Children at Riddlesdown Collegiate in Surrey witnessed the fight which erupted while workers installed disabled access lifts to the school’s music and drama building.
Punches were thrown and one builder sustained a hand injury during the fight which had to be broken up by the school caretaker.
Principal Gordon Smith told the Coulsdon and Purley Advertiser: “What happened was these two adults were working as contractors. They were squabbling over a spirit level and whose spirit level it was to use.
“This squabble then turned into a physical fight which was broken up by the caretaker. The two were then taken to their foreman and escorted from the site.
“We are waiting for a letter of apology from the company, but at no point was any student in danger.”
Smith said he was “absolutely furious” and that the incident was “wholly unacceptable”.
Budge Priechenfried, director of construction company Sherman, called the fight “appalling”, but said fights over tools are “not unfamiliar territory in the construction industry”.
He said: “I think anybody in the industry knows that tools are the working man’s possessions and vital to their trade. With 30 years in the trade I know how jealously people guard these things.
“You can’t just pick up someone else’s tools and use them.”
Priechenfried added that the two builders had been supplied by an agency and were not direct employees of the company.
The fight took place outside on the east side of the school site, which is overlooked by four classrooms.
Many pupils filmed the fight on their phones but were forced to delete the footage by teachers.