By Greg Allan, tradesman and creator of Data First Coaching
What actually decides whether a cleaner or restoration tech is an employee or a contractor?
There is no single test that settles this, and no amount of writing “contractor” into an agreement settles it either. Employment New Zealand runs a gateway test first: a worker is only a specified contractor if they meet every part of it, otherwise the common law test applies, weighing intention, control versus independence, integration into the business and the overall economic reality of the work. Inland Revenue says much the same thing on its own self-employed or employee page: the way a contract describes someone does not decide their status, the actual working conditions do.
For a cleaning and restoration business that is juggling rostered staff on commercial cleaning contracts, casual cleaners picked up for recurring cleans, and subcontracted restoration techs sent out on water damage, fire damage and mould jobs, this matters on every single one of those arrangements, not just the obvious ones.
Why does this matter more on a commercial contract or insurance job than on a one-off end of lease clean?
Because the label changes where that person's cost sits on the business's own numbers, and that is what decides whether the gross margin on a contract or an insurance job is real. Wages for an employee carry leave, KiwiSaver and ACC levies and move with actual hours worked. Payments to a genuine contractor are an invoiced cost, usually with GST, no leave, and a different ACC levy structure because the contractor pays their own.
Government consultation on contractor protections has recorded cases where a cleaner dismissed as an employee was re-engaged doing the identical work, on the identical site, under the identical direction, as a “contractor”, and the Employment Court later found she had been misclassified, as set out in the MBIE discussion document on contractor protections. Separate Inland Revenue guidance on specialised versus supervised work has noted that non-specialised tasks such as tidying and cleaning, performed under a company representative's supervision, would not generally be done by a genuine contractor. If a cleaner on a recurring office contract or a restoration tech on insurance work is mislabelled either way, the true cost of running that site gets buried in the wrong line, and the margin the owner believes a bond clean portfolio or a strata contract is making can be fictional.
What tests does New Zealand use, and how do they apply on site?
You apply the gateway test first, then the common law test if the gateway test is not fully met, both set out on Employment New Zealand's page. Ask who actually sets the schedule for a site, who runs the quality check once the job is done, whether the person can send someone else to do the clean without you vetting them, and whether they invoice with GST or get paid a set rate for turning up.
A roster cleaner who works set shifts under your direction, uses your equipment and chemicals, and cannot subcontract the work out, looks like an employee under the control and integration parts of the test. A restoration tech who quotes the job, brings their own gear, carries their own insurance and works for other businesses at the same time looks more like a genuine contractor. Most cleaning and restoration businesses sit somewhere with a mix of both, which is exactly why this needs checking role by role, not once for the whole crew.
What number in your own numbers tells you whether the label you have used is actually true?
The number that tells the truth is the gross margin on each contract or site once every dollar of labour, whether it is wages or a subcontractor invoice, is allocated to where the work actually happened, not blended into one general labour line. This is a data first way of looking at the business rather than a memory of what a job “should” have cost.
Knowing your own costings well enough, through a working set of numbers for every role, to see the real efficiency of a roster cleaner against a subcontracted restoration tech on the same type of site is what tells you whether that commercial contract, that recurring clean or that insurance job is actually carrying its weight, and whether the classification you have used is helping or hiding the real picture.
How can AI agents take this paperwork off your plate once you have made the call?
An AI agent is software that does a job the way you would, using your prices, your wording and your rules, rather than a generic template. Once a role is classified correctly, AI agents can keep the paperwork for that role consistent across every site, every roster change and every new starter, instead of it drifting back to guesswork within a few jobs.
Picture a restoration business owner running crews across water damage, fire and mould jobs, where induction forms, site-specific inductions, incident records and onboarding paperwork were scattered across different places, and team messages ran through a separate channel from the job information itself. He built his own app that pulls in job information and brings the forms, inductions, incident register and onboarding into one place. The side effect is that the records showing who actually supervises a site, who sets the schedule and who controls the work are now sitting together, which are the exact things the contractor-or-employee tests look at. AI agents can carry that kind of record keeping consistently, freeing the owner and the office from chasing paperwork manually.
Where can you check the current rules?
- Employee or contractor? (Employment New Zealand), the gateway test and common law test for deciding employment status.
- Self-employed or employee (Inland Revenue), Inland Revenue's own guidelines on what decides your tax status.
- Inland Revenue's interpretation guideline on determining employment status for tax purposes, the control, fundamental and integration tests in full.
- Inland Revenue's guide to working out your tax status, a plain explanation of who has control over what, how and when work is done.
- MBIE discussion document on better protections for contractors, includes a cleaning industry case on misclassification.
- Inland Revenue's interpretation guideline on specialised versus supervised work, looks at supervision and task specialisation.
- MBIE summary of public consultation on contractor protections, records cleaners' own experience of becoming contractors.
- ACC's guide to levies for business, the different levies depending on whether someone is an employee, contractor or self-employed.
This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
How does Data First Coaching approach this?
Data First Coaching starts from the owner's own numbers, not from a checklist filled in from memory. For a cleaning and restoration business, that means looking at what the Trade Business Intelligence shows about labour cost against revenue, site by site and contract by contract, to see where a classification is quietly distorting gross margin before anyone has had to ask a single legal question. Greg Allan built this approach from running his own trade business, where the real fix was almost always upstream of the symptom the owner first noticed. The how, including the way this gets worked through against a member's own data, is taught inside the Academy, among owners who are open minded, innovative and willing to share what they learn, because the Trade Business Intelligence is powered by every member for every member.
