Tradesmen – Insuring your casual staff & apprentices

Click here for more information on Contractors Insurance with S.A. Faughnan

As an employer, ensuring that you have adequate insurance cover for workers is vitally important for your business to survive, in the event of a workplace accident. All too often, tradesmen are carrying only Public Liability cover which does NOT cover workers or apprentices who are under your control and who are carrying out manual or other work for you on site or at your work premises.

Employers Liability Insurance protects your business against your legal liability for injury, illness, disease or death of any employee under a contract of service with your business. Workplace accidents are the very common in Ireland, particularly falls from heights and working with machinery in many sectors. Employers’ Liability (EL) insurance is not compulsory in Ireland. However, most employers will have EL insurance in place to cover claims made by employees for injuries at work or, by others, where the employer is being held liable for acts or omissions of an employee.

What is an employee? The definition of a direct employee will include: Labour-Only Sub Contractors (LOSC) or persons supplied by them, Self Employed Persons, Persons hired or borrowed by the insured under agreement, persons engaged in training, education or work experience e.g. apprentices. This means that claims against your business under these categories will be indemnified by your insurance, provided you have paid your premium for them.

Key points to remember :

Disclose ALL workers to your insurer, whether cash only, PAYE, sub-contracted (LOSC), apprentices, work experience or agency staff.

Make sure ALL staff have Manual Handling, SafePass and appropriate on-site safety training including that involving machinery

Make sure ALL staff have Personal Protective Equipment including Clothing

Declare ALL payments and wages to your insurer which are paid by you to BFSC (Bona Fide Sub Contractors) and LOSC (Labour only Sub contractors)

Carry out a sufficient risk assessment and take the suitable measures to protect employees and report incidents.

Definition of Sub Contractors for Insurance Purposes

The following information is intended to explain the different types of sub contractors and how they are categorised by insurance companies for purposes of determining whether Employers Liability Insurance is required. If you have any questions please contact us.

Bona Fide Sub Contractors (BFSC)

Bona-fide sub-contractors are generally deemed to be contractors who work without direction from the insured (you), hold their own insurance and usually provide their own materials and tools.

As long as they are not working under the direction of the Insured (you), have their own legal liabilities and insure for themselves, there is no need to include them in the count of employees.

Most insurance companies would usually exclude losses occurring due to any work undertaken for your business by bona fide subcontractors unless you take all reasonable steps to ensure that they have and maintain in force public liability insurance with a limit of indemnity of not less than that under your policy. They will not make any payment for any claim or loss where you fail to demonstrate to their satisfaction that you have complied with this requirement.

Labour Only Sub Contractors (LOSC)

Labour only sub-contractors should be treated as Employees for the purposes of cover under this type of insurance. Generally they work under the direction of the Insured (you) and do not provide their own material or tools (with the exception of small hand tools). Cover would therefore be arranged for LOSC by the main contractor under their policy.

Determining BFSC or LOSC status

Whilst it is difficult to provide an accurate definition, it is important to try and correctly determine the status of sub-contractors to ensure that the cover provided by the policy is adequate.

As a general guide as to whether a worker is a LOSC or BFSC; If the answer is ‘Yes’ to all or most of the following questions, then the worker is probably a LOSC and would need to be covered for employers liability insurance:

Are they paid by the hour, week, or month?
Can they receive overtime pay or bonus payment?
Do they only supply their own small hand tools?
Do they always have to do the work themselves?
Can the principal contractor tell them at any time what to do, where to carry out the work or when and how to do it?
Can they work a set amount of hours?
Can the principal contractor move them from task to task?

If the answer is ‘Yes’ to all or most of the following questions, then the worker is probably a BFSC:

Do they agree to do a job for a fixed price regardless of how long the job may take?
Do they have a contract of service as opposed to a contract of employment?
Within an overall deadline, are they able to decide what work to do, how and when to do the work and where to provide the services?
Do they regularly work for a number of different people other than the principal?
Do they have to correct unsatisfactory work in their own time and at their own expense?
Do they hold their own public liability insurance in their own name?
Do they pay the cost of all materials or supplies required for the work without being reimbursed? (Excluding minor items and consumables).
Can they hire someone to do the work or engage helpers at their own expense?
Do they risk their own money e.g. if they bid for a job and the bid is too low they have to bear the additional cost themselves?
Do they provide or hire in the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?

There is no legal requirement for a self-employed sub-contractor to have insurance, but it may be a condition of the contract they have with a main contractor that they must have it in place before start work for them.

REMEMBER – If you don’t provide insurance cover for your workers (i.e. employees / apprentices / LOSC etc.), you or your company could face extinction as a tradesman following an action against you for injury of an employee in the workplace, for which you are found either wholly or partly negligent.

Click here for more information on Contractors Insurance with S.A. Faughnan