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Protecting your trade business when hiring subcontractors

Rhino Trade Insurance 11 July 2022

If you are a self-employed tradesperson or business owner in the UK, no doubt there will come a time when you need an extra pair of hands to complete a job. The question is, though, will they be a full-time employee, apprentice or will you hire a subcontractor? This question will throw up a few different answers regarding insurance and the legal points you must adhere to their contract, how you pay them, what rights they have and so on. 

That's why Rhino Trade Insurance is here today. To answer all your questions about Subcontractors and put to bed the grey area this trade poses.

What is a Subcontractor?

When you manage an entire project, let's say a two-story home extension. You will more than likely need to hire a variety of skilled tradespeople to finish the job. From electricians wiring the job to plumbers connecting the water to the mains, you will inevitably hire a subcontractor. 

Subcontractors are different to your regular employees. They carry an extra level of risk but also bring excellent benefits to the job with them - namely, their craft allowing you to open your business to newer opportunities. 

There are two types of subcontractors - Labour-only and Bonafide. The first is very similar to an employee of your business. They will generally work with you daily and use your tools, equipment, materials and the like. You will tell them what hours you need them to work, where to work and how you want the task at hand done. 

The opposite to this is a Bonafide subcontractor. These skilled tradesmen and women turn up and get the party started. They are independent (usually self-employed) and work their own hours. They will bring all of their own equipment to the site, including any materials to do their piece of work and will not need any help. Once you tell them what's required, they will crack on and get the job done to a t.

Tell me about Subcontractor Insurance.

When it comes to knowing about subcontractor insurance, it all depends on whether they are Bonafide or Labour-only. As a Labour-only subcontractor, you, the employer, need to have Employers' Liability Insurance in place. This type of protection ensures that you will have cover if any claim arises that is down to damage being caused or an injury occurring to a client. This type of insurance is required by law for any UK business that hires staff. So check out Rhino's super offering starting at just £6.07 a month. 

Conversely, a Bonafide subcontractor will turn up to the site and have all the bells and whistles themselves. You won't need to worry about having cover in place for them. The only thing you need to wonder is if have they got their own Public Liability Insurance policy. This is required if they come on-site and cause an injury or damage. You can take out this type of cover at Rhino for just £72.80 a year.

What other protections should be considered with a Subcontractor?

Having the right level of cover for your trade business just makes absolute sense. Not only will it relax your mind. It also lets clients, customers, suppliers and other tradespeople know you are serious and legit. On top of insurance, you can also make sure you have these in place before hiring a subcontractor:

Have a Contract

When hiring a subcontractor, you may need them quickly, but you should always get any vital details down in a contract and sign them before any work starts. This shows who is accountable for what and who has ownership over certain elements of work. 

  • You should include what work will be undertaken. 
  • The time that is allocated to do the work. 
  • How much you are paying
  • The cost of any materials and equipment
  • Any information on who pays tax
  • Clauses to end the contract
  • Confidential info, non-compete clause, dispute resolutions and a risk transfer agreement. 

These are all vital parts of bringing someone in to work on a site that you manage. It essentially makes sure that your back is covered should anything go wrong. 


Consider asking for references when hiring a subcontractor you don't know. This is normal in business. Jobs ask for references, banks ask for references, and even landlords ask for references. So with the level of risk attached to trade work, why take the chance?

Generally, in the trade game, you will know or know of the people you hire. However, a reference will go a long way to protect yourself and get an insight into the person. 

Progress Payments 

As many payments in the trades are made with cash, it could be a good idea to set up staggered payments for the subcontractor to avoid any scams or arguments on money. 

This could help on longer projects or large projects with big bills. If you agree on payment in one large sum, you may underestimate your own cash flow situation. 

You could agree, for example, to pay a 50% deposit at the start of the subcontractor's work and the final 50% at the end. Alternatively, you could break their fee into several payments so that they have a constant money stream (especially if the project is long-term).

Qualification and Experience Checks

A final point on how a trade business can help protect itself is asking the subcontractor to provide experience details and relevant qualifications. 

Please don't assume they know what they are doing and then be surprised if everything goes wrong once they turn up. This point can go hand-in-hand with when you ask for references - doing your due diligence will help in the long run, especially if it enables you to avoid a costly insurance claim down to the subcontractor's incompetence.  

Why choose Rhino Trade Insurance?

So there you have it. How to protect your trade business when hiring subcontractors. At Rhino, we offer a variety of trade insurance policies, all at varying levels depending on the size of your business. We can provide you with protection at a fraction of the cost of most other insurers in this industry - often 40% cheaper than the nearest quote. 

If you want a quick quote, get one now in less than a minute via our website. Alternatively, please drop one of our cracking team members a message or give them a bell on 0116 243 7904

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