By Greg Allan, tradesman and creator of Data First Coaching
Why do flooring installers get caught out treating a subbie like an employee?
Many flooring installers run a mix of subcontractors and directly employed crew on the same job, and the line between the two blurs without anyone noticing. A sander brought in on one timber floor install might be told exactly what hours to start, given the business's own buffer and underlay, and paid the same rate every week regardless of the job. That looks like an employee relationship even though the paperwork calls them a subcontractor.
This matters because the way that labour is costed changes the real margin on the job. If a flooring business books a true subbie's invoice as a job cost but treats someone else's labour the same way when it should sit in overheads or payroll, the quoted margin on a hybrid or vinyl install can look fine on paper while the real job outcome does not add up. The mistake sits buried in how the job was costed, not in one number anyone checks.
What actually separates a subcontractor from an employee on a flooring job?
The difference comes down to control, risk and capacity, not paperwork. The Fair Work Ombudsman's page on independent contractors explains that contractors work for themselves providing services to a business, while employees work in and are part of it, and the Fair Work Ombudsman itself says it cannot decide a worker's status for a business, only give information to help work it out.
On a flooring job, a true subcontractor usually controls how the work gets done, can bring their own sander or polisher, can delegate sanding to someone else, and carries the risk if the subfloor prep or moisture reading was wrong. The whole of relationship test looks at the whole arrangement, not one factor, and a worker who holds an ABN is not automatically a contractor. A flooring installer who sets someone's hours, supplies the tools and the levelling compound, and pays a flat rate regardless of the result is describing an employee.
The building and construction contractors page gives an example close to flooring's own world: a builder engaging a concreter who runs their own concreting business. The same logic applies to a flooring business engaging a sander who runs their own sanding and polishing business, supplies their own gear, quotes the job, and carries their own insurance.
How does this change what your quotes and your margin actually show?
Where you book someone's labour changes whether your gross profit margin on that job is telling you the truth. If a sander you treat as a subbie is really working like an employee, their pay should sit against your payroll and on-costs, not against the job as a straight cost of sale, and the margin you quoted on that renovation or new build install stops meaning what you think it means.
This is why Greg treats the subcontractor question as a costing decision first and a compliance question second. A flooring installer who checks gross profit margin at the moment of quoting, square metre by square metre, can see when a labour line does not behave like a genuine subbie cost: it moves with hours rather than the result, it still needs the business's own tools and underlay, and it never carries its own risk if the subfloor was wet or the levelling failed.
What should you check before you call someone a subcontractor on your next job?
Before you label anyone a subcontractor on a quote, check whether they carry their own risk and insurance, not just whether they hold an ABN. According to icare NSW, a contractor is more likely to use their own skill and judgement, employ or sub-let work, be paid on a quotation, and supply their own tools, while a worker is more likely to be directed, paid for time worked, and have tools supplied.
Workers compensation and tax status are not the same question, and the rules differ by state and territory. icare NSW notes a person can be a contractor for tax purposes and still be a worker for workers compensation. WorkSafe Victoria and WorkSafe Queensland both describe a worker as someone usually paid regularly rather than by result. For tax and super, the ATO says the business must review the whole arrangement and get the classification right, since getting it wrong can bring penalties.
This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
How can AI agents help you keep this straight on every job?
An AI agent, software that does a job the way you would, with your prices, your wording and your rules, can hold the record you need the moment you book someone onto a job: who they are, what they supplied, what they quoted, and whether they carried the risk on that install.
This is where data first thinking changes the job for a flooring business. Rather than a bookkeeper sorting it out at tax time from memory, AI agents can hold the quote, the labour booking and the job cost together as the job happens, so your own numbers show whether a person is running their own show or being run like staff. One agent can flag when a labour cost behaves more like payroll than a subcontractor invoice, so the question gets asked while the job is still open.
Picture a flooring installer standing at a home show stand, meeting homeowners who want a timber floor in one room and a hybrid through the rest of the house. He needed a way to price the two options and compare them on the spot rather than promising a callback. He built his own pricing and comparison tool, on his own numbers, and used it right there at the show to put real options, timber against hybrid, carpet against vinyl, in front of people on the spot.
Where can you check the current rules?
- Independent contractors, Fair Work Ombudsman: the basic difference between contractors and employees, and why the regulator only advises.
- Contractors in building and construction, Fair Work Ombudsman: building sector examples close to a flooring job.
- Whole of relationship test, Fair Work Ombudsman: the full test for deciding contractor or employee status.
- Difference between employees and independent contractors, ATO: tax and super obligations and who must get the classification right.
- Employee or independent contractor, full guide, ATO: fuller detail, including when engaging a contractor can make a business a host employer.
- Classifying Workers or Contractors for Workers Compensation, icare NSW: workers compensation classification, separate from tax status.
- Define a worker, WorkSafe Victoria: its test for who counts as a worker.
- Who should I cover?, WorkSafe Queensland: which contractors count as workers for cover.
How does Data First Coaching approach this?
Data First Coaching starts from the flooring installer's own job and pay records inside the Trade Business Intelligence, not from a guess about who feels like staff. It looks at how each job was costed, where labour sits against each install, and whether a person's pay behaves like a subbie's invoice or like payroll, because that is usually where the real confusion starts, not in the contract wording. Greg has seen how proper costing changes a hiring decision: “the relief with the full-time trades person was instant” once the numbers, not the bank balance, made the call. The how, working through each case with AI agents and the owner's own data, 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.
