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- Continuing focus on adequate and compliant insurances
Continuing focus on adequate and compliant insurances
Ever increasing workloads and time pressures on contractors can lead to an increased reliance on temporary and subcontracted labour. Such workers are usually provided on a “labour-only” basis, often via work agencies. Day-to-day work instructions will typically be given by the contractor’s own site management directly to the workers, with or without a foreman’s involvement.
The procurement of staff on a “labouronly” basis in this way generates different issues for contractors than procurement under a “bona fide” subcontractor route. As well as insurance issues to resolve, subcontract arrangements are becoming subject to more scrutiny from HMRC. This means that ever increasing care to ensure all requirements are met should be taken in the area of subcontractor appointment.
When hiring subcontractors it is important to understand where liabilities sit. Employers’ Liability insurance is non-delegable, meaning that the party legally required to hold such cover must in fact hold it. This is usually the party which offers day-today instruction of the workers, whether or not that is the party who pays the workers’ wages.
In the case of labour-only subcontractors it could therefore be regarded that the contractor, not the labour-agency with whom they have a contract of employment, is the employer for these purposes, and as such the contractor must ensure adequate Employer’s Liability coverage for claims made by the employees. (It should be noted that the “employer” for Employer’s Liability purposes and for taxation purposes may be a different entity).