What to check
General items
Check all these:
- What you’re expected to do (tasks you’ll perform, what you’ll deliver). You may see the word “services” used to describe this section.
- Where you’ll provide your services.
- How much you’ll be paid, and when you need to invoice for your fees. This might be weekly, monthly or after you’ve completed certain projects or tasks.
- What expenses or allowances you’ll be paid – for example, if you’ll be reimbursed if you use your own car or your own tools, or for food and accommodation if you travel.
- How many hours you’ll work per day/week/month (this could be a range) and when you’ll work them.
- How long the contract will last (also called its term) and if it can be renewed.
- Who your client contact person will be.
- If either party has the right to terminate the contract.
- How disputes will be resolved – when you’re a contractor, you can’t raise a personal grievance if you and a client you work for have a disagreement.
- Who will own any intellectual property that you may have developed as part of the contract.
Insurance or licenses
Check:
- if you need to have any insurance
- any licences you may need to do the work – for example, a full driver’s licence or forklift truck licence.
Restrictions
Check the following:
- If you can contact or work with the business’s clients and employees after you finish your contract – many contracts stop you from doing this for a specified time.
- If you can sub-contract the services you’re offering – for example, by employing another person to help you.
- If you can share information about your clients’ products and services with people outside their business – confidentiality clauses usually say that you can’t.
Renewals and changes
If there are any changes to what’s been agreed in your contract, make sure you get them in writing. These include if your client asks you to:
- stay on after the end date of your contract
- do any work that is different to what you agreed in your contract.
Ask them for a new contract, or for a variation to your existing contract, that sets out the changes.
Never feel rushed to sign a contract – read and think about it properly. If you’re not confident about signing a contract, get legal advice.
Cancelling contracts
You can generally only cancel a contract based on the terms you’ve agreed. This applies to both you and who has contracted you.
A contract is legally binding, so it can be difficult for one party to cancel it if the reason is not set out in the contract’s terms.
If you want to challenge your contract ending before the date you’ve agreed, get legal advice first.
Managing disputes
As a contractor, you can’t raise a personal grievance if you and a client you work for have a disagreement. Make sure you agree how disputes will be resolved as part of your contract.
Fixed-term employment agreements
You can only be taken on as a contractor if you’re truly an independent contractor, and not a fixed-term employee.
Some organisations may offer you a fixed-term employment role instead of a contracting role for short term projects or to cover for another employee’s extended leave, like parental leave.
When someone offers you a fixed term role, they should:
- explain why the role is only for a fixed term – there must be a genuine and credible reason
- specify when the term will end, when the project is completed, or when the season finishes, and give a detailed reason why it will end then.
As a fixed-term employee, you will:
- be entitled to all the same benefits employers must legally offer permanent employees – because you get these benefits, your rate of pay may be less than if you were working and invoicing your client as a contractor
- have your tax and ACC taken from your pay, as well as any other deductions you’re required to pay by law – for example, child support or student loans.
Think about these things before you decide whether to take on a fixed-term role.
Asking for more money
Fixed-term salaries are usually lower than a contractor rate – but you can ask for more. Even though you’ll get the same benefits as a permanent employee, you still have the uncertainty of finding new work when the fixed-term role ends. Ask to be compensated for this.
The amount of leave you’re entitled to will be in proportion to the length of your contract. If you’re unlikely to use paid leave, you may prefer to be taken on as a contractor and earn a higher rate. For example, if you’re with an organisation for just two or three months, you may prefer to be taken on as a contractor and earn a higher rate.
End date
If your contract ends at a time of year when it’s hard to get new contracts, like Christmas, consider asking your employer to extend your contract by a couple of months.
Learn more about