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Using Subcontractors: How To Protect Yourself

Using Subcontractors: How To Protect Yourself

When working in construction, using subcontractors is a pretty standard. Subcontracting work can be highly beneficial to lighten workload and add flexibility to permanent employees as well as giving you access to a new set of skills.

When hiring a subcontractor it is imperative that you practice good risk management to avoid liability and to be covered by the correct builders insurance North Wales. Before going ahead and hiring a subcontractor it is important to know the following information.

Subcontractor Types

Firstly, there are two types of subcontractors, labour only and independent. Depending on the type of subcontractor will depend on what type of construction insurance Liverpool that you will need.

Labour Only Subcontractors: This type of contractor is very similar to an employee because they work under your supervision using materials, equipment and tools that you have provided. You will usually determine their hours and direct where and how they work, and you will even pay them a salary. When working with labour only subcontractors, you legally need to have employer’s liability insurance for them.

Independent Subcontractors: Independent subcontractors are exactly that, independent. This type of contractor will set their own hours, will be paid by invoice, work without supervision, supply their own tools, equipment and materials. To have a subcontractor you wont need to have Employer’s Liability insurance, but you should ask for proof that they are licensed and that they have Public Liability insurance before you hire them. If they have any staff too, you should make sure they are insured too.

Risks to Consider

Before going ahead and hiring an independent subcontractor you will need to evaluate the risks which include, quality control, time management, and liability.

Ask for references and examples of their past work and make sure that they have the experience that you need. Ensuring that their level of quality meets yours and that they aren’t cutting corners by using cheap materials or unsafe practices.

It is important that you communicate well with your subcontractor and walk them through the site, go through the layout and outline your expectations from them. Once you’ve fully understood their availability on the project, set out a reasonable deadline for the work to be completed.

Hiring a subcontractor usually mean for time spent communicating so you need to make sure you are on hand to answer any of the questions they may have and regularly check on their progress. As this is likely to be someone that you work with for a while it is good to maintain a good working relationship and for it to be someone that you get along with well.

Risk Transfer Agreements

Make sure before your subcontractor starts work that you have them agree to everything in writing. Make sure that they have signed a contract that holds them accountable for their own work, so that you are protected against damages they may cause. The contract should be simple, but it should be thorough and cover the following:

  •         The subcontractor is independent and that they are responsible for tax-related reductions.
  •         Outline the work the subcontractor has agreed to including duration and deadline of the work.
  •         The pay rate and delivery method
  •         Additional costs (materials, transport, and any other expenses).
  •         When and for what reason your contract might terminate.
  •         Confidential information and any non-disclosure clauses
  •         A non-compete clause so that your subcontractor doesn’t work directly with your client.
  •         A dispute clause, outlining how disagreements will be handled.

Having this agreement in place is highly beneficial to a good working relationship. It outlines who is responsible if a loss occurs meaning smoother relationships in the long run.

 

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