Do you fully understand the differences?
In general terms, it’s all about your intentions and who’s in control. Let’s take it from the viewpoint of someone working out what they are – these are the questions they would ask themselves, which are allied to the common law tests used to decide whether someone is an employee or a self-employed contractor. It pays to remember that sometimes people call themselves independent or self-employed contractors when they don’t actually answer ‘Yes’ to the following – what you call yourself doesn’t define you – it’s your intention, control and independence that does.
Below are some questions to ask yourself to work out what you are.
A Self-employed Contractor says ‘Yes’ to the following:
Am I in control of my own job?
Am I independent in my job?
Do I control which jobs I want to do?
Do I receive a contractually agreed rate for my services?
Do I decide where I work and with whom I work?
Am I responsible for advertising and marketing my services?
Do I take responsibility for health and safety wherever I work?
Do I decide my own annual leave, when I’m too sick to work or just not do anything for a while?
Do I take care of my own equipment, my car, my safety gear?
Do I work out my own taxes, ACC levies, Kiwisaver payments?
Am I GST registered?
Do I use the services of an accountant?
Do I claim deductions against my income? E.g. petrol?
Have I set up my own business?
Do I have a contract for my services that includes what I want?
Do I employ staff, or use sub-contractors?
Do I control my own income? (i.e. do more jobs and earn more – or do less and have more free time)
Do I sign a contract drawn up by someone else for my services that has no reference to employer/employee?
Do I present a contract to someone to sign for my services?
An Employee says ‘Yes’ to the following:
Did I apply for this job from an advertisement?
Do I and the person I work for have an understanding that I am an employee?
Did I sign an employment agreement?
Do I receive wages, salary, commission or piece rates and am I paid weekly, fortnightly, monthly?
Does PAYE, ACC levy and Kiwisaver come out of my pay before I get it?
Does this job go on until I decide to leave or my employer changes things?
Does the person I work for (my employer) tell me when, where and how to do my work and who to work with?
Does my employer take responsibility for my health and safety where I work?
Do I have to ask for an increase in income and have a good reason for doing so?
Do I face sanctions if I do things wrong on a regular basis?
Do I get paid for annual leave, sick leave and bereavement leave entitlements?
A Fixed-term Employee says ‘Yes’ to the following:
Did I answer ‘yes’ to most of the above Employee questions except that I know when my employment will end?
Did I sign an employment agreement that had a good reason for finishing on a certain date?
A Casual or Part-Time Employee says ‘Yes’ to the following:
Did I answer ‘yes’ to most of the questions an Employee asks themselves?
Do I have some differences in the way my holidays, sick and bereavement leave are available?
Do I work less hours than others, or when I’m asked to, or just over the weekends, during holidays or late at night – but I have no finish date for my employment?
What Laws apply if things go wrong?
If you are an employee, fixed-term, casual, part-time or all the time, then the Employment Relations Act, the Health and Safety Act, and the Holidays Act cover you (plus a few others as well). However, if you are a self-employed contractor you come under the general civil law which sets out your rights and obligations and the law relating to health and safety applies to you as well.
If you are unsure of the finer points of how you work and what tax obligations you have or how to work it all out – an accountant is a good place to start –we have the expertise to work out exactly where you fit in the employment world - call us on 09 639 1004