Anna spoke to several accountants that other contractors had recommended to her and chose one that she was getting used to and that seemed the most proactive. There are many differences between contractors and employees that affect the rights and obligations of the organization and the employee. When you hire someone as an independent contractor, you agree in your independent contractor contract what, when and how they will provide their services. They should also indicate whether they need their own insurance and what happens to the intellectual property they use or create. You do not have to deduct PAYE tax from your salary or accumulate annual leave, and you do not have to keep records. Even if you designate your employee as a contractor in your contract documents, the nature of your employment relationship is ultimately subject to many factors established by law. Employment New Zealand offers legal tests to help you distinguish an employer from an entrepreneur, including the intent test, the control and independence test, the integration test and the fundamental test (economic reality). You need to think about your situation and apply all the tests to help you decide. If you have any doubts, contact employment services or seek legal advice. For start-ups or companies looking for investments and/or a liquidity event, it is important to conclude this type of agreement for all independent entrepreneurs in order to demonstrate that the company`s intellectual property is properly protected, i.e. there can be no argument as to whether the company or independent entrepreneur owns the intellectual property. Employers must pay a portion of payroll tax to employees, while independent contractors file their own personal tax returns. You need to know if you are an employee or a contractor, as your rights and obligations are very different.
Keeping track of who is an employee and who is a contractor will ensure that a business is able to properly file tax returns and comply with labor laws. As an entrepreneur, you can hire a contractor or self-employed person to provide a specific service to your business under a service contract. Unlike employees, you don`t have to present an employment contract to contractors. They can decide how they work, they use their own tools and pay their own taxes. However, you should always agree to some important terms in writing to ensure you protect your business from liability. For example, your independent contractor agreement should include the following: This test examines whether the work performed by the individual is fundamental to the employer`s business (and whether they are “part of the organization”). As a rule, the work done by a contractor is only a complementary part of the business. Entrepreneurs are self-employed and earn income by charging the client for their services. A contractor pays their own VAC taxes and duties. Health and safety laws apply to employees and contractors.
Stay up to date with contract news. Get the latest updates from the government on issues affecting entrepreneurs. Changes in the law and compliance issues to new possibilities and tips and tricks for smart work. An employee is a person who is employed under a service contract (commonly known as an employment contract). This includes people who work in a triangular employment situation. You should determine whether the company`s relationship with the other proposed party to the agreement is independent or whether the person must be an employee of the company. In certain circumstances, a person may be considered an employee, regardless of their declared contractual status. Being considered an employee depends on individual circumstances, but factors include the length of the relationship (longer term may indicate an employment relationship), who provides the equipment, who controls how and what work is done, and how autonomous the contractor is.
It depends on the industry and the type of service they offer, but usually your contractor`s rate is higher because they have to cover things you don`t pay for as an employer, like vacation and sick leave, KiwiSaver, and insurance. A rule of thumb is to take the rate you would pay an employee for a similar job and add at least 20%. A great way to get an idea of the market rate for work is to use a variety of job boards like Seek or Trade Me, or talk to a recruiter. Section 101 of the Copyright Act defines a “commissioned work” as the work of employees in the context of employment, including creative work developed by an independent contractor in certain circumstances, such as a translation, a contribution to a collective work, and more. In a contractor`s contract, you can include conditions that prevent a freelancer from revealing information about your business. There are also terms on the non-solicitation and non-competition clause in the event that there are conflicts of interest in the industry or if there is a competitive risk. .
