Labour-only vs bona fide subcontractors: insurance responsibilities

The table shows common patterns to discuss with your insurer or broker. It is not a legal checklist: counting which column has more matches does not determine status or cover.

Factor	Common labour-only pattern	Common bona fide pattern
Work methods	You direct the day-to-day work.	The firm organises an agreed job.
Supervision	Works within your team.	Organises its own people.
Equipment and materials	You supply equipment or materials; personal hand tools may also be used.	The firm supplies equipment or materials for its work.
Putting work right	You manage delivery and corrections.	The firm takes responsibility for its agreed work.
People and substitution	You engage a particular person’s labour.	The firm organises staff or substitutes.
Payment	May be time-based.	May be agreed for the job.
Insurance	Check your policy’s worker definitions and declarations.	Check the firm’s cover and your subcontractor conditions.

Compare the agreement with what happens in practice, including who controls methods, supplies equipment and puts work right. Payment arrangements alone do not determine the position.

Missing insurance does not itself turn an independent firm into labour-only help.

Insurers can use these terms differently. AXA’s employee and subcontractor declaration guide illustrates one product’s approach; its categories and instructions are not rules for every policy.

Keep four checks separate:

1. Legal requirement: whether compulsory insurance is required for the actual relationship.
2. Policy definitions: who the wording includes as an employee, employed person or subcontractor.
3. Actual cover: which activities and liabilities the policy insures.
4. Tax and employment rights: separate questions this guide does not determine.

“Employed persons” is a policy term that may include people beyond payroll employees. A self-employed invoice, tax deduction arrangement or limited company does not automatically resolve employers’ liability questions.

Describe the contract and real practice. General site coordination or safety instructions alone are not a conclusive test. Describe the actual arrangements accurately rather than choosing labels to obtain a preferred category.

HSE’s employer guidance discusses working relationships in Great Britain. Northern Ireland has a separate framework; use HSENI’s insurance guidance for that context. The legal-requirements guide covers broader compulsory-cover questions.

Tell the insurer or broker how the person works, ask how to declare the arrangement and confirm which cover applies. Labour-only descriptions can raise both policy-definition and compulsory-insurance questions.

Employers’ liability concerns the employer’s relevant liability for worker injury or illness. That differs from a customer’s claim for damage a worker caused. The person causing an incident does not alone determine the insurance type; check employers’ liability and public liability separately.

The examples below illustrate questions, not legal classifications or claim outcomes.

Example: an individual assisting your team

Facts: A builder directs an individual’s tasks each day and supplies site equipment.

Question for the provider: Describe the duties, supervision and responsibility, then ask who the policy includes and which worker numbers or payment figures to provide. Seek appropriate legal advice if the compulsory-insurance position remains uncertain.

Use the employers’ liability insurance guide for the product and the broader staffing guide for other working arrangements.

Check the firm’s insurance for its staff, liability to other people and professional services where relevant.

Check your remaining responsibilities separately. Its policy does not automatically insure your business or remove your potential liability.

Example: a specialist firm delivering an agreed job

Facts: A specialist firm agrees to deliver part of a project, organises its own staff and methods, and provides equipment.

Question for the provider: Ask which work, people and responsibilities its policy covers, and which subcontractor conditions apply in your own policy. Independence does not transfer every risk, and a certificate alone does not confirm the full protection.

Check evidence, not just the certificate heading

Check:

• the business insured and insurer;
• policy dates, cover types and activities;
• limits and how they apply;
• relevant locations and courts where claims can be brought;
• the event and timing conditions determining which policy period may apply, and any previous-work restrictions;
• restrictions against the contract and your policy’s subcontractor-check conditions.

Ask for wording or clarification where a certificate does not answer these questions. Record what you checked and when, and establish how to keep renewal or change evidence current during a long project.

A certificate is not a full policy and may not show how much of a shared limit remains available. It does not amend cover to make you jointly insured. If protection for another party is required, check the actual clauses: joint-insured wording concerns parties insured together; an indemnity-to-principals provision concerns specified protection for a commissioning party. Neither automatically protects every party or liability.

The certificate guide explains evidence in more detail.

No. Separate these questions:

• Liability for worker injury or illness.
• Liability for injury to other people or damage to their property.
• Physical loss or damage to the project and materials under selected cover.

Contract works insurance addresses a different subject from employers’ or public liability. Check the selected works and materials, existing structures and defective-work terms rather than assuming every project loss is covered. Check the project and policy terms; the contract works insurance guide covers that product separately.

Record facts that point in different directions and ask the provider how the policy treats them. Note any difference between the contract and actual practice, and whether the arrangement changes during the job.

Example: own tools and invoices, but close day-to-day direction

Facts: A person invoices as self-employed and uses personal tools, while your business closely directs daily tasks.

Question for the provider: Explain who decides methods, supplies other equipment or materials, provides substitutes and puts work right. Ask which definitions and declarations apply; the invoice and tools alone do not settle the answer.

Describe what changes during a job and when, then ask what must be reported or agreed. Legal reclassification and changes to insurance are separate questions; do not assume backdating or a claim consequence. The business-changes guide explains the process.

If an incident or allegation has arisen, promptly follow the policy’s required claims recipient, method, information and deadlines; see the claims-reporting guide. Do not assume a change enquiry or new quote request satisfies those requirements. Insurance also does not replace safety duties.

Use this preparation checklist and keep the answers with your policy documents. Follow the provider’s requested categories and periods; there is no universal calculation for worker numbers or payments.

When arranging business insurance, fair presentation can require more than answering application questions. Disclose material information your business knows or ought to know, and ask the insurer or broker if you are unsure what to provide.

Area	Facts or evidence to check
Parties and people	Businesses and people involved, who engages them, staff and substitution arrangements.
Work and direction	Tasks, methods, locations, hazards, supervision, site coordination, equipment and materials.
Responsibilities and contract	Agreed scope, delivery and putting work right, compared with practice.
Payments	Pay or subcontractor-payment figures requested, period and whether estimated or actual.
Subcontractor’s insurance	Business, cover, activities, dates, limits and relevant restrictions.
Your policy	Worker definitions, subcontractor/evidence conditions and amendments.
Changes and confirmation	Required updates, agreed terms/effective date, documents and unresolved actions.

You could ask:

We engage [business/person] for [work]. In practice, [describe direction, equipment, staffing and responsibility]. How should we declare this arrangement? Which definitions and conditions apply? What evidence or policy change is needed?

Do not assume a request, quote or automated receipt confirms agreed cover. Confirm the terms, effective date, outstanding conditions and required updated documents with a provider authorised to agree them.

If a summary is silent, record “not stated; ask” and retain the answer with relevant documents. Keep records securely and share only necessary information through the provider’s appropriate channel, not with Clearcut.