From The Legal Beagle Team 12/10/2015

Running your own business is an amazing experience, but you do need to be up with the play with the terminology and paperwork to make sure you stay on the right side of everyone! That means that as an independent contractor, you need to set up a contract for services between you or your company and the people or companies that hire you. But first let’s sort out some terminology to get things straight.

Am I An Independent Contractor Or An Employee?

First up you need to be clear about whether you are an employee or an independent contractor, which are two totally different things.

You are an employee if:

• You are covered by the Employment Relations Act 2000
• You get paid holiday pay, sick pay, bereavement leave or public holiday entitlements
• You get told when and where to work
• You are paid a wage and your boss sorts out all your ACC and tax requirements
• Your work is supervised and you are given everything you need to do your job
• You can’t be told not to come to work anymore unless it can be significantly justified and a fair process is followed
• You have an employment agreement or ‘contract of services’, rather than ‘contract for services’.

You are an independent contractor if:

• You are not subject to the Employment Relations Act 2000
• You have to do your own ACC, tax and possibly GST requirements
• Your contract can be cancelled with notice
• You don’t get sick pay, holiday pay, public holiday entitlements or bereavement leave
• You work for yourself and are self employed
• You don’t have a regular wage paid by your boss, just getting paid when and what your contract for services says you will get, such as a lump sum
• You provide your own tools or equipment needed to do your work
• You can sub-contract or hire someone else to do work for you which you have agreed to do for someone else
• You pay for your own training and are responsible for getting your own work done on time
• You have a ‘contract for services’

Which brings us on to the point that as an independent contractor, while it is not a legal requirement, it is a really smart idea to have a contract for services between you (or your business) and the person (or their business) who wants you to do some specific work for them. This is because having something in writing avoids miscommunication between parties, making certain that both parties are clear on what services are going to be provided, how much and when you are going to be paid and how long the contract is going to run for. So how do you write one and what does it need?

Things To Include In A Contract For Services

Okay straight up, if you want to make sure that any contract between you and the person or business who wants you to provide a service for them is completely legal, get it written by a lawyer. This is especially true if the service you are providing could in anyway cause damage to people or property, involves a large amount of money, needs high levels of confidentiality or if you are not too sure about writing your own contract for services. Otherwise, when writing up your own general contract for services, it needs to have:

• Both parties clearly identified with full legal names listed
• A title – something meaningful which makes sense to both parties and is related to the contract, like “Contract for Landscaping Services” for example.
• Scope and nature of services clearly stated – details or a list about the specific services you are going to provide
• Programme for the services – how long is it going to take? What are the start and finish dates? You can attach a specific schedule to go into more detail necessary
• Fees and timing of payments – state how much the total value of the contract is and the dates of when it needs to be paid by in full or in instalments. Or state how much you will be paid for every hour you work for this contract
• Termination – how the contract can be cancelled by either party and with what notice
• Signatories – both parties or their representatives must sign and date the contract
• Any additional clauses or conditions of engagement – such as confidentiality and other complex legal specifics (which you may need a lawyer to complete for you)
• What happens if something goes wrong

Disclaimer: The information on this page is general information only and must not be relied on as legal advice. Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies.