Contractors are not employees and as such are not covered by the same laws, rights and obligations as employees.
Employee
An employee is a person employed to do any work for wages or a salary under an employment agreement.
This includes people in triangular employment relationships (when someone is employed by 1 organisation, but their day-to-day work is controlled by another. For example, temping through a recruitment agency or being on secondment to another organisation).
Employees are entitled by law to minimum employment rights that your employer must give you. Your employer must:
- give you a written employment agreement, commonly called a contract
- pay you at least the minimum wage for all the hours you work
- pay you in cash, unless you’ve agreed to receive it in a different way such as by direct credit
- not take (deduct) money from your wages unless the law allows it (such as tax and student loan payments), or you have agreed in writing to have money taken out
- give you regular rest and meal breaks:
- for an 8-hour day – two 10-min breaks and one unpaid 30-min lunch break
- for a 6-hour day – one 10-min break and one unpaid 30-min lunch break
- give you 4 weeks of paid annual holidays, after you’ve worked for your employer for 12 months
- give you up to 12 paid public holidays if they fall on a day that you would usually work
- give you a paid alternative holiday if you’ve worked on a public holiday on a day you would usually work
- after you have worked for your employer continuously for 6 months give you 10 days of paid sick leave, give you bereavement leave, give you family violence leave.
- provide a workplace that is healthy and safe, and free from discrimination and bullying
- consider flexible working arrangements
- allow you to join a union if you want to, without any pressure to join, or not to join
- talk to you in good faith if there will be any change to the workplace that might negatively affect your hours or role; for example, restructuring
You can also resign at any time by notifying your employer that you’ll be leaving and working the notice period set out in your employment agreement.
Your employer must also keep records about your employment history with them, such as when you worked, for how long and what your wages were. You can ask to see the records your employer has about your employment at any time.
The minimum rights and responsibilities set out in law apply to all employees, even if:
- they’re not listed in your employment agreement
- your employment agreement tries to trade minimum rights off against each other
- your employment agreement includes benefits and rights that are less than required under the law, or
- you do not have an employment agreement in writing (note: by law, your employer is required to give you one).
Contractor
A contractor (also known as a self-employed person or independent contractor) is engaged to perform services under ‘a contract for services’.
Contractors:
- are self-employed and earn income by invoicing for their services
- do not have an employment agreement
- are not covered by most employment-related laws and the Employment Relations Act 2000
- cannot bring personal grievances, and general civil law determines most of their rights and responsibilities.
Health and safety laws apply to both employees and contractors.
If you are incorrectly hired as a contractor rather than as an employee, you may miss out on:
- your minimum employment entitlements (for example, annual holidays and sick leave)
- your KiwiSaver superannuation subsidy.
You may also pay tax and ACC levies that you should not have to.
If there is a dispute about whether someone is an employee or a contractor you can find more detail at https://www.employment.govt.nz/starting-employment/types-of-worker/employee-or-contractor or call the NZ Employment Service Centre on 0800 20 90 20