What are your legal obligations as a Tradesperson when employing Sub-Contractors?
Recently we have found there to be some confusion with Tradespeople relating to their legal obligations when employing Sub-Contractors and when they are legally obliged to cover them. Hopefully we can clear this up!
First of all you will need to distinguish whether they are a Bona-Fide Sub-Contractor (BFSCs) or a Labour-Only Sub-Contractor (LOSCs). Although there is no legal definition for either we will briefly distinguish between them as guide.
Bona-Fide Sub-Contractors are normally contractors who work under their own direction (rather than under the insureds direction). They will usually have their own insurance in place and will invoice the insured on completion of their works. BFSCs will be using their own tools and equipment in the course of their work and will cover any employees under their own insurance cover. A BFSC with multiple employees will be considered as one sub-contractor and will often have their own specialist area (e.g. Plumbers, Electricians, Carpenters, Roofers and Plasters etc.).
Although BFSCs will have their own insurance, the insured must still advise their insurer on the extent of their engagement with them and also check that the BFSC has insurance in place with the same liability limits for their own protection.
Labour-Only Sub-Contractors will be treated the same as a normal employee. LOSCs will work under the direct control and instruction of the insured, using the insureds tools and materials while often being paid by the week/day/hour. They may have insurance in place (although not a legal requirement) for third party liability; however, it is deemed that an employer/employee relationship exists and thus will need to be covered under the Employers Liability section of the insureds policy.
Often insurers can cover individuals as temporary employees where they engage in work with the insured on a part time basis forming less than 50 man days during the year in total.
If you require any further information in this area then please contact our office.