Using contractors and subcontractors
Other legal points to consider when employing contractors
You have legal responsibilities when you engage contractors.
- Ensure that your business insurance covers
contractors and subcontractors working on your site and consider
the following:
- If you have employees, you need employer's liability
(EL) insurance.
- Contractors working on your behalf aren't employees - subject
to their employment status being determined otherwise - and therefore
not covered under EL, so you should have public liability
(PL) insurance.
- Your PL policy should cover contractors working for you away
from your premises unless the contractors have their own PL insurance
with the same level of cover.
- If contractors are working on your behalf, check they have
appropriate insurance.
- If a contractor works at your premises, eg a builder, they
should have their own insurance to protect you, while your PL
insurance covers them.
To be certain, consult an insurance adviser and notify your insurer
that you are using contractors.
Many businesses aim to incorporate certain clauses and provisions
in the contractor's contract for services.
Examples include:
- Protection of your intellectual property rights,
eg material and equipment designs if these will be accessed or
used by contractors.
- Non-disclosure agreements, if you have to
tell contractors about - or they help you develop - confidential
aspects of your business.
- A project schedule - including performance
targets and deadlines.
- A payment schedule - this might include payments
on account and the criteria to trigger such payments, eg completion
of a piece/stage of work.
- Penalties for poor workmanship or late delivery.
- Minimum quality standards.
- Minimum health and safety standards - see
the page in this guide on health and safety requirements
for employing contractors.
If in doubt, consult a legal adviser before you agree a contract
for services with a contractor.
If you aren't involved in choosing a subcontractor, tell the contractor
you expect them to address these matters in contracts with their
subcontracted workers.
Subjects covered in this guide
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