By Greg Allan, tradesman and creator of Data First Coaching
What's the difference between a contractor and an employee on a concreting crew?
On a pour day a concreter can have an employee and a subcontractor standing on the same slab, in the same high-vis, taking direction from the same lead hand, but New Zealand law does not care what either of them is called on the invoice. Employment New Zealand says the distinction comes down to legal tests, not labels, and sets out a gateway test: if a worker meets all the criteria in it, they are treated as a contractor.
Most concreters build a crew the same practical way: a core of employees on the truck and the tools, and subbies brought in for steel fixing, a finishing specialist, or extra hands on a big driveway pour. That mix is normal. What trips owners up is assuming that because someone invoices for their time, or because there is a one page agreement sitting in a drawer, the classification is settled. It is not. The page notes that a contractor generally is self-employed and earns income by invoicing for their services, does not have an employment agreement, and sits outside most employment-related law, but that only holds if the actual way the person works matches that description.
Why does getting this wrong cost more than a fine?
Most owners treat contractor versus employee as a compliance question to tidy up at tax time, when it is really a job costing question that moves every week. Whoever is pouring the slab, laying the reo, or running the pump truck on site is a cost that has to land somewhere on the business's numbers, and where it lands depends on how that person is classified and booked.
If a crew member who is really run like an employee, told when to start, what job to go to, what ready-mix order to expect, gets booked as a subcontractor, their cost can drift into overhead instead of sitting against the job in cost of sales. The quote for that driveway or that exposed aggregate path still looks like it carries a healthy margin on paper. The job itself, once the builder's progress payment lands and the ready-mix, pump truck hire, formwork and labour are all accounted for, often does not. The gap between gross profit and net profit on a concreting business is frequently built from exactly this kind of mis-booked labour cost, repeated across enough jobs that nobody notices until the bank balance tells a different story to the quotes.
How does New Zealand law decide whether someone is an employee or a contractor?
There is no single form or checkbox. Inland Revenue is direct about this: “There is no single test to decide if you're employed or self-employed.” The working conditions on site, not the label in a text message or on an invoice, decide the status.
Employment New Zealand's starting point is the gateway test, and from there the common law tests look at things like control over how and when the work is done, whether the person can be told to work for someone else, and whether they carry their own business risk, such as supplying their own gear or wearing the cost of redoing a defective pour. The page is specific on the first step: “To check if a worker is an employee or a contractor, first you can use” the gateway test. A written agreement matters, but Inland Revenue's own interpretation guidance is equally clear that “a written contract states that a person is an employee or an independent contractor may indicate the intention of the parties” without settling the question on its own.
What does this mean for ACC levies and tax?
The classification does not let anyone off ACC. Business.govt.nz states plainly: “You have to pay ACC levies even if you are self-employed, or a contractor receiving schedular payments.” A concreter running subbies through schedular payments still sits inside the ACC levy system, it is simply paid differently to an employee on PAYE.
On the tax side, Inland Revenue has published interpretation guidance over a long stretch, going back to a 1999 guideline and continuing through to IG 16/01, on how employment status for tax purposes is worked out, including how section six of the Employment Relations Act 2000 feeds into that decision. Whether someone is paid as a contractor under schedular payments or as an employee on PAYE changes GST treatment, KiwiSaver obligations, and what the concreter needs to withhold, none of which should be decided by habit or by what was done with the last person on the crew.
This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
How do you keep this straight pour day after pour day, not just at tax time?
You keep it straight by treating classification as part of your job data, not as a once-a-year clean-up. A concreter's own numbers, who was on which pour, as employee or contractor, and what that cost against that job, tell the truth in a way memory at the end of the quarter cannot.
Picture a concreter whose team paperwork, inductions, forms, an incident register and onboarding for a new crew member or a new subbie, was scattered across a folder, a phone and a few separate messages. He built his own system that pulls in job information and brings forms, the site-specific induction, the incident register and onboarding together in one place. The moment a new person steps onto a driveway or a slab job, the right paperwork and the right classification go with them from day one, instead of being sorted out weeks later when someone asks.
This is where AI agents earn their place in a concreting business. An AI agent is software that does a job the way you would do it yourself, using your prices, your wording and your rules, and for this it can watch new starters coming onto jobs and flag whether the paperwork and the booking match how that person is actually being used on site, before the cost gets buried in the wrong place on the P&L. That is data first thinking: start from what is actually happening job by job, not from what was assumed last time a crew member was taken on.
Where can you check the current rules?
- Employee or contractor?, Employment New Zealand: the gateway test and common law tests used to decide status.
- ACC levies, Business.govt.nz: what self-employed people and contractors on schedular payments pay ACC on.
- Self-employed or employee, Inland Revenue: why working conditions, not the contract label, decide status for tax.
- IG 16/01: Determining employment status for tax purposes, Inland Revenue: how the Employment Relations Act 2000 case law feeds into the tax view.
How does Data First Coaching approach this?
Greg Allan's Data First Coaching starts from the concreter's own job and finance data through the Trade Business Intelligence, looking at where each crew member's and each subbie's cost actually lands against each job, not at the classification question in isolation. That is where a quote that looked fine and a job that did not pay usually part ways. From there the coaching works back to find whether the gap sits in how labour is classified, how it is booked, or both.
The how, the actual systems and agents built to catch this, is worked through inside the Academy, with members, because the Trade Business Intelligence is powered by every member for every member. It suits owners who are open minded, innovative and willing to share what they learn with the rest.
Looking for a business coach who starts from your numbers? Concreter Business Coach or every answer for concreters.
