You may have heard the terms ‘contractor’ and subcontractor’ or ‘subbie’ thrown around. There is in fact a difference between contractors and subcontractors, however in effect not much within the operational side of the businesses. Here is what you need to know about the differences.
Contractors
A contractor is an individual who runs their own business and performs work on contract for others. A contractor will negotiate fees and working arrangements and will likely be working for more than one client at once.
They are generally engaged to complete a specific outcome or task by a delivery date and are not directly employed by the person engaging their services. They may still however complete the same job which an employee might do. However they are working completely independently of the company they are providing services to.
Employees on the other hand will receive a regular wage, superannuation, sick and annual leave, set hours, have ongoing work, and are provided with the resources to complete the work set out in their ongoing working agreement. Contractors have the advantage of independence and control over their own businesses, fees, and tasks. A contractor will have an ABN and pay their own GST and tax.
Contractors have a great deal of control over how the work is performed as well as the ability to choose if they themselves hire someone to help perform the work.
Subcontractors
Subcontractors are those who are taken on by contractors to perform different parts of their service. For example a building company may be contracted by the land owner to build an office. The building company will then subcontract each necessary tradesman for plumbing, gas, bricklaying etc. Or a website developer may be contracted to create a website. They might then subcontract out the content writing or graphic design elements.
A subcontractor works under the same circumstances as the contractor would except instead of dealing with the client directly, they only deal with the contractor whom has engaged them (unless of course they are instructed to communicate with the client to complete the services).
There are different insurance requirements for contractors, employees, and for subcontractors. In particular public liability insurance is almost always compulsory to obtain for contractors and subcontractors alike. If you are an employee you will most likely be covered by your employer. However, never assume and always check with whoever has engaged your services to make sure you have the correct insurances in place for your industry.
All of the above advice is given in a general nature and should you need more specific contractor insurance advice please contact Contractor Cover on 1300 GETCOVER (1300 492 862) today or fill in our fast online form for a fast and easy insurance quote.
