Labour only subcontractor vs Bona fide subcontractor… what’s the difference?
Labour only subcontractor (LOSC)
Bona fide subcontractor (BFSC)
Their work is directed and supervised by you similar to a direct employee
Paid on a fixed-price contract rather than having an hourly, daily, weekly or monthly salary
As a member of your team, ensuring the quality of their work is your responsibility
Decide how, when and where their work is carried out and generally undertake work you are unable to
They would use your materials and equipment
Have the responsibility for correcting unsatisfactory work
Do not have authority to employ others
Work without supervision or direction from a main contractor
May not have their own insurance, so will need to be covered by your public liability insurance and employers’ liability insurance
Provide their own materials and equipment
Must follow your health and safety policies
Have authority to employ others
Do not offer a guarantee for work done and can leave before a project is completed
Hold their own insurance
Supervise the work themselves with little to no intervention from you
Have contracts with their own employers
Are responsible for their own health and safety matters, such as risk assessments and method statements
What is a labour only subcontractor?
A labour only subcontractor (LOSC) is usually hired to work on a project when extra help is required. For example, if you are a building contractor, and you don’t think you’ll be able to complete construction on a house in time, you may need to hire some extra staff on a short-term basis.
Labour only subcontractors become part of your team and work under your supervision, using tools, equipment and materials provided by your business. Typically, it’s up to you to determine their working hours, their work location and their daily tasks.
Under UK law, a labour only subcontractor is an employee. Therefore, as the employer, you become responsible for the health and safety of your subcontractor while they are at work. This includes making sure you have employers’ liability insurance in case something goes wrong.
What is a bona fide subcontractor?
A bona fide subcontractor (BFSC) is usually brought in, as part of a wider contract, to complete a specialist job that you or your employees don’t have the necessary skills to complete. For example, if you are a kitchen fitter installing a new kitchen, you may call upon plumbing, electrical or plastering contractors to carry out work you are unable or unqualified to complete.
Bona fide subcontractors will work independently, on a set task, without supervision or direction from you. They will also bring their own materials and tools to site. As they are hired for a specific job, payment would be made through an invoice or fixed price contract.
As self-employed professionals, bona-fide subcontractors should have their own liability insurance. You will need to check that any bona fide subcontractors contracted by you have public liability insurance with a limit of indemnity that isn’t less than yours and that covers them for the work you’ve contracted them to do.
Remember if you are ever unsure then speak to one of the team and we can help you determine if your customer is using LOSC’s or BFSC’s.
Contact us on – 01270 758 095.