The above phrase is a common one in military circles, used in situations where someone senior has made a mistake and needs someone junior to blame and sort it out. There are probably parallels in the construction world as often the hierarchy is blurred and as subcontractors are engaged by various parties and in the event of a claim he blame game is often a tough one to sort out. This is why Employers Liability is a legal requirement. This obligation is not just concerned with people who are PAYE but anyone who works under your direction.
Here are some handy notes for you to work out whether you are meeting the Compulsory Insurance (Employers Liability) Act. There are hefty fines if you are not.
Common Misconceptions:
My subcontractors all pay their own N.I. and Tax so are not my responsibility: WRONG!
All my staff are volunteers and therefore work on the understanding that they are responsible for their own actions: WRONG!
I only engage one sub-contractor for a couple of hours a week. They don’t build up enough hours to warrant this insurance: WRONG!
My Subcontractor already has insurance in place so I don’t need to take it out: WRONG!
In all of the above Employers Liability is required. Unless you are a sole trader working exclusively on your own or only with Bona-Fide Subcontractors (more on them in a bit) the liklihood is that you do require cover.
Bona-Fide Subcontractors:
It is not a legal requirement to insure Employers Liability for people you are working with who you may class as Bona-Fide Subcontractors. These are people who you might bring in to do a specific task for a fixed contract price and who would work under their own direction with their own tools and under their own health and safety policies and method statements. In order to assist in identifying whether someone can be classed as a bona-fide subcontractor I have attached a tick-sheet.
Is My Sub-Contractor Bona-Fide?
The Subcontractor…
arranges their own Liability Insurances: Yes No
works solely under their own direction: Yes No
is responsible for their own H&S and method statements: Yes No
works for a fixed contract price: Yes No
works with their own tools and / or equipment: Yes No
If the answer to all of these is ‘yes’ then they can be rated as Bona-Fide Subcontractors. If even only one of the above is a ‘no’ then they must be rated for Employers Liability.
Case Study: Joe Bloggs Lighting Design Ltd has designed the lighting scheme for a new museum in London. They employ a firm (Handyman ltd) to provide the staff to undertake the installation. Handyman Ltd have agreed a fixed price for the three day job. Joe Bloggs Lighting will be overseeing the installation as they are keen to make sure the lights are put in place in accordance with their design. Joe Bloggs Lighting Design Limited provided ladders with which to reach the heights to fix the lights in place. One of the employees of Handyman Limited is following the lighting plans produced by Joe Bloggs Lighting Design and goes up the ladder to fix the light in place. Whilst up there he over-stretches and falls to the floor, he breaks his leg.
Are Joe Bloggs Lighting Design Limited legally obliged to insure Employers Liability? Yes – Despite the fact Joe Bloggs are employing Handyman on a temporary basis they are in charge of the overall site and are providing equipment with which to carry out the contract
Assuming Joe Bloggs had the EL cover in place will they actually pay out for this claim? Probably – Whilst it would appear to be the individual’s fault for over-stretching and falling it was ultimately the responsibility of Joe Bloggs to ensure that they were competent working at height and depending on the circumstances should have been supervising such work and maybe suggested moving the ladder closer to avoid such things. There are several points which suggest that Joe Bloggs were negligent and so it is entirely plausible that the injured individual would make a successful claim.
So for some good advice and a review of your requirements why not give us a call. A phone call might cost you a few pence, to ignore these requirements might cost you a whole lot more.
We look forward to hearing from you.
Alistair
