expenses. Be sure to keep the receipts so you can claim on them on your returns.

Another thing to consider is liability insurance (also known as indemnity insurance), as you can be made personally liable for any damage you cause to the organisation’s property, or any losses they suffer resulting from your work. Read about other types of insurance for independent contractors on the website. 

For further help, contact your local Citizens Advice Bureau, Community Law Centre or lawyer.

Other things to think about:

  • Set aside money for those periods when you are between contracts (aim to have enough money to live on for three months).
  • You’ll have to organise your own KiwiSaver payments
  • You’ll have to pay three different ACC levies (an employer only pays one ACC levy).
  • You could sign up with a recruitment agency, which can find you clients and make sure you get paid.
  • If there is a professional association for workers in your field, the benefits of becoming a member may include free legal advice, advocacy and information resources.
  • You can find information for people thinking about going contracting on the website.

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What are my options if I have a dispute with the organisation I have a contract with?

If your contract for service includes a dispute resolution process then you will need to follow that process. It may include mediation and/or arbitration.
If a dispute resolution process is not included in the contract, one option to try is mediation through the Ministry of Business, Innovation and Employment (MBIE). This is the same mediation service that is offered employees and employers, and is free. Either party can request mediation, but it can only proceed if both parties are both willing to participate.

You can request mediation online – you’ll need a RealMe account. You’ll need to attach any supporting documents (e.g. a scan of the contract for service) and make clear the nature of your relationship i.e. that the dispute is between an independent contractor and client rather than between employer and employee.

You can get help with completing your mediation request by contacting MBIE.

If mediation is not successful or can’t proceed, either party can make a claim at the Disputes Tribunal or to the courts. (It is worth getting legal advice before you do the latter).

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Can I do more than one contract job at the same time?

Yes you can, as long as you’re able to do what is required in each contract and carry out the services that you’ve agreed to. This might mean you have more than one contract for doing the same kind of work (eg a number of cleaning jobs); or you could be doing different types of contract work for different people or organisations (eg contracting as a software engineer for a few days a week and working nights as a contracted security guard).  

You will need to check your contract to see whether there are any restrictions on what other work you can do at the same time. If the contract for service you have with one organisation has a restraint of trade clause, then you might not be able to do the same type of work for another organisation at the same.

Restraint of trade clauses are included in some contracts for service (and some employment agreements) to protect an organisation so the person carrying out the work doesn’t poach staff or clients or compete against them in the same industry.

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I’m a cleaning contractor. Am I liable for any damage I cause to property as a result of my work?

If you are an independent contractor (as opposed to an employee of the cleaning company) you can be held personally liable for any damage you cause while you are contracted to do work for the organisation.

If there is disagreement over who is liable for damage done to the property, either party can consider their options for dispute resolution.

If you are an independent contractor, consider taking out liability insurance to cover yourself for future incidents where you could be held responsible for damage or loss by the organisation.  

For further help, contact your local Citizens Advice Bureau, Community Law Centre or lawyer.

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I invoiced my client months ago but they have never paid me. What can I do to get my money from them?

The contract between you and your client (the other party) should state when, how much, and how they should pay you.

Ask them why they have not paid – they might be withholding the money because of a problem with your work, or the invoice could have got lost. 

Provided the amount you are claiming is no more than $15,000 (or $20,000 if the other party agrees), you can go to the Disputes Tribunal if you and the other party are in dispute about, for example:

  • whether they owe you the money;
  • the amount you want them to pay;
  • the quality of your work.

If you and your client cannot agree on the debt (e.g. whether they owe you money, the amount of the money owed or the quality of your work) either party can consider their options for dispute resolution.

If the other party doesn’t dispute the amount, but just refuses to pay, you can try going to a debt collection agency. However, be aware that they generally charge hefty fees for this service. More information is on our Recovery of debts page.

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What are my rights as a subcontractor, when the main contractor won’t pay me until they are paid?

A subcontractor is an independent contractor who provides work to a main contractor. For example, an online retailer might contract a web development business to build their new website, and the web development business (the main contractor) in turn contracts web developers (the subcontractors) to do the actual work.

In this example, there is a contract for service between the online retailer and the web development business, and another contract for service between the web development business and each subcontractor.

If you have a pay dispute with the main contractor, generally your options for resolving this are similar to those of the main contractor if their client doesn’t pay them (see the previous question).

Building contracts
If you are subcontracting in construction work, then you do have some protection under the Construction Contracts Act 2002 and the Construction Contracts Amendment Act 2015. Under these two Acts, the subcontractor and main contractor can agree on progress payments (i.e. payment for work in instalments) to be made during the term covered by the contract for service.

If both parties can’t agree, or if it’s not clearly stated in the contract for service, then by default the subcontractor is entitled to claim payment for work each month, and must be paid (or disputed) within 20 working days of the claim. The amount of payment they can claim is calculated based on factors such as the rates agreed to in the contract for service. 

More about this is on the Building Performance website.

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Is it possible to terminate a contract for service early?

Your contract may include a termination clause, which covers whether and how a contract can be terminated. For example, it might specify how much notice either party needs to give if they don’t want the contract to continue, and specify acceptable reasons for cancelling the contract.

A contract is legally binding, so it can be difficult for one party to cancel the contract or end it prematurely if the reason is not provided for in the terms of the contract. If your client wants to cancel the contract early for reasons not covered by the termination clause you can challenge the cancellation, but it would be a good idea to seek legal advice first.