Bona-fide subcontractors (BFSCs) are hired to complete a specific job, usually one that the main contractor and his employees cannot do. They work under their own direction, use their own materials and kit, and are responsible for their own liability insurance, health and safety arrangements, and compliance.
Labour-only subcontractors (LOSCs) work under the main contractor’s supervision and are usually hired when the main contractor needs extra employees for a job. They use the main contractor’s tools and materials and must be insured under the employing company’s employers’ liability policy.
Liability insurance – what you need to know
If one of your employees is injured or becomes sick as a result of their work - then employers’ liability insurance is designed to protect you against claims they may make against you for negligence. Employers’ liability insurance is a legal requirement if you employ people, and that includes labour-only contractors.
Bona-fide subcontractors, however, are not classed as employees as they work under their own supervision and direction, so you don’t need employer’s liability insurance for them.
Public liability cover should be considered for anyone who works for you or on your behalf. Bona-fide subcontractors should have their own Public Liability cover. However, if they do not, and they cause damage or injury to a third party or their property while working, the liability would fall back to your insurance policy. It is vital to check that a bona-fide subcontractor has their own liability insurance in place, for your own protection.
Both LOSCs and BFSCs must be declared to your insurance provider. LOSCs will be classed as employees and both employers’ and public liability cover should be provided. BFSCs are not, and only public liability cover will be provided.
Good business sense
Hiring a subcontractor at some point is common practice and is not without its benefits. You can lighten your workload, speed up the completion of a project and bring in a specialist – such as a plumber or electrician. Plus, it can be more flexible than employing a team member. It makes good sense to manage your risks and avoid compensation claims with a robust insurance policy.
For tradesman insurance, get a quote online, or if you would like to speak to somebody in more detail call 0800 0280 380.