Contractor vs employee - which one is my worker?

The contractor/employee distinction is set by IRD's tests, not by what you call the person in conversation. Mis-classification can lead to back PAYE, holiday pay claims, and IRD penalties.

Key IRD tests:

• Control - do you direct how, when, and where the work is done? (more = employee)
• Integration - is the person integrated into your team and core operations? (more = employee)
• Independence - does the person have their own business, multiple clients, and supply their own tools? (more = contractor)
• Risk - does the person take financial risk on the work? (more = contractor)

For tax purposes:

• Employee - PAYE withheld and paid to IRD, KiwiSaver deducted, holiday pay accrued. Pay Hero handles this.
• Contractor - paid in full (or with schedular tax for some industries). They handle their own tax. No PAYE, no KiwiSaver, no holiday pay.

If you are not sure which applies to a specific person, book a tax advisory session - the misclassification cost is much bigger than the advice fee.