Do I need Insurance for Sub-contractors

Do I Need Insurance for Sub-contractors?>

Employers liability is one of the only mandatory forms of insurance in the UK for businesses. It covers you in the event an employee makes a claim against you following an injury or illness sustained as a result of work they do for you. In the majority of cases, employers liability insurance is a legal requirement if you have employees, this includes employees who work for you on a short-term basis.

You are likely to need employers liability insurance if you hire labour-only sub-contractors, even if you only hire them on a short-term basis, and they assist you with just one project. However, you don’t need employers liability insurance if you only hire self-employed bona fide sub-contractors.

Many businesses still find themselves unsure of the difference between a labour-only sub-contractor and a bona fide sub-contractor, and when they need employers liability insurance in place. Here we will consider the two types of worker in more detail.

What is a labour-only sub-contractor?

A labour-only sub-contractor is often hired to work on a project that requires extra help. For example, if you are working to a very strict timeframe, or if the project demands it, you may need to hire some extra staff on a short-term basis.

Labour-only sub-contractors become part of your team under your supervision, with their tools, equipment and materials provided by your business. You will determine their working hours, their work location and their daily tasks. In simple terms, you control the work they do in every way.

According to UK law, a labour-only sub-contractor is classed as an employee and therefore, as their employer, you are responsible for their health and safety while at work and making sure you have employers liability insurance in case something goes wrong.

What is a bona fide sub-contractor?

A bona fide subcontractor is usually brought in as part of a wider contract, to complete a specialist element of the work that you or your employees perhaps don't have the necessary skills or experience to complete.

Bona fide sub-contractors work independently, on a set task, without supervision or direction from you, using their own materials and tools. Since you have hired them to undertake a very specific task, payment would be made through an invoice or fixed price contract.

As self-employed professionals, bona-fide sub-contractors should have their own liability insurance. You will however need to check that any bona fide sub-contractors contracted by you have public liability insurance with a limit of indemnity that is no less than yours and that covers them for the work you've contracted them to do.

Do I need employers liability insurance?

If you are still unsure whether you need employers liability insurance, or if you would like a quote for your business insurance, please get in touch with the FENSA Business Insurance Services team on 01905 892 381. You can find out more on the insurance page within the FENSA Installer Portal.

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FENSA Ltd is an Introducer Appointed Representative of Marsh Ltd. FENSA Business Insurance Services and Marsh Commercial are trading names of Marsh Ltd which is authorised and regulated by the Financial Conduct Authority (FCA) for General Insurance under Firm Registration Number 307511. Not all products and services are regulated by the FCA.