Who is liable for Sub-Sub-Contractors?

Marian85

Hi,

We (painting contractors) plan to work with a roofing sub-contractor with a team working for or with him. As our public liability insurance only covers Bona-Fide Subcontractors, it is mandatory that our subcontractor has his own insurance. But what about his team? Do they need their own insurance (unless he would employ them)? I can't find any clear replies on the internet. Thanks for your help.

sydthebeat

who does the "sub-sub-contractor" have a contract with?

Marian85

The sub-sub would have a contract with our sub.

C3PO

Ultimately, in the event of a claim, you will end up with responsibility if any of your subcontractors (or their subcontractors) do not have proper insurances in place.

Deeec

Can you not hire the sub sub contractor yourself as a subcontractor instead of your subcontractor hiring the sub sub contractor.

Also in the eyes of Revenue I dont think a subcontractor should be hiring a sub sub contractor to do the job - they should be doing the job themselves.

You need to cut out the middle man which is your subcontractor to avoid a possible mess.

rayjdav

Why not just ask your broker for the information then you will have it first hand instead of looking for information on the interweb from people who will just give you their opinion???

muffler

https://www.boards.ie/discussion/comment/122721749#Comment_122721749

Best solution.

Mellor

https://www.boards.ie/discussion/2058374426/who-is-liable-for-sub-sub-contractors

There's no such thing as a sub-sub-contractor. You are either a party to the contract or subcontractor to the contract above you. The number of levels doesn’t change liability.

As our public liability insurance only covers Bona-Fide Subcontractors, it is mandatory that our subcontractor has his own insurance.

Why would it be mandatory that he has his own insurance? You just said your insurance covers subcontractors - which is has to. You can’t subcontract out your liability to the client.

But what about his team? Do they need their own insurance (unless he would employ them)?

Contractually they are irrelevant. You have a contract with their boss. How he fulfills that contract is his business. He is liable to you fit the agreed scope of work.

We (painting contractors) plan to work with a roofing sub-contractor with a team working for or with him.

the bigger red flag for me is the fact you are a painting contractor, subcontracting in a roofing business. It may be the case that your insurance doesn’t cover work outside of that expected by painting contractors. In which case, you need their insurance to comply with the head contract

Mellor

There a few misconceptions in this thread.

https://www.boards.ie/discussion/comment/122721522#Comment_122721522

It’s his responsibility whether they have insurance or not.

If I engage you to build a warehouse. As head contractor you engaged dozens of subbies, who engaged subbies. Everyone has insurance.
One if the subbies messes up, starts a fire, destroys a million worth of product. I want to make a claim, and I only need to claim off you - my contract is with you. You can chase your subbies insurance, not my business.

https://www.boards.ie/discussion/comment/122721584#Comment_122721584

That’s incorrect on a number of levels.

He can’t just hire the roofers subbies. Because they run a painting company. They do not have the expertise to price roofing work, supervise the work, etc. They are engaging a roofer who is experienced enough to manage that portion of work. They also can’t hire the roofers team directly, as the team may not have the insurance, experience, or track record to meet the contract terms.

it makes no difference to revenue. They are interested in who is paid, and how much. It’s all work, not just the guy on the tools.

Cutting out the middleman is a way to save costs. It’s not always feasible on large scale work. On billions dollar contracts, there’s many levers of contracts.

Deeec

https://www.boards.ie/discussion/comment/122723396#Comment_122723396

Revenue very much do care about subcontractors and how the procedure is misused to avoid tax and legal responsibilities- I deal with this every day in my job. The OP needs to be very careful in this situation.

Marian85

https://www.boards.ie/discussion/comment/122721749#Comment_122721749

It's a logical question, yes, and I did ask the broker but had to wait for his reply because I didn't get through to him by phone . So I sent an email, and in the meantime, while waiting, I thought I could try on boards to get a reply faster…😁

Marian85

https://www.boards.ie/discussion/comment/122721584#Comment_122721584

The sub-contractor is the sole trader and he has someone working with him, and I have no details about that guy. Therefore I wanted to know whether we are liable for the people working for our sub. In the meantime I found out, that everyone should be insured, either covered by the sub's insurance or by his own insurance.

Marian85

https://www.boards.ie/discussion/comment/122724550#Comment_122724550

Of course Revenue cares, but when we as painters have a contract for a full refurbishment of a building and hire a roofer sub, there's no space for avoiding tax etc. It's perfectly legal.

Mellor

https://www.boards.ie/discussion/comment/122724550#Comment_122724550

Being a subcontractor doesn’t avoid tax any legal responsibility. Whether the sub ie is hired by the main contractor, or a sub or the tax implications are the same.

Where are you getting this notion that it avoids tax from.

Deeec

https://www.boards.ie/discussion/comment/122732936#Comment_122732936

Contractors are abusing the RCT system to avoid the PAYE system. Instead of putting guys on their payroll they are encouraging them to register as self employed and operate through the RCT system. These principle contractors are avoiding employer PRSI, holiday pay, bank hols and employer legislation by going down this route which revenue have a problem with. You would be very surprised by the amount of subcontractors that only work for 1 contractor - they are essentially employees not subcontractors. This is against Revenue legislation and revenue are trying to crack down on this practice.

The practice of subcontractors engaging subcontractors is another practice that revenue dont like. It can be done but should be for legitimate reasons. Ive seen this queried several times by Revenue. It can get very messy.

Mellor

https://www.boards.ie/discussion/comment/122733026#Comment_122733026

You are conflating two separate issues. Employers engaging individual “employees” as contractors is obviously an attempt to by-pass obligations.

That’s entirely removed from head construction contracts being subcontractored out to other businesses. Which is perfectly legitimate, and the real purpose of RTC systems.

For large scale construction projects, there will be many levels of contracts.