Using subcontractors in the construction industry the norm. But it can be a legal minefield in terms of health and safety. Here’s what you need to do to make sure your sub-contractors are compliant and a benefit to your business, not a liablity.

What is the difference between a Self-employed Labour Only Subcontractor or Bona Fide Subcontractor?

There are two types of subcontractors in the construction industry.

A Bona-Fide Subcontractors are, in effect, companies that you are employ to carry out the works you are contracted to complete. They have their own insurance and pay their own tax. They also have their own health and safety RAMS that they sign onto.

A Self Employed Labour Only Subcontractor works to your health and safety RAMS. They can have their own insurance or you can arrange for them to be covered on your policy. You have responsibility for complying with the rules of the HMRC CIS scheme.

When a Subcontractor Becomes an Employee

It has been a tax loop for years that self employed subcontractors are not on the payroll. Umbrella companies were the favoured way to reduce tax burdens for several years. Thankfully, the health and safety requirements are much simpler!

If your self employed, labour only subcontractor ONLY works for you, then they are considered to be an Employee.

That’s it.

Who Provides RAMS for Subcontractors?

If you are using a bona-fide subcontractor, you will get the most legal protection if you get them to provide their own Risk Assessments and Method Statements.

Self employed subcontractors are typically one person who fit into your team. To ensure consistency and have everyone working together safely, it offers you the most legal protection if they sign onto your Risk Assessments and Method Statements.

Personal Injury Claims when Using Subcontractors

This is where it can get very messy, particularly if they have an injury on site. The test of who is liable is the “undertaking” ie the work they were doing at the time the injury was sustained.

Here’s the way it goes, in terms of liability:

If there is a Principal Contractor in control of the site, they are liable first. Why? Because they have a duty under the CDM Regulations to manage the overall standard of health and safety on site.

If there is not a Principal Contractor and the injured person was doing your undertaking -ie. your trade – then you are liable. The way the claim will work is that the subcontractor’s insurer will counter-claim off your insurer. There are levels of liability and percentages for contributory negligence, but that is a whole other article.

What you Need to Do to Protect Your Business When Using Subcontractors

1. Appoint a competent subcontractor – labour only or bona fide you need to ask for proof of competence. You need training certificates, preferably references and details of their experience.
2. Check their insurance is valid and covers the work they are doing or make sure they are on your insurance.
3. Check their RAMS are suitable and sufficient – or have them sign onto yours

If you have any questions about using subcontractors, message me