As the law doesn’t provide a definition, it can be difficult to determine sub-contractor status to ensure you have the correct insurance for your business.

If a sub-contractor is a labour-only sub-contractor (LOSC), Employers’ Liability Insurance is required.

If they are a bona-fide sub-contractor (BFSC), you do not need this cover.

Labour-only sub-contractors, hired people and self-employed people embedded within your business, working for you and under your control are considered as employees. If they are not directly working for you or under your control and have their own insurance, they are BFSC.

If you are unsure how to class your sub-contractor, answer the following questions:-

  • Are they paid by the hour, week or month?
  • Can they receive overtime payments?
  • Do you supply their materials and tools (perhaps small hand tools) in order to work?
  • Do they have to carry out the work themselves and not have someone sent in their place?
  • You can tell them what to do, where to work and how to do it at any time?
  • Are they able to work a set amount of hours?
  • Can you move them from one job to another?

If you have answered Yes to most or all of the above, then the worker is probably a LOSC and you would need Employers’ Liability Insurance.

The Health and Safety Executive (HSE) enforces the law on Employers’ Liability insurance and HSE inspectors can check that you have an Employers’ Liability insurance, with an approved insurer, for at least £5 million. They may ask to see your certificate of insurance and other insurance details.

You can be fined up to £2500 for any day which you are without suitable insurance.

If you do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, you can be fined up to £1000.

If you wish to discuss this further or would like a quotation for this cover, please contact me.