Before parties enter into a work contract, they need to decide if this should be an employment agreement or an independent contract.
Employees have many rights that independent contractors do not have, such as paid annual holidays, paid sick leave, paid public holidays and paid bereavement leave. They can raise personal grievance claims for unjustified dismissal. Independent contractors do not have these rights.
The Employment Relations Act does not tell you which type of workers should be employees and which type should be independent contractors. We can provide advice on the differences and help you work out which type of contract is best for you.
Over time the courts are developing a number of legal tests to determine if a worker should be an employee or an independent contractor. They look at a number of factors such as control, integration and the true nature of the relationship between the parties. They say that the label given to the relationship will not be determinative of the legal nature of that relationship. Current litigation is considering the status of Uber drivers.
Although it is not a legal requirement for independent contractors to have written contracts, we strongly advise that they do. For example, the parties need to know what work will be done, what will be charged for the work, and how the contract can be terminated.