By Greg Allan, tradesman and creator of Data First Coaching
Why does a solar business get this wrong when the rebate rush hits?
Most solar installers do not sit down to work out contractor versus employee status in a quiet month. It usually gets decided in a rush, when a residential rebate deadline pulls in more installs than the permanent crew can cover and the owner calls round for extra hands. A solar installer short on roof access labour during a panel and battery rush often books someone as a subcontractor because it is quick, without checking whether the actual working arrangement matches that status.
The job gets installed, the certificate gets lodged, the network approval goes through, and nobody looks at the labour again until the bank balance and the profit and loss stop matching. That gap is not just an accounting headache. If the person was really an employee for employment law purposes, the business can end up facing a dispute over entitlements it never budgeted for, on top of a quoted margin that was wrong from day one.
What actually decides if an installer is a contractor or an employee in New Zealand?
Employment New Zealand says a contractor is self-employed, earns income by invoicing for their services, has no employment agreement, and sits outside most employment related laws and the Employee or contractor? page explains, the Employment Relations Act 2000. Whether an installer on a crew fits that description is not decided by what the paperwork calls them.
Employment New Zealand points owners to a gateway test first, and if a working arrangement meets every criterion in that test, the installer is treated as what the law calls a specified contractor, under the changes described on the Employment Relations Act changes page. If even one gateway criterion is not met, the older common law test is used instead, looking at things such as who decides the quality and amount of work, whose premises the install happens at, and whether the installer can take other jobs at the same time, as Inland Revenue sets out on its self-employed or employee page.
The gateway test only came into force on the twenty-first of February twenty twenty-six and is not retrospective, so an arrangement that started before that date is checked against the common law test for the earlier period, and against both tests from that date onward.
Why does this change your job costing, not just your tax return?
Get this wrong and the cost does not disappear, it just sits in the wrong place on your books. If an installer who should be on wages is booked as a subcontract invoice, your labour cost on that residential or commercial install looks lower than it really is, and the gross profit margin you think you protected on that quote was never real.
That margin is the number you should be watching every month on every job type, panel only, panel and battery, commercial solar, not something you check once at quoting stage and forget. This matters more at peak rebate season, when overflow labour is doing roof access work alongside your permanent crew and the two labour types get mixed together in the books.
A solar installer who does not separate true contractor cost from true employee cost cannot trust their own job costing, and a business that cannot trust its job costing is pricing its next quote on a guess.
When should you move an installer from subcontract onto your books?
The decision to bring your second or third installer on as an employee should come from your install capacity and job costing, not from whether the bank balance looks healthy enough to cover a year of wages. Waiting for that kind of comfort before hiring means staying on the tools long after your quoted pipeline of residential and commercial leads says you could be chasing more work instead.
This is the hire that breaks the ceiling of the owner doing both the selling and the installing. Once the numbers show the install volume and the real consumption of your crew's time, the case for moving someone from subcontract to employee is already there, and delaying it only keeps you tied to the roof instead of the next commercial solar quote.
How you advertise that role matters too. A job ad written only around what the business needs from the installer rarely attracts someone who wants to stay and grow with a solar business, rather than just fill a gap until the rebate rush ends.
How do AI agents help you keep contractor and employee costs straight?
An AI agent is software that does a job the way you would do it yourself, using your prices, your wording and your own rules, rather than a generic template. For a solar installer, that can mean an agent that checks every new installer booking against how that person is actually engaged, before the job cost gets logged against the wrong labour type.
Working this out data first, from your own job and pay records rather than from memory at the end of the quarter, means the contractor versus employee question gets answered while the information is still fresh, not reconstructed from old invoices after Inland Revenue or Employment New Zealand asks. AI agents can also keep the certificate, network approval and warranty claim paperwork moving on a job without pulling you off the tools to do it, so the admin gets done your way instead of becoming the reason the books fall behind.
Where can you check the current rules?
The clearest answers sit with Employment New Zealand, Inland Revenue and the Ministry of Business, Innovation and Employment, not a general search. Each page below covers a different part of the same question, and each is kept current by the body that enforces it, which matters because the detail changes.
- Employee or contractor? - Employment New Zealand's explanation of the difference between the two and how the gateway test works.
- Employment Relations Act changes take effect today - how the gateway test and the common law test sit together under the Employment Relations Act 2000.
- Self-employed or employee - Inland Revenue's guidelines for working out status for tax purposes.
- Providing greater certainty for contracting parties - MBIE's briefing on how a worker can ask the Employment Relations Authority or Employment Court to decide a dispute.
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 your own job costing and payroll data inside the Trade Business Intelligence, not from a description of how you think the crew is engaged. It looks at what each install, panel, battery or commercial job actually cost in labour, split correctly between contractor and employee, before deciding whether the real problem is status, pricing or capacity. Greg Allan has watched what this brings owners who finally separate the two: as he puts it, “the relief with the full-time trades person was instant”. The how, working through your own numbers to decide who should move onto your books and when, is worked through inside the Academy, with members, because the Trade Business Intelligence is powered by every member who is open minded, innovative and willing to share what they learn.
Looking for a business coach who starts from your numbers? Solar Business Coach or every answer for solar installers.
