One of the most common questions we are asked is whether employees are classed as labour only or self-employed subcontractors. When you obtain a security insurance quotation it’s really important that you are as accurate as possible with your estimates.
Many insurance quotations will require you to be within 25% accuracy of the declared figures or you will need to notify insurers immediately.
At Security Insured we arrange insurances that are bespoke to you and aim to give you as much information as possible for you to be able to make an informed decision.
The below should help you identify who is a Bona Fide Sub Contractor and who is a Labour Only Sub Contractor.
Bona Fide Subcontractors
Separate firms/individuals who quote for work usually relating to their specific field and work to a contract.
- Have their own Public Liability/Employers Liability cover
- Supply their own materials/equipment
- Importantly they work and are not supervised
- Use their own equipment and tools
- Are responsible for their own health and safety
- They may employ additional employees
- Are responsible for their portion of the contract with guarantees/maintenance & must see it through
- The firm is paid as a firm by the main contractor.
- Main contractor requires Public Liability contingent cover only for BFSC’s.
Labour only Subcontractors (employees paid gross of tax)
- Rely on employers PL/EL cover – Firm has to insure full wages of
- Given materials to work on, supervised, have to comply with H & S arranged for them
- Given detailed instructions on what to do.
- Paid hourly and can be hired and fired.
- Don’t give a guarantee for work done and may leave part way through.
It’s important to remember that the test for taxation by the HMRC and the test for whether someone is covered by the Employers Liability Act are different from one another. An employee/contractor may be responsible for their own tax but you may be responsible for any injuries they sustain at work.
For a comprehensive insurance review why not seek help from Security Insured this year? Take advantage our specialist knowledge in obtaining a competitive security insurance quotation.
Blog created by: Golan Lambranzi – Security Insured