For Builders Insurance Why Do I Need A Breakdown Of Figures Between PAYE Employees And Subcontractors?
Caeva O'Callaghan | January 16th, 2023
You need to keep accurate records for builders insurance purposes, including how you pay your employees.
Your builders insurance providers need to know what kind of employees you have in order to give you an accurate quote.
For builders who need employers’ liability insurance as well as public liability insurance, we need to know the split of figures between PAYE (pay as you earn) employees and subcontractors.
In this article, we’ll go over the following questions:
- Are subcontractors covered by builders’ insurance?
- Does my insurance cover casual workers?
- Why does my insurance need to know about my employees?
Building is a risky trade to be in. It’s important that you protect not only yourself, but the members of the public you serve as well as your employees when on site.
Are subcontractors covered by builders’ insurance?
No. If you subcontract out part of a project, these workers will absolutely need their own insurance. This means public liability at a minimum. If they don’t and something goes wrong, you’ll have to pay for damages out of your own pocket.
If you’re a builder working as a contractor or subcontractor, you should make sure you have the right insurance to protect you and those you’re working for, as well as those you’re working with.
From an insurance point of view, you may have three types of people working for you:
- Employees who work with you permanently or part-time
- ‘Labour-only’ subcontractors, who work under your supervision using your tools and materials
- ‘Bona fide’ subcontractors, who typically make their own decisions and use their own tools and materials
If you have any employees or labour-only subcontractors, you’re legally required to have employers’ liability insurance. This protects anyone who works for you against accidents, theft, and other workplace risks.
Does my insurance cover casual workers?
In most cases, “casual workers” would be classed as “labour-only” subcontractors, who work under your supervision using your tools and materials.
This would mean you absolutely need employers’ liability insurance to protect them as well as yourself. No matter if your casual worker is with you for an hour, on and off throughout the year or just during the summer, you will need employers’ liability insurance.
Your insurance will ask you for a breakdown of figures between bona fide subcontractors and labour only subcontractors. This is because the bona fide subcontractors will have their own insurance in place, whereas a labour-only employee will not.
This means that if your labour-only subcontractor injures themselves during the course of their employment with you, they can open a case against you. Therefore to be insured, you need to declare your projected payments to both types of contractors.
Why does my insurance need to know about my employees?
Knowing what kind of employees you have enables your insurance companies to quote for your insurance requirements.
It not only matters who your employees are, but also their role within your company. For example, if you hire a receptionist, the cost to insure them will be much lower than for a bricklayer. This is because the chances of injury during the course of employment is much higher for a bricklayer than for an administration assistant.
If your employee or casual worker injures themselves on the job and you are proven negligent, your employee will be awarded compensation. This must come out of your own pocket, unless you have employers’ liability insurance.
If you do not, compensation payments could very well put you out of business. It’s not very likely that a sole trader or small building company will be able to absorb compensatory damages and still continue to trade.
This is why it’s vital to have the correct builder’s insurance in place. If you’re wondering how to get started, just give us a call and our experts can help you today.
All Information in this post is accurate as of the date of publishing.