If there is intent to employ contractors, employers should follow the guidelines below to ensure the worker is a genuine contractor. Differences Between Independent Contractors And Employees A contractor is less likely to be integrated into the team, for example they might not be invited to company events, and they should not be required to wear company uniform. Contractors control the hours they work, how work is done, and use their own tools. Unlike employees, an employer is not required to maintain contractor records to the same extent as payroll and other data for employees. Again, contractors also pay their own taxes and other government levies, while an employer is required to make these payments on behalf of an employee. Ultimately, this means they are not entitled to annual leave or sick leave, and they cannot claim a personal grievance. Unlike an employee, an independent contractor is not covered by normal employment laws.

The payment of contractors is done through invoices, and contractors are responsible for paying their own tax and Accident Compensation Corporation (ACC) levies. This agreement will outline payment, duties and other important factors, similar to what an employment agreement does for employees. This type of agreement is referred to as an independent contractor agreement. Sometimes referred to as an independent contractor, a contractor will be engaged by a principal (often the business owner) to complete certain tasks or perform services. What Is An Independent Contractor Agreement? However, the arrangement must be managed effectively. In some industries, it makes sense to utilise independent contractors instead of permanent employees.

Idependent contractor expenses