By Greg Allan, tradesman and creator of Data First Coaching
What actually decides whether someone on a brickwork job is an employee or a contractor?
Most bricklaying businesses assume the answer comes from how the invoice is written, a day rate means employee, a rate per thousand bricks means contractor. New Zealand law does not work that way. According to Employee or contractor?, contractors are not employees and as such are not covered by the same laws, rights and obligations as employees, so the label on the invoice is not the test, what actually happens on site is.
Employment New Zealand's gateway test says a worker is only a specified contractor if there is a written agreement that says so, the worker can work for someone else, can choose when to work or subcontract the brickwork out to a third party, can turn down extra work without the arrangement ending, and had a real chance to get independent advice before signing. If a labourer on a bricklaying job does not meet every part of that gateway test, the business then has to run the common law test, which Employment New Zealand describes as four legal tests used to work out the true nature of the relationship.
Why does this trip up so many bricklaying businesses running day rate labourers and per-thousand crews?
A labourer who turns up each day, works the hours the bricklayer sets, mixes and loads out using the bricklayer's scaffold and mortar, and gets paid a flat day rate no matter what gets laid, looks a lot like an employee. A crew paid per thousand bricks, who bring their own tools, can send a different brickie to finish a footing or a retaining wall, and can say no to the next job without losing the arrangement, looks more like a genuine subcontractor.
IRD's own guidance says there is no single test to decide if someone is employed or self-employed. The working conditions in the contract, or agreed verbally, decide it, not what the job is called on the quote. The problem for most bricklaying businesses is that the same person can look like both pictures across a single job, because scaffold lifts, weather days and cleaning down at the end change who is really controlling the work that day. See Self-employed or employee.
How do you work out which one your labourer actually is?
You work it out by looking at who controls the job, not by what the arrangement is called. IRD's self-employed guidelines ask whether the worker provides the major equipment, decides their own hours and quality standard, can bring other people onto the job without asking you, and advertises for other work. IRD's interpretation guideline describes this as the control test: the more you specify what gets built, when, and how, and the more you can supervise or end the arrangement, the more likely that person is an employee rather than a contractor.
For a bricklayer, that means looking honestly at whether the person on your scaffold is working your day rate on your instructions, or running their own job on your site with their own gear and their own say over the brickwork. See IRD interpretation guideline. Either way, ACC levies still apply. According to ACC levies - Business.govt.nz, you have to pay ACC levies even if the person is self-employed or a contractor receiving schedular payments, and a sole trader starts out automatically on ACC's CoverPlus.
What should you have in place once you know the answer?
Once you have made the call, put it in writing, because the paperwork is what protects the business if the question is ever challenged. If the person is an employee, Employment New Zealand's page on hiring your first employee says you must give every employee a written employment agreement, and both of you should sign it before they start work.
If the person is a genuine contractor, the written agreement is what satisfies the gateway test in the first place. MBIE's update, Increased certainty for contractors coming, describes this gateway test as something a business can use if a worker later claims they were really an employee, and notes that a worker who disagrees can take the question to the Employment Relations Authority and the courts. The agreement needs to reflect what actually happens on the brickwork site, not just what suits the quote.
This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
What does getting this wrong actually cost a bricklaying business?
Getting the contractor versus employee call wrong does not only risk a letter from a regulator, it hides what a job really cost you to run. If a labourer's day rate sits against the wrong job, next to a crew paid per thousand bricks on the same footing and retaining wall, a bricklayer cannot see the true labour cost once scaffold hire, weather days and cleaning down are added in.
A data first look at your own job and pay records shows the real labour cost against each job, before you quote the next one off a feeling about how the last one went. This is where AI agents can take over the paperwork rather than the judgement call. An AI agent is software that does a job the way you would do it yourself, using your day rates, your subcontract rates and your own record keeping habits. AI agents built around your own numbers mean the person on site gets booked against the right job and the right column every time, instead of you reconstructing it at the end of the month. Because Greg coaches online and starts from the owner's own data, a bricklaying business anywhere in New Zealand, or across the Tasman, gets the same starting point: its own numbers, not a guess.
Where can you check the current rules?
- Employee or contractor? - Employment New Zealand's gateway test and common law test for telling the two apart.
- Self-employed or employee - IRD's guidelines on the working conditions that decide the question.
- Increased certainty for contractors coming - MBIE's explanation of the gateway test and challenge rights.
- ACC levies - Business.govt.nz - what you pay ACC whether someone is employed, self-employed or contracting.
- IRD interpretation guideline - the control test explained in depth.
- Hiring your first employee - what a written employment agreement needs to cover.
How does Data First Coaching approach this?
Data First Coaching does not start with an opinion on whether your labourer is a contractor or an employee. It starts with your own job costing and pay records, read through the Trade Business Intelligence, to see where that person's labour actually sits against each job, the footing, the retaining wall, the feature panel, before anyone argues about the wording of an agreement. That is usually where the real question starts. Greg Allan built the method on the belief that a tradesman trying to run every call himself hits a ceiling, and as he puts it, “you've got to delegate those roles”. The how of sorting it out, job by job, is worked through inside the Academy, with members who are open minded, innovative and willing to share, because the Trade Business Intelligence is powered by every member.
