Subcontractors can provide SMEs with the resources to get a job done without the commitment of hiring an additional member of staff, but as they are not directly employed, working with them requires a different approach. Master Builder spoke to Rachel Crookes, Partner at Keebles LLP and Julie Camp, Head of Seminars & Training at Silver Shemmings Ash LLP to ﬁnd out more.
What do I need to do before taking on a subcontractor?
Before taking on a subcontractor it is a good idea to carry out credit checks to ensure they are ﬁnancially viable and to check references for past projects. When dealing with a company, rather than a sole trader, ensure that the person you are dealing with has the authority to make agreements on behalf of the company.
Julie recommends preparing a brief and inviting prices from the market, ensuring that all subcontractors are pricing on a like-for-like basis. “As part of this process it is advisable to prepare a pre-qualiﬁcation procedure in order to learn more about the subcontractor’s health and safety record, previous work portfolio and ﬁnancial standing,” she said.
Do I need a contract?
While a contract can be made orally, it is good practice to have a written contract in place before the subcontractor begins work.
Contracts are generally bespoke to each project, said Julie, but as a bare minimum must conﬁrm scope of works, price, programme and payment.
“This contract will govern the relationship between you and the subcontractor and allocate risk under the contract,” she said.
It is also a good idea to cover the speciﬁcation of materials to be used and who will supply them and the safety and training credentials of the subcontractor’s staff.
If your contract with the employer/main contractor contains speciﬁc obligations such as a defects liability period, dispute resolution procedure or warranties covering the work carried out, you should consider mirroring these obligations in your contract with the subcontractor.
Contracts will assist you if something goes wrong at a later date and ideally, they should be drawn up or reviewed by a solicitor, said Rachel. FMB members can download a free subcontractor contract template in the Members’ Area of the website.
“If court action is required it is much easier to pursue your claim, or defend a claim brought against you, if there is a clear written record of the parties’ intentions and who was responsible for what,” she explained.
Do you have to have a certain kind of insurance policy?
As a minimum, employers should have Employer’s Liability and Public Liability insurance in place, as well as insurance for any vehicles you operate in the course of your business. Subcontractors should also provide evidence of Employer’s Liability and Public Liability insurance and if they are carrying out design work, Professional Indemnity insurance will be required. Visit www.fmbinsurance.co.uk to request a competitive quote for your insurance policies.
Who is liable if a subcontractor makes a mistake on site?
Subcontractors have a duty to carry out their works with reasonable care and are legally obliged to follow the requirements of a contract. However, the question around liability depends on the facts of individual cases.
“If the mistake is due to the subcontractor’s own carelessness or negligence, then they are likely to be liable to you as the main contractor, for any loss you may suffer as a result of that mistake. However, other parties in the chain, including the employer could have a claim against the subcontractor,” explained Rachel.
“Similarly, if the mistake impacts upon the larger project where you are not the main contractor, the employer or other parties in the chain may have a claim against you. In turn, you may be able to recover from the subcontractor any losses you suffer as a result of a claim against you by anyone else in the chain.“
However, there may be other factors to take into account which will impact upon who, if anyone, is liable for the mistake. For example, was the mistake due to poor instructions and/or poor material or equipment provided by someone else? If so, the subcontractor may not bear ultimate responsibility for the mistake.”
Who is liable if a subcontractor is injured on site?
The employer has a duty to protect workers from risks under the Health and Safety at Work Act 1974 and failure to comply can expose you to a criminal prosecution, as well as a civil claim for damages but the questions around liability will depend on the circumstances.
“This is a very complex area,” said Rachel. “It is not unusual for several parties to be brought into legal proceedings when attempting to identify who is liable for the injury and any associated damages.
“If an injury occurs on site, it is very important to keep a thorough written record of any subsequent investigations and meetings and, if possible, to obtain signed statements from any witnesses. It is highly advisable that you seek legal advice as early as possible to assist with this process and to protect your position.”
Top tips for taking on a subcontractor
- Ensure you have a written contract signed by each party clearly setting out their obligations. If possible, get it drafted or checked by a lawyer.
- Research the subcontractor’s reputation. View work they have carried out and make enquiries within the trade or with customers. If possible, check their ﬁnancial status.
- Know who you are contracting with. Is it a sole trader, a partnership, a limited liability partnership or a company? Ensure you have the correct company name and registration number.
- Ensure the subcontractor has adequate experience and training/credentials to carry out the job you’re hiring them for, check their health and safety policies and procedures and ensure they have sufficient insurance for the works.
- Include a defects liability period in the contract and ensure that the subcontractor provides warranties over their work.
- Check the subcontractors’ availability for the duration of the work.
This article was published in the February / March 2020 edition of Master Builder; the magazine of the Federation of Master Builders.