Do I Hire an Employee or Contractor?

Hiring the right person at the right time can shape the future of your business. But should you take on a contractor or an employee?

This question isn’t just about contracts or compliance – it’s about scalability, cost, flexibility, and getting the job done right.

Let’s explore the key differences and decision points.

What is the difference?

Employees	Contractors
Ongoing employment contract	Fixed term or casual contract
Work set weekly or monthly hours	Work an agreed number of hours
You pay PAYE and Kiwisaver on their behalf	Contractors make own tax payments or can request withholding tax to be deducted
Use their employer’s equipment	Use their own equipment
Get paid for annual and sick leave	Don’t get paid for annual and sick leave
Receive ongoing training	Are expected to have the right skills at the time they start
Need to be paid regardless of the level of income	Can easily have their contract ended when income drops

Consider Your Workforce Needs

1. Do You Need to Scale Up or Down?

Businesses with seasonal demand or fluctuating projects – such as construction or tech – often prefer contractors.
Stable, year-round businesses might benefit more from hiring permanent employees for consistency and control.

2. Do You Require Specialised Skills for a Short Time?

Contractors are ideal when a niche skill is only needed for a short-term project or to meet a deadline.
This keeps your payroll lean while giving you access to the expertise you need – without long-term commitment.

3. Getting the Admin Right

Whatever you choose, compliance matters. Make sure you:

Have clear written agreements in place
Meet tax and holiday pay obligations
Provide correct classification to avoid fines or backdated liabilities

If in doubt, speak to a business advisor or HR specialist. It’s always safer to ask before you hire.

Client Success: How Ross’s Plumbing Got Structure Right

“We were coasting. Now we’re building something with purpose. We’ve got direction, better culture, and real excitement about what comes next.”
– Ross & Maureen, Ross’s Plumbing

Ross’s Plumbing faced a classic challenge: steady work, but a business that had plateaued.
Without the right systems and structure, growth stalled.
With help from Oxygen8’s Business Success Programme, Ross and Maureen re-evaluated how they hired and structured their workforce, giving them new clarity and momentum.

Meet Peter Jacobsen

Peter Jacobsen is a consultant at Oxygen8 who specialises in helping locally-owned businesses grow with people development, strategic branding, marketing, and operations. He works closely with business owners to strengthen their presence in New Zealand communities and turn local awareness into loyalty.

Contact Peter at PJ@oxygen8.co.nz or 021 922 023 to explore growth strategies for your business.

Want Help Making the Right Call?

Whether you’re hiring your first staff member or scaling your business to the next level, we can help.
Let’s make sure your team is structured for growth – not just survival.
Book a FREE consultation today to talk through your options with Oxygen8.