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Contractor vs Employee

Is it better to be a contractor or an employee? Here’s an answer that might start a debate: It depends!

To help you decide for yourself, we’ve put together a quick comparative view of what’s what and who’s who.


Sometimes, a business needs an extra pair of hands for a specific project and they might only require support while the task is ongoing. If you’re brought on board to kick off a new program, provide special support during a season of market expansion, or redesign an organisation’s protocols, chances are you’re a contractor.


Being a contractor means you might have more freedom around your hours and schedule, working when you’re available instead of on a set roster.

Also, your specialised skill set will allow you to determine the price of your services, and you’ll deliver results through your own methods and tools. Sort of like a retired watchmaker capable of cracking open any vault, you’re brought in to do a one-of-a-kind job. Get the bounty, take your cut, and on to the next gig. You’re the best in the game, kiddo.


The flip side of being a contractor is that your income only flows when there’s work. You’ll need to make sure you have jobs lined up, in order to keep earning regularly.

Additionally, you won’t accrue sick leave or holiday pay. You’ll get paid in full, with no tax deducted prior, and left to your own devices to navigate the complexities of the tax system. And when the taxman comes knocking on your door, you better be ready to answer.

(Alternatively, you can just use Hnry – we’ll answer that door for you. Read more in our guide to being a contractor.)


Being employed by a company or organisation means you’ve signed an agreement with them to provide your time and your skills in exchange for a salary. Employment can be permanent or temporary, but it always carries the intention of being fundamental for the employer’s operation.


As an employee you can kick back and relax once you’re off the clock. Your employer will calculate all taxes and levies you owe, deduct them from your salary, and pass these on to IRD on your behalf. Your KiwiSaver contributions will be automated, your holiday pay and other leave will accrue as your employment progresses, and your agreement guarantees all your minimum rights under employment laws.

Basically, you can focus on your job description for a few decades, retire and buy a sailboat, never to wear anything but beige shorts and flowery shirts.


The potential downside? An employer is more likely to have more control over your schedule, as well as the tools and methods you use for the job you’ve been hired to do. You’ll likely have a boss supervising your work, and you’ll be expected to fall in line with their strategy, culture and values.

So which one is best for you?

There’s no verdict on which structure is best. Some might enjoy the stability of traditional employment and appreciate the challenge of building their career as they go through the ranks of the org chart. Others will hone specific skills that they’ll sell to the best bidder, surfing the tides of the market’s demand for their services.

DISCLAIMER: The information on our website is for general educational purposes only. It doesn't cover all situations and circumstances, and shouldn't be taken as direct tax advice. If you're looking for specific help with your taxes, join Hnry and our team of experts can provide you with assistance tailored to your business needs.

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