Your compliance-ready guide to construction payroll management

Published on Thursday 28 August 2025

Table of Contents

• Streamline Construction Payroll with Xero: Stay Compliant and Save Time
• Understanding construction payroll complexity
• A construction industry payroll guide to awards, overtime and allowances
• Managing superannuation and long service leave
• Understanding payroll tax and site-based reporting
• How Xero helps construction firms stay compliant
• Frequently asked questions about compliant payroll in construction

Streamline Construction Payroll with Xero: Stay Compliant and Save Time

Payroll in construction is far from simple. Between shifting rosters, multiple job sites, and overseeing a mix of staff and subcontractors, it’s a lot to manage. Throw in juggling award wages, overtime rules, site-based payroll setups, and portable long service leave – it can quickly become one of the most complex parts of running your small business.

That’s where Xero comes in. With tools built for the industry, we help you streamline your processes, stay on top of compliance, and take the stress out of running construction payroll management. In this guide, we’ll walk you through how to run payroll for construction workers in Australia and New Zealand – covering everything from understanding award rates, super, allowances, long service leave and more, so you can get back to building brilliant things.

What’s in this guide?

• Payroll for construction workers must follow strict rules around awards, superannuation, and industry-specific entitlements.
• Big compliance risks include underpaying overtime, mishandling allowances, or misclassifying contractors.
• Xero helps simplify trades payroll in Australia with automation tools built for the way you work.
• Features like time tracking for builders and project-based payroll systems help you manage costs and teams across multiple sites.

Understanding construction payroll complexity

Unlike a standard office payroll, construction payroll management needs to account for:

• Teams working across different job sites
• Shifting start times and site-based schedules
• Varying pay rates depending on roles, locations, and projects
• Additional on-costs such as travel allowances and site allowances

You may also need to think about:

• How to calculate on-costs in payroll accurately
• Managing timesheet approvals for contractors and time tracking for builders
• Setting up a robust site-based payroll setup that tracks who worked where and when

Every mistake in this process could mean underpaying staff, breaching awards, or missing payroll tax thresholds. That’s why having the right tools and processes in place is essential – not just to stay compliant, but to keep your projects running smoothly and your team paid properly.

Tools like Xero’s time tracking software are built into a Xero subscription as standard. Explore how industry tools keep you focused on what matters most.

A construction industry payroll guide to awards, overtime and allowances

One of the most important aspects of payroll compliance in construction for Australia and New Zealand is understanding which awards apply. In Australia, most construction employees are covered by the Building and Construction General On-site Award, which includes:

• Minimum award wages for different trades and experience levels (for example, labourer, carpenter, electrician)
• Strict overtime rules in the construction industry, including including time-and-a-half after 38 hours per week, and double time for weekends, night shifts, or public holidays
• Specific allowances in payroll for construction workers like a tool allowance (a fixed daily rate if workers supply their own tools, a travel allowance (for using their own vehicle to get to remote or changing job sites), a meal allowance (for when working overtime without prior notice), and a Living Away From Home Allowance, or LAHA (if a worker is required to stay overnight for work).

In New Zealand, the system is more agreement-based, but employers must still follow MBIE’s rules around fair pay, break entitlements, and accurate timekeeping.

Apprentices and casuals have their own set of rules too. In Australia, apprentice pay rates depend on their year of training and whether they've finished school, while casual workers are usually entitled to a loading on top of base pay.

In New Zealand, terms for apprentices and casuals should be clearly outlined in their employment agreements – especially around hours, breaks and overtime. Always keep an eye on the Fair Work Ombudsman and MBIE NZ for up-to-date award and pay guidance.

Managing superannuation and long service leave

In Australia, calculating superannuation for construction staff must be done carefully, particularly when employees are moving between projects or subcontracting arrangements. If you miss super for even one pay cycle, you could face penalties.

And then there’s portable long service leave payroll. In many states, workers are entitled to long service leave even when they move from employer to employer, as long as they stay in the construction industry. This applies to:

• Employees and some subcontractors
• Site transfers between projects
• Project-based leave accrual, which must be accurately tracked

In New Zealand, long service leave isn't portable in the same way, but correct leave accrual and payouts are still essential under local law.

Understanding payroll tax and site-based reporting

One of the more complex areas of payroll for construction workers is understanding payroll tax for builders. Payroll tax is managed at a state level in Australia, meaning thresholds and exemptions vary depending on where your business operates.

For example, if you have employees working in multiple states, you may need to register for payroll tax in each – even if they’re only on-site for a short period. That’s why accurate site-based payroll setup and time tracking for builders is crucial. You’ll want to allocate:

• Costs by job site
• Hours worked by location
• Subcontractor payments vs employee wages

Take Dave and his construction company, Dave’s Beautiful Builds, for example. Dave has teams working across two states – NSW and QLD – on different residential projects. To stay compliant with payroll tax for builders, he uses Xero to track hours worked on each site, split costs by project, and keep clear records of who’s a subcontractor and who’s on payroll. That way, when it’s time to report to each state, everything’s already sorted. No spreadsheets, no scrambling.

Manual payroll’s a headache – Xero makes it simple. Check out our construction guides for easy tips to get set up right.

How Xero helps construction firms stay compliant

Whether you’re running a small crew or managing multiple sites, Xero’s tools are built to handle the complexity of construction payroll management.

Here’s how Xero helps:

• Time tracking for builders and staff via mobile apps
• Automated award interpretation and award wages for construction in Australia
• Built-in leave tracking and compliance with portable long service leave payroll rules
• Accurate cost allocation across jobs and projects

Super and tax calculations that align with payroll compliance in construction in Australia and New Zealand

“Before Xero, we were constantly checking awards and chasing up missed hours. Now payroll just runs itself – and we can focus on the build.”

– Sam, construction business owner, NSW

Frequently asked questions about compliant payroll in construction

What is the award wage for construction workers in Australia?

It depends on the role, experience level, and award. The Building and Construction General On-site Award sets the base rates. Use Xero to automatically apply correct award wages for construction in Australia.

How do I calculate super and allowances correctly?

Follow ATO super guidelines and award-based rules for allowances like tools, travel, and meals. Xero can help you stay on top of calculating superannuation for construction staff and handling allowances in construction payroll.

What’s the best way to manage payroll for subcontractors?

Use a site-based payroll setup that separates contractors from employees. Track hours, payments, and ensure timesheet approvals for contractors are done before each pay run.

Do I need payroll tax registration in each state?

Possibly. If your team works across multiple states, you may need to register separately depending on your wage bill. Xero helps track payroll tax for builders and manage trades payroll in Australia, even down to compliance by location.

How does Xero help with construction payroll management?

Xero simplifies construction payroll management with tools for time tracking, job costing, leave and super tracking, and real-time reporting – all in one platform.

Want to simplify your construction payroll? Explore how Xero helps builders and tradies stay compliant and in control.