Everyone
Understanding types of workers
Learn about the different types of workers and how this affects employment rights and responsibilities.
A ‘worker’ can be:
- a contractor (a self-employed person or freelancer)
- a volunteer, unpaid intern or unpaid student
- an employee, which also includes:
- an apprentice or trainee
- a paid intern
- someone employed by a labour-hire or recruitment company but who works in a different organisation (called a ‘triangular employment situation’)
- a homeworker (a person who works for someone from a private home, but does not work on the house or its fittings or furniture)
- someone who has accepted a job offer but has not started working yet (called a ‘person intending to work’).
The type of worker someone is affects:
- their rights and responsibilities at work
- the rights and responsibilities of the organisation they’re working for.
It’s important to make the right decisions about what kind of worker someone is so that everyone:
- is clear about the working arrangements, and
- knows what their rights and responsibilities are.
Organisations who get this wrong could face extra costs and penalties.
Different types of workers
Here are the main differences between types of workers.
| Employee | Contractor | Unpaid intern, unpaid student or volunteer |
|---|---|---|
| Has an employment agreement (contract of service). | Self-employed under a contract for services. | Does not have an employment agreement. |
| Gets paid wages or salary. | Invoices the person they're working for. | Does not get paid or expect to be paid. |
| Their employer pays PAYE tax and ACC. | Usually pays their own tax and ACC. | |
| Is covered by employment law and has employment rights and responsibilities. | Is not covered by employment law and does not have employment rights or responsibilities. For example, does not get paid annual holidays and cannot raise a personal grievance. Is generally covered by civil law instead, like the law of contract. | Is not covered by employment law and does not have employment rights or responsibilities. |
Who is an employee?
An employee is a person who’s employed to work for a wage or salary under an A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
- they get paid regular wages or salary
- they get paid leave and holidays
- they do not control their hours of work
- they use tools and equipment their employer has provided
- they’re expected not to work for their competitors as well.
Contractors are not employees. There are 4 legal tests to determine if someone is an employee or contractor. It’s important to consider each situation individually and use these tests to work out if someone is an employee or contractor. Learn more:
Volunteers, unpaid interns and unpaid students are not employees if they do not get paid and do not expect to get paid. Learn more:
Volunteers, internships and studentships
People who work in the screen industry — for example film or video-game production — are not employees unless their agreement says they are. Learn more:
Employment Relations Act 2000 s6 Meaning of employee – New Zealand Legislation(external link)
Different types of employees
Employees can be:
- permanent
- fixed-term
- casual.
| Permanent | Fixed-term | Casual |
|---|---|---|
| Guaranteed ongoing employment. | Guaranteed employment only for a set period of time. | Does not have guaranteed or predictable hours. |
| There's always work for the employee to do. | For the fixed term, there’s always work for them to do. For example, they could be a seasonal worker during harvest or covering someone on parental leave. | They only work when their employer asks them to, and if it suits the employee. For example, they might cover for someone who’s off sick. |
| Their employment will end when either the employee or employer terminates the agreement. | Their employment will end on a specific date or event. | Their employment usually ends when either the employee stops accepting work or the employer stops offering work. |
Learn more about permanent, fixed-term and casual employees and their entitlements here:
Permanent or fixed-term employment
Trainees and apprentices
A trainee or apprentice is an employee who’s learning skills related to their job and earning at the same time. They could be doing a formal apprenticeship or industry training to get a qualification, for example, training to be a hairdresser and working in a salon at the same time.
They are usually employed on a permanent basis so once they finish their apprenticeship or training they keep working for their employer. Find out more:
An apprenticeship or trainee arrangement is different to an internship or studentship.
Volunteers, internships and studentships
Triangular employment situations
Workers in triangular employment situations are employed by their employer but do work for someone else.
An example is someone who’s employed by a recruitment agency and is sent to work for another organisation. Someone on a secondment is also in a triangular employment situation. Find out more:
Full-time or part-time?
An employee is full-time or part-time depending on how many hours they work each week.
There’s no legal definition of what full-time or part-time work is. Generally, full-time is working 30 hours or more every week and part-time is anything under 30 hours a week.
For example, Jamie works 9am to 5pm Monday to Friday. They are full-time.
Aditi works 10am to 3pm Tuesday to Thursday. She is part-time.
Under the law there is no minimum number of hours for any type of employee. However, zero-hour contracts are illegal. A zero-hour contract is an employment agreement which does not guarantee the employee any hours, but says they have to work if they are asked to.
Being full-time or part-time does not affect employment rights or responsibilities. Permanent part-time employees have the same minimum entitlements and employment rights as permanent full-time employees.
Choosing the right type of employee
To help decide what type of employee they need, employers should consider:
- how much work there is for the person to do
- if they can commit to providing work or not
- how long they need the employee for — is the work ongoing or just for a while
- if the hours of work are regular and predictable or irregular and unpredictable
- if the employee’s work arrangements will be different or similar to other employees — if similar, look at what type of employment other employees have
- if the person will be essential to the business — can the business run without them
- if the employee will be able to turn down work
- if the employee will be completing industry training, like an apprenticeship, while they’re working.
How to work out what type of employee someone is
To work out what type of employee someone is, it’s important to look at the:
employment agreement A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
- actual work situation — now, and in the past if there is a work history.
Don’t just rely on what the employment agreement says. It’s the actual work situation that determines what type of employment someone has, even if:
- it has not been agreed to in writing
- the employment agreement says something different.
This is known as ‘custom and practice’, which is when what people say or do over time is considered an agreement, even though they have not written it down.
For more information about the differences between permanent, fixed-term and casual employees, visit:
Regularly check what type of employment employees have
It’s important for employers to keep on top of what type of employment their employees have and check if the situation has changed.
If the employee’s work situation is different to what’s in their employment agreement, then the employer and employee should:
- enter into a new agreement, or
- agree updates to the existing agreement
so that it reflects what’s actually happening. This protects employers and employees by making responsibilities and entitlements clear.
Employees who think their employment has changed should speak to their employer about the situation — it could be time for a new or updated employment agreement.
For example, if you’re an employee who started off as an apprentice and now you’ve finished your training, you should talk to your employer about getting a new or updated agreement. Your employer must make sure your employment agreement:
- confirms your work hours now you’ve finished training (if they’ve changed)
- moves you off the training wage or starting-out wage (if you were getting paid the minimum training wage or starting-out wage, but are no longer eligible)
- updates your job description and responsibilities (if they’ve changed).
Creating an employment agreement
If you think you’ve got the wrong type of employment
If you’re employed, you have rights and responsibilities no matter:
- how many hours you work
- how often you work.
Employee rights and responsibilities
Any workers who think they might have the wrong type of employment should talk to their employer or the person controlling their work.