Author: Crescent Consulting

Categorised as: Resources

Many professionals opt for contract work over traditional full-time employment. If you’re considering contracting, it’s essential to understand the advantages, drawbacks, and key considerations that come with this choice. In this article, we’ll explore what it means to be a contractor in the New Zealand job market.

Contractor vs. Employee

At its core, the difference between a contractor and an employee lies in the nature of their engagement with a company. Employees are permanent members of a company’s personnel, entitled to benefits like sick leave, paid holidays, and job security. On the other hand, contractors are engaged on a project-by-project basis, usually for a predetermined duration. They are considered self-employed and are responsible for managing their own taxes, insurance, and other administrative tasks.

Benefits of Contracting

Flexibility: One of the most enticing aspects of contracting is the flexibility it offers. Contractors have the autonomy to choose projects that align with their skills and interests, and they often have more control over their work schedule.

Variety: Contracting exposes professionals to a diverse range of projects and industries. This variety can be intellectually stimulating and offers opportunities for skill expansion.

Higher Earning Potential: Contractors often have the potential to earn more than their employee counterparts. They can negotiate their rates based on their skills and the demand for their expertise.

Networking: As contractors move from one project to another, they build a broad network of professional contacts, which can open doors to future opportunities.

The Downside of Contracting

Lack of Job Security: Contracting can be uncertain, as contracts are often short-term. This lack of stability can be a concern for those who value a steady income and long-term job security.

No Benefits: Contractors typically don’t receive benefits like paid leave, health insurance, or retirement plans from the companies they work with. They need to factor in these costs and plan accordingly.

Inconsistent Income: The irregularity of project durations can lead to inconsistent income, making budgeting and financial planning challenging.

Self-Employment Responsibilities: Contractors are responsible for managing their taxes, insurance, and other administrative tasks. This can be time-consuming and complex.

Considerations Before Getting Started

Financial Preparedness: Ensure you have a financial cushion to cover periods without contracts and unexpected expenses.

Market Research: Research the demand for your skills in the current job market to gauge the availability of contracts.

Legal Structure: Decide whether to operate as a sole trader or to set up a company. Each has its implications for taxes and liability. provides a tool to help make choosing a business structure easier.

Rate Negotiation: Determine your desired rates by considering your skills, experience, industry rates, and cost of living.

Networking: Build and maintain a strong professional network to discover potential contracting opportunities.

Becoming a contractor in the New Zealand job market offers both exciting opportunities and challenges. The decision to pursue contracting should be based on a thorough understanding of its implications. While flexibility, variety, and earning potential are enticing, the lack of job security and benefits, as well as the responsibility of managing your self-employment affairs, should not be underestimated. As with any major career decision, careful research, financial planning, and networking will set you on the path to success in the world of contracting. offer advice for going contracting that is well worth a read.