Got a mix of employees and contractors in your business? Remember, they’re not just different in how they’re paid and taxed – they bring their own flair to the party!
No matter what nickname you’ve bestowed upon the person in question, that label is far from final. If the worker’s standing is up for debate in the Employment Court or Employment Relations Authority, for instance, the Employment Relations Act 2000 demands a peek into the ‘true essence of the bond’.
Common law tests lend a hand in uncovering that secret. They consist of:
- the control test – i.e. how much control the hirer has over the worker.
- the integration (or organisation) test – i.e. whether the worker is independent or instead an integral part of the business organisation of the person who engaged them.
- the economic reality (or fundamental) test – i.e. is the worker performing services as a person in business on their own account?
These tests, with all their complexities, and the quirky laws in the employment realm, also lend a helping hand to Inland Revenue in figuring out where a worker stands.
Key payment differences
When dishing out cash to your team, remember to slice off PAYE, ACC, Student Loan Repayments, Child Support, and KiwiSaver/Superannuation.
Don’t mess with the taxman – Inland Revenue’s got its eyes on you! They don’t take kindly to employers playing fast and loose with PAYE. Get it wrong, and you could end up in a fine pickle!
The bottom line
As an employer, you’ve got to keep those records ship-shape and know the tax drill for your workers’ earnings.
Give us a shout. We’ve got your back!