By Greg Allan, tradesman and creator of Data First Coaching
How does a roofing business tell a contractor from an employee in New Zealand?
A roofer works out status by running the official tests in order, not by what is convenient on the day a storm hits. Employment New Zealand's page on Employee or contractor? sets out that you first apply the gateway test, and only if the worker does not meet all its criteria do you move to the common law test, which Inland Revenue describes in IG 16/01: Determining employment status for tax purposes as four checks: control, independence, whether the person is in business on their own account, and integration into your business.
The gateway test is recent. Employment New Zealand says it came into law on 21 February 2026 and is not retrospective, so a roofer with people already engaged under an older arrangement needs to check which test applies to that contract, not assume the newest rule covers everyone on the books. Understanding types of workers makes the same point: these tests look at the actual working relationship on your roofs, not at what you'd prefer to call it.
Why does getting this wrong cost more than a compliance headache?
The real damage is not a fine, it is a set of numbers a roofer can no longer trust. If a subcontractor's invoice gets coded the same way as a wage, or a wage gets buried in cost of sales, the gross margin on a re-roof or restoration can look fine while the net profit for the month tells a completely different story.
Most owners find this mistake hides itself. A roofer doing insurance work after a storm might see strong job margins right through the surge, then wonder months later why the bank balance does not match. The fault is not the job, it is where the labour cost sat on the books the whole time: cost of sales for a subcontractor against wages and overheads for an employee. One of those buckets is treated as part of the job, the other sits in running the business, and mixing them up quietly bends every margin a roofer looks at.
What happens to a roofer's crew costs during a storm season surge?
Storm season is when a roofer makes this call fastest and worst. Leak repairs, flashing failures, guttering and downpipe damage, and a run of urgent roof inspections all land at once, and a roofer short on hands brings someone on that week to keep up, often without stopping to ask whether that person is a contractor or an employee.
A trade business under that pressure tends to engage whoever is available, on whatever terms get the job moving: scaffold and edge protection up, height safety gear sorted, crew back on the roof. The question of control, who directs the work, who supplies the gear, who carries the risk if a valley leaks after sign off, gets answered by habit rather than by the test. By the time the surge eases and the invoices get reconciled, nobody is sure which jobs actually paid for themselves.
What do ACC levies have to do with contractor or employee status?
ACC levies are tied directly to how a worker is classified, which is another reason the call matters before the job starts, not after. Business.govt.nz explains that for employees, ACC levies are deducted from wages as part of PAYE, while someone self-employed is invoiced for their own levies once a year, covering workplace cover, non-work injury cover, and the levy collected for WorkSafe NZ's activities.
That split follows the same line as cost of sales versus overheads. A roofer who has sorted contractor status correctly knows which levy sits where and can see the true cost of a person on a ridge capping job or a metal roof install, not a blended guess.
How can AI agents help a roofer keep this straight, job by job?
An AI agent is software that does a job the way you would, following your prices, your wording and your rules, and it can carry the paperwork that sits behind every new person brought on for a surge. For a roofer, that means the forms, the site inductions, the incident records, and the onboarding steps are captured the same way every time, whether that person turns out to be a subcontractor on the tile crew or a new employee on the payroll.
Picture a roofer whose team paperwork used to live everywhere at once: inductions in one folder, incident records in another, onboarding forms texted around, and crew messages running through a separate chat on top of all of it. During a storm surge that spread became the problem, not the roof work itself. The owner eventually built his own app for the team, pulling job information in and bringing the forms, the site-specific inductions, the incident register and onboarding into one place, so every new person on a weather day or a skylight repair started the same, properly recorded way.
That is the data first way of working: the record of who did what, on which job, at what cost, is kept as the job happens, not rebuilt from memory once storm season settles and someone finally asks where the margin went.
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 common law test, and when the gateway test applies.
- IG 16/01: Determining employment status for tax purposes, Inland Revenue's four-part common law test in detail.
- ACC levies, how levies differ between employees and the self-employed.
- Understanding types of workers, why the actual working relationship decides status, not the label used.
- Employee or independent contractor?, Inland Revenue's earlier guideline on the common law tests for tax purposes.
How does Data First Coaching approach this?
Data First Coaching starts from a roofer's own job and finance data through the Trade Business Intelligence, not from a description of how the crew was engaged. It looks first at where a subcontractor or employee cost actually landed on the books against where it should have sat, because that is usually where a margin problem starts, long before storm season makes it visible. As Greg Allan puts it when owners hesitate over a labour decision, “this is what you're employed for,” and the same clarity that tells a roofer a hire was worth it is the clarity needed to classify it correctly. The how of building that into a roofer's own systems is worked through inside the Academy, with members, because the Trade Business Intelligence is powered by every member who joins open minded, innovative and willing to share.
Looking for a business coach who starts from your numbers? Roofer Business Coach or every answer for roofers.
