Contracts for Service Policy


This policy applies to all members of the University who engage independent contractors by way of a Contract for Service.


To outline the guiding principles around the use of Contracts for Services at the University, and direct decision making to ensure that only bona fide (genuine) independent contractors are engaged on a Contract for Service.


A Contract for Service (“CFS”) is a legally binding agreement between the University and an independent contractor.

A CFS states the terms and conditions of the engagement. This includes the scope of the service, price to be paid, and the rights and obligations of both the University and the independent contractor.

It is important to have a CFS to protect both the University and the independent contractor. This helps both parties avoid any potential ambiguity, misunderstanding or disputes that may arise in the absence of a formal written contract. A CFS is also critical to minimise the University’s potential for exposure to unnecessary legislative, financial, tax or reputational risk.

The law distinguishes between two types of employment relationship: the employer–employee relationship and the principal–independent contractor relationship. Each relationship has different legal rights and obligations. The principal differences between an independent contractor and an employee are detailed here: Contracts for Service (CFS) - The University of Auckland

A “Contract for Service” applies to the relationship between an independent contractor and a principal. It emphasises the nature of the services to be provided by a person rather than their availability to work as directed. The courts have developed several common law tests to determine whether there is an employer-employee relationship or a contract for service relationship. The case law shows that the main tests are the intention, control, independence, fundamental and integration tests. These tests are outlined in the guidelines associated with this policy.



1.  Approval to proceed with a CFS must be received from a manager with the appropriate Financial and HR Delegation.

2.  A Contract for Service must only be established where the standard common law tests for employment status confirm that the relationship is one between the University as Principal and an independent contractor as service provider.

Note - Other than in exceptional cases, core teaching and research roles at the University do not meet the standard common law tests and in these cases an employment agreement should be progressed rather than a contract for service.

3.  A Contract for Service must not be established where the standard common law tests indicate the relationship to be one between the University as Employer and an employee. This is because the University would be liable for any unpaid income tax, penalties and/or claims under employment legislation where employees are incorrectly engaged as independent contractors.

4.   Tax on schedular payments (withholding tax) must be deducted from all payments made to independent contractors (other than NZ registered companies), where the service provided would fall within activities listed on the IR330C form or as prescribed in Schedule 4, of the Income Tax Act 2007.

5.   No tax on schedular payment is required to be deducted where an IRD Certificate of Exemption has been provided.  


6.   A CFS will generally be used where an individual is required to deliver and provide specialised technical skills and expertise where the capability and/or capacity is not available within the University of Auckland or would require extensive training and upskilling of current staff.

7.   The following individuals will not be engaged under a Contract for Service (unless approved under exceptional circumstances by the relevant HR Manager and Finance Business Partner or Director of Faculty Finance):

i. current employees of the University, as any additional work is to be managed using a variation to an employment agreement

ii.  former employees (engaged to undertake employment of similar nature of work to their previous employment) of the University.

8.   Contracts under $10,000, within a 12-month period will be setup through the simplified contractor process. Refer to Contract for Service Decision Tree in the CFS guidelines.

9.    Research sub contracts are specifically excluded from this policy. Refer to additional information in the Contracts for Service Guidelines.  


10.   A CFS must be initially set up for no more than 12 months.

11.   Any extension to an existing CFS, must have the same approval level as original CFS (see “Approvals” section).

12.   A CFS must not exceed two years, on the same program or project. Engagements longer than two years could be deemed as not meeting the common law tests for independent contractors and expose the University to taxation and other risks.

13.   Where a contractor has an existing Contract for Service and is to be engaged in a different area of the University, the contractor must be engaged on a new contract. If you are following the simplified CFS process, ensure you adhere to the guidelines.

 Prior to commencement 

14.   A CFS must be created and approved through the relevant CFS process and agreed, prior to service commencing.

15.  Standard University terms of conditions must be accepted by the independent contractor.

16.  No Contract for Service can be entered into without the inclusion of a fee amount including GST, where applicable.  

Contractor requirements 

17.   The contractor must self-register for the CFS application to become accessible. All assessments, stages and business rules must be completed for a contract to be generated.

18.  Contractors must have both public liability and indemnity insurances. 

19.  Independent contractors must follow all University of Auckland’s Policies and Procedures. 

Contracting manager’s responsibility 

20.   Contracting managers are required to ascertain if a CFS is the most appropriate form of engagement, considering this policy and the common law tests.

21.   Contracting managers must also ensure that contractors are engaged to meet specific business requirements that the business in unable to meet internally for reasons of capability or capacity.

22.   Any actual, potential, or perceived conflict of interest must be identified, disclosed and resolved prior to entering a CFS, and reviewed for any subsequent renewals. These should be performed in accordance with the University Conflict of Interest Policy.

23.   The contracting manager is responsible for management of the independent contractor and must:

  • ensure the contractor is properly inducted, granted appropriate access to University systems and relevant policies and procedures 
  • ensure the contractor delivers the services as agreed and where there is a dispute to follow the relevant processes outlined in the CFS 
  • manage renewal process if applicable; and
  • ensure all University property in the contractor’s possession is returned before the term of the Contract for Services expires.


24.   Prior to engagement, approvals must be obtained: all CFS require approval from a manager at Level 3 of the University Organisation Structure.


The following definitions apply to this document:

Common law tests of employment status provide the main tests used by the Courts of New Zealand for deciding employment status –(i) the intention of the parties, (ii) control, (iii) independence, (iv) fundamental and (v) integration tests. The tests are provided in detail in the guidelines to this policy (see link below)

Employee is a person employed by the University to perform work for remuneration.

Independent contractor is an individual/organisation contracted by the University to supply a service. They are not employed by the University and do not have the same benefits and employment rights as employees.

Members means those persons who make up the University as set out in section 3(2) of The University of Auckland Act 1961 and includes University employees, students, Council committee members, contractors, sub-contractors and invitees.

University means Waipapa Taumata Rau| The University of Auckland and includes all subsidiaries.

Key relevant documents

Document management and control

Owner: Chief Financial Officer
Content manager: Group Financial Controller
Approved by: Vice-Chancellor
Date approved: 22 November 2022
Review date: 22 November 2027