Advice for SME's when hiring contractors and subcontractors

Advice for SME's when hiring contractors and subcontractors

11th September 2014

Britain is a nation of small to medium enterprises and it’s fairly common for small organisations to hire contractors or subcontractors from time to time.  When a business has some extra work on it makes sense to use contractors instead of hiring permanent staff.  Most small to medium businesses that need refurbishment or remodelling work done on their premises will use contractors to do the job.  Today we’re taking a look at contractors and subcontractors who may need to use access equipment and the issues that face an organisation considering their services.

First of all, there are legal considerations to take into account.  Contractors are not employees of the company, but contract with the company to provide certain services.  Subcontractors may carry out all or part of the work on behalf of the contractors.  Contractors provide agreed upon services to a client for a set fee (and sometimes within a set timeframe) under a contract for services.  A ‘contract for services’ is not to be confused with a ‘contract of service’ which is a contract of employment between and employee and an employer.

Contractors may charge clients by the hour, by the day or on a lump sum for the job basis with contracts that may specify payment milestones.  Subcontractors enter into a contract with the contractor, usually in order to complete a part of the job that the contractor cannot do (such as when a building contractor hires a subcontractor to install the electrical wiring part of a building job).  The contractor is responsible to the client for the job as a whole, including the part undertaken by the subcontractor.

Neither contractors nor subcontractors would normally be considered to be your employees – they will either be self-employed, employees of the contracting business or agency workers.  This means that you will not need to make tax and national Insurance deductions.

Health and Safety regulations state that in any relationship between a client and a contractor both parties will have responsibilities when it comes to health and safety issues.  When subcontractors are also involved, they also have responsibilities.  Cooperation, coordination and effective communication between all parties (including your existing staff) at all times is essential as this adds an extra level of safety. 

Making sure you are aware of your responsibilities towards contractors and subcontractors is essential as there are many cases where clients, contractors and subcontractors have all been fined for failing in their health and safety duties.  For example, failure to:

  • Ensure a contractor’s/subcontractor’s competence to carry out the work
  • Supervise a contractor/subcontractor
  • Exercise a duty of care towards a contractor/subcontractor
  • Provide a formal site induction, risk assessment or method statement
  • Take steps to prevent contact with live equipment
  • Provide information about the presence of asbestos or asbestos containing materials (ACMs)
  • Ensure safe operation of vehicles
  • Ensure safe loading or unloading from delivery vehicles
  • Assess risks to health from regular exposure to high vibration levels

It’s also important to consider your company’s liability insurance when using contractors and subcontractors as they will not be covered by your employer’s liability insurance.  You will need a public liability insurance (PLI) policy that covers contractors when working on your premises or when working elsewhere on your behalf (for example sourcing and buying materials).