Hiring your first employee in a building business

An apprentice hire and a first non-apprentice hire look similar on paper: one more person on the books, one more set of paperwork. They are not the same decision. An apprentice is a training arrangement with its own support structures and its own expectations about supervision. A first non-apprentice employee — a leading hand, a second carpenter, an office administrator, a estimator — is a person you are putting to work on the assumption they can carry a task from start to finish with less of your attention than an apprentice needs.

That shift is what makes the first hire different. It is not just a wage. It is a change to how your business is insured, how it keeps records, how it supervises work, how it prices jobs and how it protects the information it holds. Get the sequencing wrong and the cost surfaces months later, usually at the worst possible moment: a claim, an audit, or a job where the margin has quietly disappeared.

This article deals with the first non-apprentice hire. If you are taking on an apprentice, the incentives and the training arrangements are a separate subject and worth reading separately.

Why the first non-apprentice hire is a different decision

When you work alone or with subbies, your cost base flexes with the work. A quiet month means fewer subbie days, less materials, less fuel. The business absorbs the slowdown because the cost was never fixed.

A wage is fixed. It is payable whether the job is running, whether the client has paid, whether the weather has stopped the programme. That single change is what turns a first hire from an operational decision into a commercial one. You are not just buying capacity; you are committing to a cost that has to be recovered across every job you run from that point.

The practical consequence is that the hire has to be priced in before it happens. If you add the wage and then hope the margin absorbs it, the margin will not absorb it. The wage will be paid out of the margin and the business will feel busier and poorer at the same time.

Insurance and cover before the start date

The most common first-hire mistake is treating insurance as an administrative task to be sorted out in the first week. It is not. Cover needs to be in place from the day the person starts, because an incident on day one is still an incident.

Workers compensation is the first item. In New South Wales, if you employ someone, you generally need a workers compensation policy that covers that employment. The policy has to reflect the new employee and the work they will do. If you are already covered for yourself as a sole trader or through a company arrangement, that is not automatically the same as covering an employee. Confirm the position with your insurer or your workers compensation advisor before the start date, and get the confirmation in writing.

Public liability is the second item. Your existing policy may have been written around the work you do personally. Bringing an employee into the business can change what the insurer wants to know: what work they will perform, whether they will drive a company vehicle, whether they will supervise subbies, and whether they will work on sites where you are not present. Answer those questions honestly. An undisclosed change in the business is exactly the kind of thing that causes a claim to be disputed later.

If you have income protection or a business expense policy covering you personally, check whether it needs to be reviewed as well. The business now has an ongoing wage commitment that continues if you are off work, and that changes the risk profile.

Records you now have to keep

Employment adds a second category of record keeping on top of your project records. You already keep quotes, contracts, variations, invoices, receipts and site documentation. You now also keep wage records, tax file declarations, superannuation records, leave records and the employment agreement itself.

The Australian Taxation Office is clear that business records need to be kept and produced when asked, and that includes records relating to employees. The practical approach is not to build a separate system; it is to extend the one you already have. If your bookkeeping already captures job costs against a job number, add a wage category that can be coded to a job or to overhead, so you can see what a job actually cost rather than guessing.

There is a second reason to get this right early. Once you have one employee, you will almost certainly have two, and the record keeping that felt manageable for one person becomes unmanageable for three if it was never structured. Setting up the categories, the pay cycle and the filing convention at the first hire is far cheaper than rebuilding it at the fourth.

If your current setup is a shoebox and a spreadsheet, the first hire is the moment to fix it. The article on bookkeeping systems for builders covers what a workable structure looks like.

What the hire does to your pricing and margin

Adding a fixed cost changes the break-even point on every job. Before the hire, a job priced at a certain margin was profitable. After the hire, the same job at the same price has to carry a share of the wage before it contributes anything.

There are two ways builders get this wrong. The first is to treat the wage as an overhead that gets absorbed somewhere. It does not get absorbed; it gets paid. The second is to assume the new person will immediately generate enough additional work to cover themselves. That is sometimes true, but it is not a plan. It is a hope with a start date.

The disciplined approach is to work out, before advertising, what the employee needs to produce each week to cover their cost and contribute. That number then goes into your pricing. If the number is not achievable at your current rates, the hire is not the problem — the rates are. The article on pricing and margin for residential builders works through how to test that.

It also helps to be honest about the ramp. A new employee is not at full productivity in week one. They are learning your systems, your suppliers, your clients and your standards. Budget for that ramp rather than pretending it does not exist, and you will avoid the common pattern where a builder panics in month two and starts discounting to keep the work coming in.

Supervision, induction and site obligations

If you are the principal contractor on a site, bringing an employee onto that site does not reduce your obligations. It adds to them. The person needs to be inducted, needs to understand the site rules, and needs to know who to go to when something is unclear.

This is where the difference between an apprentice and a general employee shows up most clearly. An apprentice is typically attached to a tradesperson and supervised closely by design. A general employee may be expected to work on their own within a defined scope. If you have not defined that scope, you have created a situation where the person makes decisions you would have made differently, on a job you are responsible for.

The fix is a written scope of duties in the employment agreement and a clear reporting line on site. Who checks their work? Who signs off a set-out before the pour? Who do they call if the client asks for a change? These are not HR formalities; they are the controls that keep the job buildable. A change the client requests verbally and the employee acts on is a variation you may never get paid for.

If the employee will be driving a company vehicle, operating plant or working at heights, the relevant licences, tickets and inductions need to be current and recorded. Keep copies. When something goes wrong, the first question asked is what the person was qualified and authorised to do.

The cyber and information side of a first hire

The Australian Signals Directorate publishes guidance for small business on cyber security because small businesses are targeted precisely because their controls are thin. A first hire widens your exposure in ways that are easy to overlook.

The new employee will have a phone, possibly a laptop, access to your email, access to your job files, and access to your accounting or project management system. They will also have credentials. If those credentials are shared with you, or if the person uses the same password across personal and work accounts, a compromise on a personal account can reach your business records.

Basic controls are enough at this scale: separate accounts for each person rather than shared logins, multi-factor authentication on email and on anything that touches money, devices with a screen lock and automatic updates, and a clear rule about what client information can leave the office and how. When someone leaves, you need to be able to disable their access quickly, which is only possible if their access was individual in the first place.

There is also a records dimension. Client plans, contracts, variations and personal information are business records. They need to be stored somewhere you control, backed up, and not sitting only on an employee’s personal phone.

A worked example

A builder in western Sydney runs a small residential business doing renovations and extensions, working with a regular set of subbies and doing the carpentry personally. The workload has grown to the point where quoting happens at night and site supervision is squeezed between tasks.

The builder decides to hire a leading hand. The reasoning is sound: someone to run the day-to-day on one job while the builder quotes and manages the next. Before advertising, the builder writes down what the leading hand will actually do, and discovers that a meaningful part of the role is coordinating subbies and dealing with clients on site. That is a supervisory role, not a second pair of hands, and it needs to be priced and insured accordingly.

The builder then models the cost. The wage, superannuation, a vehicle allowance, a phone, tools and the additional insurance are added up and divided across the jobs the business expects to run in the year. The result shows that the current rates on renovation work will not carry the hire unless the business also takes on a larger job each quarter. That is uncomfortable, but it is better discovered before the hire than after.

Cover is confirmed with the insurer and the workers compensation position is checked and documented before the start date. The employment agreement sets out the duties, the reporting line and the authority to approve variations — the leading hand can note a client request but cannot agree a price. A separate login is created for the project management system, multi-factor authentication is switched on, and the leading hand is issued a work phone rather than using a personal one for client photos and messages.

Six months in, the business is running two jobs at once. The margin on each job is thinner than it was when the builder worked alone, because the wage is now in the cost. But the number of jobs has increased and the builder is no longer quoting at midnight. The hire worked because it was priced, insured and scoped before it happened, not because the builder got lucky.

Keeping your own knowledge current

Hiring is a business change, and business changes sit alongside the technical and compliance knowledge you already maintain. If you hold a NSW builder licence, your continuing professional development is where a lot of this gets covered: contract and business practice, work health and safety, record keeping and the obligations that come with employing people.

The guide to how NSW builder CPD works explains the structure and what counts. If you are looking for courses that cover the business and compliance side rather than the trade side, the course catalogue is the place to start, and the PointCPD home page has the current enrolment information.

The point is not to collect certificates. It is that a first hire brings a set of obligations — insurance, records, supervision, information security — that most builders meet for the first time with no prior exposure. Learning them before the person starts is cheaper than learning them from a claim.

Questions builders ask

• Apprentices
• Business Systems
• Hiring

Published 30 July 2026. General information for builders, not legal, financial or engineering advice for a specific job. Check current requirements with the relevant regulator or standard before relying on them.