A Subcontractor is a firm or person that carries out work for a company as part of a larger project. In Insurance terms, we deal with two main types of Subcontractors, these are:
| Labour Only Subcontractors – LOSC
These are normally self-employed people who work for you and can be classed as employees. |
Bona Fide Subcontractors – BFSC
These are normally companies in their own right with a specialism e.g. an electrician. |
The easiest way to tell the difference between the two types of Subcontractors is how they work.
For instance, if you say jump, they will say:
| How high?
When? Where?
A LOSC will take all instructions from you. They will normally use your tools. |
OK I will jump a 1 metre in the air,
At 12:00, By the door.
A BFSC will take your instructions and work out the best way to carry them out themselves. They will normally use their own tools. |
How do they work?
| LOSC’s are normally used to fill out the ranks of your normal staff when a job is too big for your normal staffing levels, or there is a need to speed the process up and this can only be done by taking on more members of staff.
Often referred to as a day labourer, a LOSC will turn up, use your tools & supplies and work only when and where you have asked them to.
A LOSC will normally work general jobs as an employee. They will attach themselves to you and will be covered by your liability insurance, should they cause any damage. If they become injured, they will be covered by your employer’s liability insurance. |
BFSC’s are normally hired to complete a specific job that requires specialist skill on a project that your normal staff are not qualified to complete without further training or specialism.
(E.g. Wiring a property).
As your firm would be hiring them for a specific job, you would pay them as if it were a standalone job, typically by invoicing them as a separate company. As they are capable of working independently of your firm and may obtain jobs of their own outside of your contract, BFSC’s should have their own liability insurance. |
Do I need to cover them and if so, where do I declare them?
| LOSC should be noted as employees and will need to be declared as such on any insurances.
They will come under your EL and PL covers.
|
BFSC should carry their own insurances and will only need to be declared for liability purposes. Insurers will ask for payments made to BFSC and these are normally not expected to exceed a set percentage of your turnover.
If you engage BFSC you will be expected to check that they hold a comparable level of cover via a subcontractors checking clause in most wording. |
If you would like to discuss more in detail about these different types of Subcontractors, or would like to find out about our cover options, please don’t hesitate to contact Omni Davis on
01403 785775 | 01243 864018 or by email info@omnidavis.co.uk.
