By Greg Allan, tradesman and creator of Data First Coaching
What's actually at stake when a gasfitting business calls someone a contractor instead of an employee?
For a gasfitting business, calling someone a contractor instead of an employee is not a formality on an invoice. It changes who pays ACC levies, who covers holiday pay and PAYE, and whether the margin on a hot water install, a compliance certificate run or a leak callout is real profit or a cost sitting unpaid until it surfaces later. The engagement type changes the numbers, not just the paperwork.
Most gasfitters bring in extra hands when the diary fills with servicing, appliance installs and gas line extensions, and the instinct is often to sort out the engagement type later. A trade business can end up treating a worker as a contractor on the books while directing their day the way an employer directs an employee, supplying the flue tape, the pressure test gear and the van, and setting the hours. When that happens, the true cost of that job was never properly captured, and the gross profit the owner thinks they made was never real.
How does New Zealand law actually decide if someone working for a gasfitter is an employee or a contractor?
New Zealand now has a formal gateway test for this. Employment New Zealand says a worker who meets every criterion in the test is treated as a specified contractor, and the test only applies from the date it became law, not backwards. Inland Revenue looks at the actual working conditions agreed, not what the paperwork calls the arrangement, and uses a wider set of tests when a dispute reaches that stage.
Employment New Zealand's employee or contractor page sets out the gateway test: a worker is a specified contractor if they have a written agreement saying they are independent, can work for others, can choose when they work or subcontract the job, can turn down extra work without the arrangement ending, and had a real chance to get advice before signing. Employment New Zealand's notice on the Employment Relations Act changes confirms the gateway test is one of the clearer rules now in force, noting that “The gateway test came into law on 21 February 2026 and it is not retrospective.”
Separately, Inland Revenue says “There is no single test to decide if you're employed or self-employed.” and instead points to who provides the major tools and training and who controls how the work is done, questions any gasfitter juggling an apprentice, a labourer or a subbie on compliance work will recognise. Inland Revenue's own interpretation guideline, IG 16/01, sets out four further tests, control, independence, whether the worker is in business on their own account, and integration into the business, drawn from the leading case on the point.
What should a gasfitter check before bringing someone on to cover busy servicing and compliance work?
Before you bring anyone on to help with appliance installs, gas line extensions or a stacked day of compliance certificate inspections, you need to know what that person actually costs you, not just what their invoice or payslip says. Whether they are paid as a contractor or an employee, the real number is what lands in your gross profit once ACC, materials, van time and any carbon monoxide testing or pressure test gear they use is accounted for.
Many gasfitters wait until the bank balance looks comfortable before bringing anyone on, employee or contractor. The decision usually works better the other way round: start from costed capacity numbers, what the extra set of hands adds in billable hours on servicing, hot water work or leak calls, against what they actually cost once every obligation is counted. Made that way, the extra capacity can pay for itself quickly, whichever engagement type is used, because the cost was understood before the person started the job rather than discovered afterwards.
Picture a gasfitter whose site inductions, incident forms and onboarding paperwork for every new offsider, contractor or employee, were spread across text threads, a folder in the van and whatever form was to hand that week. The owner built his own app that pulls in job information and brings the forms, the site inductions, the incident register and onboarding into one place, so whoever turns up to a job site has what they need before they start, and the record exists if anyone ever asks for it.
This is where AI agents can take weight off a gasfitter's week. An AI agent is software that does a job the way the owner would, in the owner's own wording, with the owner's prices and rules, so onboarding a new contractor or chasing an incident form does not fall on the owner at ten at night. A second AI agent can sit over the engagement decision itself, holding the job and pay data so the question of contractor or employee gets answered from the numbers each time a new person starts, not from memory of how the last one was set up. That is the data first point: the answer sits in the gasfitter's own job and pay data, not in a feeling about how busy the diary looks this week.
What does this mean for ACC levies and licensing for gasfitters?
ACC levies and licensing apply regardless of how someone is engaged. ACC says a self-employed gasfitter or a contractor receiving schedular payments still has to pay ACC levies, and every person doing or assisting with gasfitting work has to be registered and licensed under the Plumbers, Gasfitters, and Drainlayers Board, contractor or employee alike.
ACC's page on levies for business is plain on this: “You have to pay ACC levies even if you are self-employed, or a contractor receiving schedular payments.” ACC's own pages on cover for the self-employed and understanding levies set out that a contractor is automatically placed on a standard cover option and pays separate levies, on top of whatever the engaging gasfitter pays for its own staff.
Licensing sits apart from the employment question entirely. The Plumbers, Gasfitters, and Drainlayers Board says “All people doing or assisting in doing sanitary plumbing, gasfitting and drainlaying must be registered and licensed, or otherwise authorised,” so a labourer helping on a gas line extension or a compliance certificate inspection needs to be covered by that registration whether they are on the payroll or invoicing as a subbie.
This is general information, not legal, tax or employment advice. Check your own situation with the body named here or a qualified adviser.
Where can you check the current rules?
- Employee or contractor?, Employment New Zealand's gateway test and the criteria for a specified contractor.
- Employment Relations Act changes take effect today, what the gateway test changed and when it applies from.
- Self-employed or employee, Inland Revenue's guidelines on working conditions that point to employee or self-employed status.
- IG 16/01: Determining employment status for tax purposes, Inland Revenue's fuller tests and the leading case behind them.
- ACC levies, which levies apply to a business, a contractor and the self-employed.
- Cover for self-employed and Understanding levies, ACC's cover options and levy structure for contractors.
- Registration policy, the Plumbers, Gasfitters, and Drainlayers Board's registration and licensing requirements.
How does Data First Coaching approach this?
Data First Coaching starts from the gasfitter's own job and pay numbers, through the Trade Business Intelligence, rather than from a feeling about who is busy or how the bank balance looks this month. Greg Allan looks first at what each engagement, contractor or employee, actually costs once every obligation is counted against the hours it frees up on servicing, installs and compliance work, because that is usually where the real margin problem starts, not in the invoice or payslip itself. The how of setting that up, the agents, the records and the checks, is worked through inside the Academy, with members, because the Trade Business Intelligence is powered by every member and the Academy is for owners who are open minded, innovative and willing to share what they learn.
