Contractor True Cost Calculator NZ 2026/27

The five things you give up as a contractor

Each of the figures above comes from a specific New Zealand employment entitlement or contribution that stops the day you swap a payslip for an invoice book.

Paid annual leave

The Holidays Act 2003 entitles every New Zealand employee to a minimum of four weeks, 20 working days, of paid annual leave a year. At a daily rate of salary ÷ 260 working days, 20 days is worth a meaningful slice of income that a contractor simply does not receive unless a client happens to pay them anyway.

Paid sick leave

The statutory minimum is 10 days of paid sick leave a year once an employee has worked for the same employer for six months. This calculator defaults to 5 days, a more realistic figure for actual use in an average year, but you can move the dropdown to 10 to model the full entitlement, or lower if you rarely take sick leave.

Public holidays

New Zealand observes 11 national public holidays: New Year's Day, the day after New Year's Day, Waitangi Day, Good Friday, Easter Monday, Anzac Day, King's Birthday, Matariki, Labour Day, Christmas Day and Boxing Day. Most employees also receive a twelfth paid day off for their region's Anniversary Day, which is why this calculator uses 12 days rather than 11.

Employer KiwiSaver contribution

From 1 April 2026, employers must contribute a minimum of 3.5% of gross salary to an employee's KiwiSaver account, on top of salary. A contractor can still contribute to KiwiSaver voluntarily and receive the government member tax credit, but there is no employer match, so this 3.5% simply disappears unless the contractor funds an equivalent amount themselves.

The ACC Work Levy

Every New Zealander pays the ACC Earners' Levy, 1.75% of income up to a cap of $156,641, and this is identical whether you are employed or self-employed, so it is not counted as a give-up here. What changes is the ACC Work Levy: employers pay this on behalf of their staff, invisibly to the employee, while contractors and other self-employed people are billed for it directly by ACC each year, based on their industry classification. Rates range from under 0.4% of income for lower-risk office-based work to 3% or more for higher-risk trades, so use the industry preset closest to your own work, or your actual rate from ACC if you already know it.

Worked example

Aroha is a marketing specialist deciding whether to leave a $90,000 permanent role for a contract position. Her daily rate as an employee works out to $90,000 ÷ 260 working days, which is $346.15 a day. Her four weeks of annual leave is worth 20 × $346.15, or $6,923.08. Five sick days, a realistic average for her, adds another $1,730.77. Twelve public holidays add $4,153.85. Her employer's 3.5% KiwiSaver contribution on $90,000 is $3,150.00. Working in marketing consulting, she uses an ACC Work Levy rate of about 0.47%, which comes to $423.00 a year. Added together, Aroha gives up $16,380.70 a year, or 18.2% of her $90,000 salary, the moment she stops being an employee, before any difference in income tax, GST or business expenses is even considered.

What this figure does not include

This calculator deliberately isolates one thing: the dollar value of employment benefits a contractor no longer receives. It does not model income tax, the ACC Earners' Levy that both employees and contractors pay equally, GST, deductible business expenses, unpaid gaps between contracts, or employment protections such as notice periods and redundancy pay. For the full picture, including a break-even contract rate that accounts for tax as well as leave and KiwiSaver, use the Contractor vs Employee Calculator.

Who this calculator is for

This calculator is for employees weighing up a move into contracting, for contractors who want a clear number to justify their day rate, and for anyone comparing a contract offer against a permanent role on a like-for-like basis. It assumes a standard New Zealand employment package, a five-day working week, and that you would otherwise be an employee receiving these entitlements in full. If your current or prospective employer offers more generous leave, a higher KiwiSaver rate, or you know your exact ACC classification rate, adjust the inputs to match.

What this calculator assumes

• A five-day working week and 260 working days a year, used to derive your average daily rate.
• Annual leave fixed at the Holidays Act 2003 minimum of 4 weeks (20 working days).
• Public holidays fixed at 12 days (11 national days plus a regional Anniversary Day).
• Sick leave, employer KiwiSaver rate and ACC Work Levy rate are all editable to match your own situation.
• The ACC Earners' Levy (1.75%) is excluded from the total, since it applies equally to employees and contractors.
• Results are indicative and rounded for display; your actual ACC Work Levy invoice depends on your confirmed classification with ACC.

Frequently Asked Questions

What does the true cost of contracting mean?

Going from employment to contracting does not just change how you are taxed. It removes several benefits your employer currently funds without you noticing: paid annual leave, paid sick leave, paid public holidays, an employer KiwiSaver contribution, and the ACC Work Levy your employer covers on your behalf. This calculator adds up the dollar value of those five items at your income level, so you can see exactly what you are giving up each year, in dollars and as a percentage of income.

How many days of paid annual leave do New Zealand employees get?

New Zealand employees are entitled to a minimum of four weeks, or 20 working days, of paid annual leave a year under the Holidays Act 2003. As a contractor, any time you take off is unpaid unless you build the cost into your rate.

Why does this calculator default to 5 sick days rather than the full entitlement?

The statutory minimum sick leave entitlement under the Holidays Act 2003 is 10 days a year once an employee has worked for the same employer for six months. This calculator defaults to 5 days to reflect a realistic year of actual sick leave use, since most employees do not use their full entitlement every year. You can change the figure to 10 to model the full entitlement, or to your own expected usage.

Why 12 public holidays rather than 11?

New Zealand has 11 national public holidays: New Year's Day, the day after New Year's Day, Waitangi Day, Good Friday, Easter Monday, Anzac Day, King's Birthday, Matariki, Labour Day, Christmas Day and Boxing Day. Most employees also get a twelfth paid day off on their region's Anniversary Day, so this calculator uses 12 days as the realistic figure for most employees.

How much is the 3.5% employer KiwiSaver contribution worth?

From 1 April 2026, the minimum employer KiwiSaver contribution is 3.5% of gross salary. On a $90,000 salary that is $3,150 a year that your employer adds on top of your pay, with no equivalent for a contractor unless they set it aside themselves from their own income.

Why does ACC cost more for contractors than for employees?

Employees pay only the ACC Earners' Levy, 1.75% of earnings capped at $156,641, which is deducted through PAYE. Their employer separately pays the ACC Work Levy, a cost the employee never sees on their payslip. Contractors and other self-employed people must pay the Work Levy themselves in addition to the Earners' Levy, and the rate depends on their industry classification, from under 0.4% for low-risk office-based work to 3% or more for higher-risk trades. This calculator lets you choose an approximate rate for your industry.

Does this figure tell me exactly what to charge as a contract rate?

Not directly. This calculator shows the dollar value of what you give up, not the day or hourly rate you need to charge to replace it. Add this annual figure to your target income, then divide by your expected billable days, to see the effect on your rate. For a full side-by-side comparison of net take-home pay under each option, including income tax and GST, use the Contractor vs Employee Calculator.

Is this the same as the Contractor vs Employee Calculator?

No. The Contractor vs Employee Calculator compares full net take-home pay under both options, including income tax, ACC, GST and business expenses, and works out a break-even contract rate. This calculator has a narrower focus: it isolates and quantifies just the value of the benefits you lose, in dollars and as a percentage of income, without the full tax comparison.

Related calculators

• Contractor vs Employee Calculator: full net take-home comparison including tax, ACC and GST, plus your break-even contract rate.
• Tax Reserve Per Invoice Calculator: what to set aside from every invoice for tax, ACC, student loan and KiwiSaver.
• ACC Levy (Self-Employed) Calculator: estimate your full annual ACC levy from your liable income and combined rate.
• Contractor GST Threshold Calculator: work out when you need to register for GST.
• Self-Employed Take-Home Calculator: annual after-tax income for the self-employed.

Official NZ sources

This calculator is built from primary New Zealand sources. Always confirm current figures against the official source for your situation:

• Employment New Zealand: annual leave, sick leave and public holiday entitlements
• Inland Revenue (IRD): KiwiSaver contribution rates
• ACC: levies for self-employed people and contractors