This is a common query and there are many industries in New Zealand that choose not to have employees and instead they engage independent contractors. An industry in which this is very common is with courier drivers.
Are you wondering whether you are an employee or an independent contractor?
So, what is the difference between an employee and an independent contractor?
It is not a black and white matter and every case depends on the individual and their circumstances. However, there are some common themes that run through the role of an employee as opposed to that of an independent contractor. For example, an employee is almost always on a wage or salary. They must be paid the minimum wage and they have minimum rights which are provided for in the Employment Relations Act, Minimum Wage Act and the Holidays Act. Also, an employee must have a written employment agreement and they are usually directed when to work, where to work and what they are expected to do. Most important of all, an employee can take a personal grievance claim.
An independent contractor is effectively a self-employed person and they are usually engaged to perform a particular service, often as a one-off. An independent contractor, being self-employed earns their income by issuing an invoice, usually monthly. They must pay their own taxes being GST, provisional tax, terminal tax and ACC levies. An independent contractor isn’t entitled to annual leave, sick leave and they can’t take a personal grievance.
Despite this, the court will not look at the ‘label’ of independent contractor or employee – they will instead look at the substance of the relationship taking any wording regarding the relationship in the employment agreement into account.
Get the right advice from the start! Contact us today
If you are unsure whether you are an employee or an independent contractor, Collins and May can help. We are keeping up to date with the current changes in the law around whether a person is an independent contractor or an employee. Contact us and we will be happy to look into your circumstances and underlying agreement and advise you on the rights that you have in your respective position.