Navigating employment law is tricky. In a new country with a different legal system it’s even tricker. Should I be paid for my meal breaks? Should I have $3000 deducted from my wages for resigning early from my position? Should I be paid for the time I’m at work but not seeing patients?
These are all real scenarios – where do you think you stand?
Locum? Employee? Contractor? Who am I?
Hopefully not someone about to have an existential crisis. Knowing the terms of your employment will help you know what you are and are not entitled to, and therefore make an informed decision about what’s best for your circumstances.
There are lots of ways to earn money as a health professional. Let’s go through and define each scenario in plain language, the pros and cons of each, and common pitfalls that are worth addressing up front before you agree to commit your time and energy to a particular workplace.
Note: The Employment New Zealand Government website is the best resource for understanding Employment in New Zealand – crazy right? I’ve done my best to summarise some of the relevant bits for you here, but I’d thoroughly recommend you have a flick through this site if you’d like any further clarification.
A “locum” is essentially a temporary worker, usually filling in for someone’s absence.
Locum arrangements may be on an employee or contractor basis, so this title doesn’t necessarily define your rights. Read through the next few sections if you’re considering taking on a locum position and have the option of choosing whether you’re hired as an employee or contractor.
Most people understand the concept of being an employee (being hired by an employer to complete a certain job in exchange for payment), but there are different ways you can be paid as an employee.
- Wages: an hourly rate (as of 2021 minimum wage is $20 per hour)
- Salary: a fixed annual amount for agreed hours
- Piece rate: a type of commission for the number or pieces worked on e.g. patients seen, fruit picked (important note: you must still be paid the minimum wage for hours worked if the piece rate works out to be less than $20 per hour)
- Commission: payment based on sales made or other targets met. This may be a commission only or a combination of minimum wage with commission on top
The types of employee also vary:
- Permanent (full or part time): the job is yours until it’s terminated by you or your employer. Full time work in New Zealand is typically 40 hours per week.
- Fixed-term (full or part-time): employment will end on a specific date
- Casual: a very loosely defined term where there are no guaranteed hours or ongoing expectation of employment. The employer and employee arrange work when it suits them both.
- A few others e.g. seasonal etc.
- Minimum employment rights under law: as an employee you’re entitled to lots of stuff like minimum wage, public holidays, holiday pay, penalty rates (time and a half) on public holidays, 10 days sick leave per year, paid rest breaks and unpaid meal breaks based on the number of hours worked, bereavement leave, parental leave and KiwiSaver.
- Less admin: your employer pays your taxes on your behalf
- Security: you can bank on having that regular income hitting the bank for the agreed duration of your employment
- Health and safety: your employer is responsible for providing the facilities and equipment you need to perform your work
- Less flexibility: your work is dictated by your employer’s needs, and you’re responsible for following all (reasonable) instructions to the best of your ability at the agreed time
- ? Lower rates of pay: This totally depends on your negotiation skills, but while typically on face value your hourly rate may be lower than a contractor doing the same job, you’ll have holiday pay and sick pay and compulsory employer KiwiSaver contributions on top. Be sure to add up all the extras when doing your sums
- Essentially no tax deductions: unlike Australia there are very few deductions employees can make in New Zealand
Important Things to Remember
- You must be given a written employment agreement
- You must be paid at least the minimum wage (currently $20 per hour) for your time at work regardless of your agreed piece rate. For example if you are at work from 8am-4pm but only see 3 patients, your pay must be topped up so you are paid at least $160 for that 8 hours of work.
- On a standard 8 hour shift you are entitled to a 30 minute unpaid meal break, and 2 x 10 minute paid rest breaks; on a 6 hour shift you are entitled to a 30 minute unpaid meal break and 1 x 10 minute paid rest break
- An employee gets 4 weeks of annual leave each year once they have worked for an employer for 12 months. If you stay in a position for less than 12 months your annual holiday pay will be calculated at 8% of your gross earnings
- You only qualify for sick leave after 6 months of work
- Your employer is not allowed to tell you how to spend your pay, and not all wage deductions are legal – if there are any deductions on your payslip ensure you ask for an explanation
- Head to the Employment New Zealand website to read over the details of anything you aren’t sure about
Contractor is just one of many names describing an individual who is self-employed, a sole trader, a consultant, a free-lancer, or operating as a small business.
Whatever name you use, they are essentially self-employed people who are engaged to perform services under a contract. Contractors independently pay their own tax, don’t get paid annual leave or sick leave, but can make tax deductions (which I’ll explain below).
You can lawfully take on a health care position (e.g. as a physiotherapist or occupational therapist) as a contractor, but it’s important you know your rights and responsibilities to ensure this is the best way for you to earn money.
- You’re in control: pick when and how you work, the fees you charge, when you take breaks and when you take time off – the business contracting your services must agree of course!
- No formal/legal company set up tasks: just get to work, pay tax under your individual IRD number and off you go
- Tax deductions: As a contractor you can claim back expenses for business activity including registration fees, travel, meals, professional development/education… You’ll then pay tax on your net profits (i.e. gross income minus these deductions) when filing your income tax return – that means less money to the tax man! (Read my post on understanding the NZ tax system here).
- No work no pay: in theory you need to be seeing patients to be bringing money in, no paid meal breaks, no paid leave, no sick leave, you’re only paid for hours worked
- ? Less stability/protection/entitlements: depending on the length of your contract you may find yourself regularly on the lookout for the next new job. Have you got the savings in the bank if it takes a little longer than expected to lock something in?
- All the admin: You’re responsible for everything bookkeeping including invoicing the company and paying your ACC levies and taxes to IRD. Any stuff ups and the tax department will come chasing you!
- You need to register for GST if you earn over $60,000 a year
- Sham arrangements: some employers deliberately attempt to hire people as contractors when the reality of the working relationship is employer-employee (this gets them out of paying your extra entitlements). A major con to being a contractor is when you should really be an employee – if you’re not sure about your position, or need some help understanding the terms of your employment you can grab a free legal consultation with Citizens Advice Bureau to go over the terms of your contract before signing
Not having explored this myself I don’t want to lead you astray with dodgy info!
If you plan to set up a business while in New Zealand, better get some proper business advice.
Hopefully this info helps you with a basic understanding of what you can expect while working in New Zealand. But remember, there is also a lot of non-financial value in some roles (e.g. fun experience, mentoring, exposure to particular specialties, outside of work opportunities…) so money isn’t always king. Applying for a new job is a great time to sit down and have a think about what is really important to you, and plan your lifestyle accordingly – have some fun with it, put yourself outside your comfort zone and see how you grow!
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