What You Need to Know about Working with Contractors

What You Need to Know about Working with Contractors

01 April 2022

Flexibility is the main reason Australian businesses hire contractors. Think of it as your very own surge capacity to onboard swiftly, deal temporarily with skill shortages, try before you hire and protect your bottom line, etc. And you might be spoilt for choice because one million Australians are independent contractors, says the Australian Bureau of Statistics.

However hiring and managing contractors opens up a new suite of risks for your business. For example, when a contractor or subcontractor suffers an injury on your site, your business could be concurrently liable.

Check out these tips to help improve how you manage contractors.

Hiring the right contractor for the job (prequalification & vetting)

Set your criteria and expectations early, spelling out the qualifications, safety system, insurances and professional experiences needed for your project or role. Do your due diligence through:

  • Prequalifying and vetting each candidate
  • Ensuring they hold the relevant licences, registrations, and certifications to carry out the work
  • Verifying their experience is job-specific and they can do the jobs
  • Inspecting their tools and equipment, if possible, to be sure they're well maintained and fit for purpose
  • Checking their safety training, recent risk assessment training, and copies of their work safety policy/plan
  • Examining evidence of their past workers' compensation claims and injuries resulting in lost work time
  • Understanding what arrangements they have with their sub-contractors, if any, to work on your project
  • Contacting their referees from past jobs.

Your state or territory's Fair Trading department will also have a 'name and shame' list of deregistered contractors, such as this one for NSW.

If you're unclear about whether you're hiring an independent contractor or employee, check this Fair Work Ombudsman explainer. An error here and your business risks a $66,000 fine under the Fair Work Act 2009.

Communicating work & safety procedures on site

No doubt you'll monitor your contractors, but this checklist might have some handy reminders:

  • Double-check they have a copy and have read and understood your company's safe work procedure
  • Ensure they're complying with these regulations
  • Spell out the chain of command for the contractor to report on their status
  • Audit and review their work
  • Regularly review your own safety performance information and check in with contractors about any new elements
  • Be sure your incident reporting system extends to all contractors and sub-contractors
  • Impress upon contractors their obligation to regularly report on safety issues by self-auditing and filling in safety checklists.

Have a process in place for when they're not following your site rules and procedures that you've forewarned them about. Usually this means you'll ask them to stop work to address the issues, including with their employer, asking the latter what steps they'll take to ensure safety on site. Once the contractor is back on the tools, you'll supervise them to ensure they're working safely.

Don't shortcut on contracts

Be sure to include a clause in your contracts for the contractor and their workers to follow your company and site protocols, policies and procedures. That makes them legally binding. Take the guesswork out of the equation by giving them a manual at induction, ideally in both hard copy and digital form.

Here's a performance benchmark checklist for what else you should feature in your contract:

  • Achieving a high quality of work, which you review throughout the project and on completion
  • Following your site procedures, policies and safety practices
  • Meeting your project specifications, including timeline and budget
  • Directing contractors to report to you all near misses, incidents and accidents as well as property damage
  • Being responsible for keeping your site, facility and equipment in good working order.

Check both your insurance and that of your contractor

Gain peace of mind by verifying your contractors hold the right insurance, including:

  • Contracts work
  • Public liability
  • Workers' compensation
  • Professional indemnity insurance.

Retain up-to-date copies of their policies and certificate of insurance, and note their expiry date in your system.

You can also tighten your risk management by investing in an onsite-safety app, such as HammerTech, Sine, or alternatives. These apps link to a virtual geo-fence to verify who's on-site and where, their tickets, safety training, other documentation and trigger different workflows depending on their trade.

Let us help you review your risk profile and policy package as your business circumstances change. For example, construction-all-risks cover will protect you against unexpected loss or material damage on-site, including during transit or while in storage.

Make sure you minimise your risks in managing contractors by embracing your responsibility under workplace health and safety laws to inform, train and supervise them to follow your high standards.

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