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USING SUBCONTRACTORS: TIPS FOR PROTECTING YOUR BUSINESS

Do you understand the legal implications of using subcontractors?

 

At last official count, Australia had more than one million independent contractors.1 Many pest management businesses use this to their advantage, using a subcontractor to help them take advantage of increased demand for their business.

Rapid Solutions knows this can be a savvy way to keep customers happy and increase your revenue, as long as you understand how to protect your business against subcontractor-related insurance claims.

Remember the subcontractor isn’t an employee, they are used to running their own show. They may not have the same professional approach or quality assurance systems as you. So, before allocating the work, ensure you’re on the same page when it comes to the most important aspects: customer communications; pre-job paperwork; on-the-job activity and reporting; after-the-job paperwork; and business insurance, yours and theirs.

Consider the implications of not doing so – an unhappy customer might share negative feedback online, or to other potential customers or, even worse, you might leave yourself wide open to a claim being made against you. The subcontractor is representing your business so if something goes wrong you could be held financially liable.

Subcontractors usually aren’t covered by your insurance; they need their own, just as they need their own licence and qualifications for the services they perform. You need to explore this with them carefully before they work for you, to ensure they’re adequately qualified and covered for each activity.

Rule of thumb: your subcontractor needs the same level of professional indemnity insurance and general liability insurance as you, or more. This is crucially important if your customer puts forward a claim against the subcontractor’s work. Otherwise, you can be brought into the claim.

Also advise your insurer that you’ll use subcontractors (before you do) and check your policy conditions to see whether you’re covered if a claim occurs.

Finally, check their reporting on every job before passing reports on to your customer, checking for consistency and completeness. That’s your duty of care as the business owner and as the person who’s been entrusted to do the job properly.

 

1 Source: Australian Bureau of Statistics (2016). Characteristics of Employment, Australia.