Hiring subcontractors for my trade business
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Subcontractors can be a great way of adding to your team when you need extra manpower or specific trades. But it’s important you remember a few things when taking them on...
If you find yourself getting behind on your jobs or burning the candle at both ends during busy periods, or if you’re looking to take on bigger jobs than you can manage on your own, you might want to consider making use of subcontractors.
They can help share some of your workload, give you the capacity and manpower to take on bigger projects, or provide a specialism that you yourself aren’t able to do.
Hiring subcontractors gives you a certain amount of freedom and less responsibility than if you take people on as employees, but there are important things to keep in mind.
- Finding subcontractors - There are many different avenues but in some ways, you’re the same as any customer looking for a great tradesperson, which means you can ask your friends and family for recommendations, or ask other trusted tradespeople if they can recommend someone.
- Making sure they’re right - before you hire a subcontractor, ask for references and to see some of their past work. You need to make sure the person you hire has the right skills for the job and isn’t going to ruin your reputation by cutting corners or working to a lower standard. Ask around or check their online profiles, just like you were hiring them as a customer, and look to build up a good network of people you can use.
- Getting the paperwork right - Even if you’re taking on subcontractors rather than employees, you need to make sure you follow the rules. This means checking their employment status and making sure you’re in line with HMRC rules. It also might mean using the CIS Scheme and making sure you understand IR35 rules, which are designed to stop you using people on a self-employed basis when they should technically be employed.
- Look out for their welfare - Health and safety applies to everyone so make sure you are looking out for the welfare of everyone on site. That also means making sure subcontractors are properly licensed and insured for the work you’ve got them doing.
- Remember insurance - You’ll also need employers’ liability insurance if you have anyone working for you, to protect you against any claims if someone working on your site is injured or falls ill.
- Know your own rights - Even with the best will in the world, sometimes things can go wrong. But you do have rights, including the right to refuse payment if a subcontractor’s work is substandard.
Advantages of using subcontractors
Many tradespeople looking to grow their team will start with subcontractors rather than employing people. Here’s why:
- Hiring subcontractors gives you the freedom to find the right people with the specific skills for certain jobs and build the perfect team for each job. You might need an electrician on one job, but a carpenter on the next. Using subcontractors gives you that freedom. Subcontractors do not have an employment contract and therefore as the contractor - and barring any other contractual agreements - you can let them go as and when you see fit.
- While you’re most likely going to have to operate through the CIS scheme, there are less legal and administrative hoops to jump through when using subcontractors, which is why it’s so appealing to many sole traders when they start growing their business.
- It’s a good way for general contractors to be able to take on bigger jobs. You can basically offer a bigger team without actually employing other people permanently.
Things to remember when using subcontractors
There are plenty of pros when it comes to using subcontractors, but also a few things to consider:
- Using subcontractors may give you more freedom, but don’t forget it works both ways. Subcontractors have the freedom to walk away at any time and aren’t tied to you in the same way employees are.
- Subcontractors are used to working for all sorts of different contractors. They won’t necessarily have any personal loyalty to you and might not have the same standards.
- Subcontractors are often experienced tradespeople themselves so they will probably be used to doing things their own way. This might not necessarily be the same as your way.
Lots of tradespeople end up either being or using subcontractors at some point, so it’s useful to get your head around how it works before the need arises.