Labour Only Vs Bona-fide Subcontractors: Do you have the Correct Insurance Cover?
What is a Subcontractor?
Let's paint a little picture for you of what a Subcontractor is. The company is called Big Dave's Building Services, and the owner is one David Smith. Now Big Dave has a whole host of work going on and clients waiting in line for his services. He employs a couple of young lads to help manage the workload - They are with him full-time. Big Dave also needs the services of other trades for his projects. They are called Subcontractors, and once they complete the work for Big Dave, they'll go off and work on other sites or for other contractors.
There're two types of Subcontractors, 'labour only' and 'bonafide'.
What is a "labour only" Subcontractor?
So, on a job, Big Dave needs work done, so he brings in a couple of 'labour only' Subcontractors. He tells them what work he wants doing, how they should go about doing it, and when it needs to be done.
These 'labour only' Subcontractors are only brought to certain jobs by Big Dave and are paid standard rate by the hour, day or week. They are free to bring small pieces of equipment with them, but Big Dave provides all of the tools and equipment they will need to do the job. He will also ensure that they have all the suitable materials required to finish.
What is a “bonafide” Subcontractor?
The difference with a 'bonafide Subcontractor is quite major. Big Dave can bring these specific Subcontractors to the site for a certain job. He will explain what he wants to be done and when he wants it done. It is then down to the 'bonafide' Subcontractor to inform him of the price and the time it will take.
These tradesmen are usually experts in a particular trade, so Big Dave, for example, maybe a builder and needs an electrician or plumber to come out and do part of the work on a project. In this scenario, Big Dave will pay the 'bonafide' Subcontractors in one go, and then they are expected to do the work and be gone. If anything were to go wrong with their work, as they are independent, they are expected to fix any issues caused at no extra cost - as the original contract will have stipulated.
Wondering which trade insurance is right for you? Get a quick quote now.
What insurance do you need as a Subcontractor?
Trade Insurance comes in a whole manner of forms. From Income Protection to Tool Insurance, you can protect your livelihood from potential risks and hazards. Our Subcontractor Insurance policies have been designed to offer a safety net to various trades, from Plumbers, Electricians, Builders, Gas Engineers and many more.
Having protected thousands of tradesmen and women across the UK, we are safe in the knowledge that our trade insurance is ranked as one of the best in the land. Don't believe us?
Can a Subcontractor be treated as an employee for the purposes of insurance?
When it comes to bonafide vs labour-only insurance, it's best to check what's right for you with your insurer. With that said, it's best to assume:
- A labour-only Subcontractor equals an employee
- A bonafide Subcontractor is the same as a third party (not an employee)
The main distinction between the two (as we stated in the section above) is one will be guided on what they are doing whilst on the job, and the other will manage their own workload.
Suppose you are currently considering your insurance options and unsure what to put down. Speak to the Rhino team, and we will guide you through the process. If you have any labour-only Subcontractors, let us know. It's better to be safe than sorry when it comes to insurance, as the worst thing to happen is a claim be made against something you think you are insured for or are under-insured for. Drop us a line on 0116 243 7904.
Are Subcontractors covered under Employers' Liability Insurance?
As labour-only Subcontractors are classed as 'equal to employees' when it comes to insurance, they would be treated in the same way when it comes to Employer's Liability Insurance. If something were to go wrong on-site and an injury or damage was caused by the labour-only Subcontractors whilst undertaking work set by Big Dave, they would be covered under his trade insurance policy.
On the other hand, if a bonafide Subcontractor is on-site, they are deemed a 'third party'. So if they cause any damages to the property or injure someone, they would not be covered by Big Dave and ultimately need their own Public Liability and Employer's Liability Insurance to avoid any significant financial claims.
Is Public Liability Insurance important for Subcontractors?
Here are a few examples of why having Public Liability Insurance as a Subcontractor is so essential:
- Let's imagine a labour-only Subcontractor. They are treated as equal to employees, so they are usually covered under the companies Public Liability Insurance. This is when it's worth checking your policy. If they were to injure a member of the public somehow or cause some damage whilst working on the main contractor's job, then this should be covered by Public Liability Insurance.
- Taking bonafide Subcontractors as another example. If, whilst undertaking their work, they cause damage or injury due to their work, then they may be liable to a claim. That's why they need their own independent Public Liability Insurance as the main contractor does not cover you.
With Rhino Trade Insurance, our Public Liability Insurance starts at just £6.07 a month and offers cover starting from £1 million all the way to £10 million on request.
Do Subcontractors need their own Tool Cover?
As mentioned above, labour-only Subcontractors are entitled to bring some of the tools they enjoy using. Fortunately, they will be covered under Big Dave's Tool Insurance but be careful. This doesn't mean you can take your entire tool arsenal to work every day. You may need to check your policy as something like CARS will be required for possessions to be protected on-site.
On the flip side, if you are a bonafide Subcontractor, any tools used would not be covered by the main contractor (or, in this case, Big Dave) as you are a third party tradesman, not an employee. Therefore you will need your own Tools Insurance policy.
Let Rhino help with your next insurance policy.
We at Rhino Trade Insurance offer some of the best trade insurance protection for Subcontractors. We have been working with different tradesmen up and down the country for 20 years now and have designed individual policies for each trade available.
Get in touch with one of our lovely UK team now, or get a quick and easy quote online now. We look forward to hearing from you!