​Contracting in NZ

What is contracting?

Contracting is a significant part of the technology market.

Thinking of branching out on your own but not sure where to start? Between employment opportunities and not ready to commit to a full-time position? Enjoy working on a project basis? Wanting more flexibility?

Independent contractors are significant players in the job market - in particular, the technology industry. Our clients will come to us with a specific outcome or a one-off project they have in mind to be delivered, as post this, they won't require a permanent employee. They utilise our services because of our in-depth access to talent in the market and our ability to turn around highly qualified capability.

Contract work can be rewarding but it certainly isn't for everyone. Here are some key things to consider before you branch out:

    • Is contracting right for you?

    • Setting up as a contractor

    • Contractor Rate Guide

    • Contracting with Recruit I.T.

Why Start Contracting?

Benefits of contracting

    1. Flexibility: Being a contractor means you’re your own boss. Enjoy excellent flexibility and tick off your own to-do list between assignments.

    2. Try Before You Buy: Contracting allows you to get a feel for the culture, fellow employees and the job before signing an employment agreement for a specific role or with a company.

    3. Broaden Experience: Contracting allows you the opportunity to broaden your experience across various projects, sectors, and situations. You can add more strings to your bow and increase your professional development in your industry of choice.

    4. Financially Rewarding: Contractors get paid a premium and have the opportunity to earn more money than if you were a permanent staff member.

    5. Networking: As a contractor, you may need to regularly head into new environments and network as you start engagements. It is a great way to meet new people, build your reputation and hear about new job opportunities.

    6. Constant Challenges: Contracting is excellent if you get bored quickly and need constant variety in projects and work environments.

Potential drawbacks

    1. Reduced Security: Along with the contracts being typically 3 – 6 months, as a contractor, your job security is less than that of permanent employees. Usually, contractors are the first to have their contracts terminated during restructuring or cost-cutting measures.

    2. Potentially Irregular Income: There is the risk that the gap between contracts could be weeks. You will need to budget for this.

    3. Limited Career Training: Without access to formal workplace training programmes, you will need to plan and cover any extra costs such as certifications and development you may want to do. You may also need to provide your own equipment.

    4. Administration: Time and energy are required to keep on top of taxes, record keeping and the potential setup of your small business. One of our partners, HNRY, can provide an end-to-end service to assist with this work.

    5. Constantly Looking: As you’re not in a permanent role, you naturally want to ensure you have work lined up post your contract end date. Searching involves time and energy and is where having a good working relationship with a recruitment agency (and of course Recruit I.T.) has its benefits.

    6. No Annual Leave or Sick Leave: Since you don´t have employment agreements in place - unlike permanent or full-time employees - if you aren’t working, you won’t get sick leave or holiday pay.

Check out our current contracting roles here and start your journey to contract work now!

Frequently asked questions about being a contractor:

No. You do not need to set up a limited company or any kind of business structure to perform services for a business under contract. Many of our contractors are a mixture of GST Registered, Limited Company, or working via a Tax Agency such as HNRY.

You must register for GST if your annual turnover for the previous 12-month period has exceeded $60,000, if you expect your turnover will exceed $60,000 within the next 12 month period, or if you charge GST in your prices. If you’re not already registered for GST as a sole trader, you can do this through the IRD website – it only takes a couple of minutes.

As an independent contractor, you are responsible for paying your own income tax and provisional tax in respect of the services you provide. The tax you pay includes but is not limited to ACC levies, GST (if applicable), and all other liabilities whatsoever. While many people choose to pay their own tax themselves (or via their accountant), there are some alternatives for those who don’t want to worry about it all. At Recruit I.T., we partner with HNRY, an NZ tax agency that manages the finances and income tax obligations of the self-employed and independent contractors. If interested, get in touch with your Recruit I.T. consultant for a discount code.

Effective from 1 April 2017, Recruit I.T. (and all other recruitment agencies) are obligated to deduct withholding tax (WT) from all payments made to you. We use your individual IRD number and pay tax monthly on your behalf. You need to complete and send us the tax notification form IR330C prior to starting your contract.

There are various factors to consider when assessing the rate. However, please check out our salary guide here, or speak to your Recruit I.T. Consultant for guidance around the current market rate

Please see below for the benefits of contracting via Recruit I.T.

You do. You will need to plan for your own retirement, as your independent contracting arrangement means the employer is not required to hold contractor records, contribute to KiwiSaver or deduct PAYE. KiwiSaver contributions need to be paid directly to your scheme provider.

Business expenses incurred are reimbursable only if you have pre-arranged this with your client and you keep your tax receipts. Keep in mind that you may also be responsible for providing your own tools and any expenses this may incur. Please contact your Recruit I.T. Consultant for details on how to make a claim.

No. As a contractor, you don’t receive any employee entitlements. This includes maternity, personal grievance, statutory or sick leave, or paid holidays. This means the annual 31 paid days off you’ve previously looked forward to may be less enticing because you aren’t earning any income.

Yes. Please discuss your holidays and leave with your client initially and then inform your Recruit I.T. Consultant.

Your invoice will be paid on or around the 25th of each month for the previous month’s work. If the 25th falls on a weekend or public holiday, you will get paid the business day prior.

Approximately six weeks before your employment contract ends, your Recruit I.T. Consultant will liaise with you and the client to discuss whether your independent contractor agreement is likely to be renewed. If it is, a new contractor services agreement will be produced for you to sign.

  • Business.govt.nz - https://www.business.govt.nz/

  • KiwiSaver - https://www.ird.govt.nz/kiwisaver

  • ACC - https://www.acc.co.nz/

  • Contracting vs Employee - https://www.employment.govt.nz/starting-employment/who-is-an-employee/difference-between-a-self-employed-contractor-and-an-employee/

Contracting via Recruit I.T.

Benefits of contracting with Recruit I.T.

    • Receive payment earlier than going direct

    • Recruit I.T. are BTCI (Buyer Tax Created Invoice) approved by the Inland Revenue Department. This means we provide you with an invoice without you needing to create one.

    • Discounted PI & PL Insurance

    • Cloud-based timesheets & payslips

Our payment schedule

Recruit I.T. uses a cloud-based timesheet and payroll system that ensures all contractors are paid on time. All contractors are paid monthly and given a payment schedule detailing the timeframe for sending documents and payment dates.

If you miss your timesheet and invoice deadlines your payment may be delayed. If you think you may have trouble meeting the timeframe, please contact our finance team to discuss options.

PI & PL insurance offering

Our clients require our contractors to maintain their own insurance - both Public Liability and Professional Indemnity. Essentially this protects you legally and financially from any mistake or error you make while doing work, including any loss that your clients’ business might suffer as a result. When you are an employee of a company, you do not have this risk, as your organisation covers you under their professional indemnity insurance policy. For this reason, independent contractors purchase liability insurance to protect them from the risk of causing a significant loss to their client, which they either couldn’t or wouldn’t want to pay for out of their own pocket.

Contractor rate guide

As one of New Zealand’s leading agencies in the technology sector, we have access to a range of salary data, particularly around contractor rates in the current market. Please feel free to download your complimentary Recruit I.T. Salary Guide covering contractors’ market rates.

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​​If you are after a particular skill set that isn’t outlined in our Salary Guide, please

 Get in Touch

If you would like to see what contracting opportunities are available, please check out Our Jobs

 

Alternatively, if you would like to speak to one of our consultants to understand the market and demand for contracting in your chosen skillset then check out Our Team