What to consider when hiring

Hiring an employee is a big decision. To make sure you hire the right person for the job, consider these things:

  • how much work needs doing
  • when work needs to be done by
  • the difference between an employee and a contractor
  • what level of responsibility you’re willing to take on
  • what the rules are around different staff types. 

Staff types

Employee, contractor or intern? Check out the below overview so that you can choose the right kind of help for your business.

They can help you with:

  • ongoing full- or part-time work that always needs doing and is expected to continue indefinitely
  • building a work culture that is committed to the business
  • moving into future leadership roles.

Their employment agreement must formalise wages and conditions.

Things to consider:

  • whether there is enough work for them to do.
  • how can you grow their skills to improve your business.

They can help you with:

  • working for a specific period of time, like seasonal work
  • completing a big project that needs doing
  • covering the workload of other employees who might be away, for example on parental leave.

Their employer agreement must clearly state beginning and end dates, and why they have to be on a fixed-term agreement.

Employees on fixed-term contracts are not contractors – they’re employed by you and entitled to all the same benefits as a permanent employee.

Things to consider:

  • if you need them for longer, you have to either give them a new agreement that explains why it’s still for a fixed term, or offer them a permanent role.
  • apprentices and paid interns might be fixed-term employees.
  • you can’t hire someone on a fixed-term contract to try them out before you hire them permanently. To do this, you must hire them permanently and include a trial period in their employment agreement before they start work.
  • if you decide to offer the fixed-term employee a permanent position after the fixed-term contract ends, they can’t be subject to a trial period, but you can use a probationary period if necessary.
  • if you want to dismiss a fixed-term employee, you need to follow the same disciplinary and dismissal processes as for other employees.
  • you should always finish the agreement at the agreed time. If you need to extend it, do it in writing or create a new fixed-term agreement before the original agreement expires. You can’t extend a trial period once it ends or use it for someone who has worked for you before.
  • if you’re thinking about renewing a fixed-term contract more than once, consider hiring a permanent employee.
  • if you’re hiring someone for a fixed term of less than a year, you can agree together that they’ll be paid 8% extra (before tax) instead of earning annual leave.

Permanent or fixed-term employment – Employment New Zealand 

Minimum rights of employees – Employment New Zealand

Manage public holidays – Employment New Zealand

 

They can help you with:

  • times when you might need an extra pair of hands
  • showing up when they’re needed
  • fitting into your schedule.

Their employment agreement must clearly state the uncertain hours and casual nature of the work. Also include an indication of days and time periods they might be asked to work.

The hours of work clause should explain:

  • that they’re working on an ‘as required’ basis
  • the amount of work they’ll get will change
  • how you’ll let them know when you would like them to work
  • that they can agree to work if asked, but they don’t have to.

You can offer a minimum number of hours for each work session, but you don’t have to.

Things to consider:

  • they don’t have to accept any offer of work given.
  • they’re still entitled to paid leave.
  • if the work becomes more regular, consider having them as a permanent employee.

Leave entitlements for casual employees

Like all other employees, casual employees are entitled to:

  • annual leave
  • sick leave
  • bereavement leave.

Because they don’t have set hours, you can agree with them that instead of earning annual leave, you’ll pay them an extra 8% of their salary or wage each pay.

They are entitled to sick leave and bereavement leave after six months of starting work with you, if during that time they have worked:

  • an average of at least 10 hours a week
  • at least one hour a week or 40 hours a month.

Casual agricultural work

Casual workers doing agricultural work are charged tax at a flat rate.

Leave and holiday entitlements - Employment New Zealand 

Enrol temporary and casual employees – Inland Revenue

Contractors are not classed as employees.

They can help you with:

  • special skills or knowledge
  • working for a limited time
  • bringing their own tools and equipment with them. 

Things to consider:

  • they get to decide how to do their job by the deadline, including location and working hours.
  • they sort out their own obligations with Inland Revenue and ACC.

You should give them:

  • a contract service agreement
  • an agreed timeframe to complete the work.

Unpaid interns or volunteers are not classed as employees.

They can help you with:

  • freeing up your time
  • doing one-off jobs
  • charity work or anything that might give them new experiences or skills.

Inland Revenue could see koha or gratuity that you give them as payment. If you are regularly giving gratuity or paying them, consider having them as a paid employee.

You should give them:

  • any training that is required to do the task, for example health and safety training
  • any equipment they might need
  • a record of when they worked for you
  • a written agreement that explains this is an unpaid internship/volunteer position only, what the nature of their work is, and how long you have agreed it should last. 
Case study

Fixed-term done right

fixed term done right  thumbnail

David owns a busy painting business that’s won a bid to paint two office buildings, a three-person job. David doesn’t have enough employees for this job, so he hires three new workers on two-month contracts.

Case study

Fixed-term done wrong

fixed term done wrong thumbnail

Wendy owns a shop in a busy mall. Wendy has two assistants and needs one more. Some of her previous assistants have been unreliable, so she’s wary of taking on a permanent employee. She decides to offer a three-month contract just in case things don’t work out.

Learn more about

Deciding to hire