Managing contractors & subcontractors at your workplace

Growing a business gives you a lot to celebrate. But managing contractors and subcontractors — given the lack of a direct employer and employee relationship — can be tricky.

Potential risks such as accidents in the workplace, workers compensation claims, and even legal action can be more complex with contractors than with employees. But with the right planning, you can ensure a healthy relationship with your contractors.

When might you hire a contractor or subcontractor?

Specific arrangements can vary, but in general, a contractor is usually hired to complete a specific task or project, working directly with a client . Subcontractors are often brought on to help with a particular aspect of that project, working directly with the contractor rather than the client.

A few key things can indicate that it might be time to hire outside help:

●      If the task is specialised and you don't have in-house expertise.

●      It’s a one-off job or project.

●      The expertise of multiple people is required.

Understanding the difference between contractors and employees may help identify your business needs.

The benefits of using contractors and subcontractors

Hiring contractors can sometimes be more cost effective than hiring full-time employees. Contractors are usually only paid for the work they do, and they don’t get benefits such as annual leave and personal leave.

Contractors also offer businesses flexibility, as they can be hired on a short-term basis to help with specific projects or tasks. In addition, contractors often have specialist skills that businesses may not have in-house.

Finding and vetting potential contractors

There are a few things to keep in mind when looking for contractors. First, make sure they have the necessary qualifications and experience. Second, check that they have insurance cover in place. It’s a good idea to ask if a contractor has: 

• Worker Compensation Insurance
• public liability insurance
• income protection insurance
• contractual liability insurance, and
• tool insurance if they're a tradesman.

You could also ask for references from previous clients.

Carrying out due diligence checks and validating certificates is essential to managing risk, as doing so can help you avoid any nasty surprises.

Once you've found a few potential contractors, invite them to submit proposals for your project. This will allow you to compare prices and services.

When evaluating proposals, make sure you understand what is and isn’t included. For example, some contractors may include travel costs in their proposal, while others may not.

Once you've selected a contractor, draw up a contract with your solicitor. This document should outline the scope of work, timelines, payment terms, and any other relevant details.

Explore Workers Compensation Insurance with GIO

Tips for managing contractors and subcontractors

Keeping a few things in mind can help ensure your project runs smoothly and that your contractors and subcontractors are properly managed.

• Communicate regularly with your contractor or subcontractor to ensure that they understand your expectations.
• Review their work regularly to make sure that it meets your standards.
• Make sure you keep up to date with their insurance coverage and workers compensation arrangements.
• Be prepared for worst-case scenarios, such as accidents or injuries in the workplace.

Tips on what to do if expectations aren't being met

If you're not happy with the work that your contractor or subcontractor is doing, the first step is to talk to them about it. It's important to try and resolve the issue amicably. If this isn't possible, then you may want to speak to your solicitor to see what your options are under the contract.   

It’s good practice to keep records of conversations, including emails, meetings and calls and examples of their work as evidence for potential disputes. 

Avoiding costly mistakes with contractors

It's crucial to understand your obligations when working with contractors. Do your due diligence and carry out proper induction processes to ensure that everyone is aware of their roles and responsibilities, including all safety obligations in the workplace.

Review contractors' safe work procedures to make sure they are up to standard and monitor workers regularly to ensure they’re following these procedures.

Prepare for worst-case scenarios by having a plan in place.

Training and guidance for your small business with GIO

In addition to providing expert claims management with your local authority, GIO offers a comprehensive range of training courses and seminars. These are designed to help you reduce the risk of workplace injuries and their associated costs.

Learn more about training courses

We also provide risk management services that can help your business better understand and manage your WH&S and injury management systems and obligations.

If you want to find out more about Workers Compensation Insurance, GIO is here to help.

Learn more about Workers Compensation Insurance with GIO

Read more:

• Workplace risks during the festive season
• Be heat vigilant this summer
• Managing mental health in the workplace

Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. In NSW, GIO manages claims as agent for the Workers Compensation Nominal Insurer ABN 83 564 379 108, also known as icare workers insurance.