Contractor / Subcontractor Management

Australian Bureau of Statistics (2019) stated that over 1 million people as in August 2018 were independent contractors, and a large number of them were in the construction (26%), administrative and support services (20%) and professional, scientific and technical services (14%). The statistics also showed that the largest groups were the technicians and trades workers (16%), labourers (11%) and professionals (9%).

There were approximately 260, 000 contractors in the construction industry. Due to such a significant number of contractors, the effective management of contractors on many building projects has a great influence on the safety and welfare of these workers. In Australia, the Department of Industry Innovation and Science (2018)has defined the subtle differences between the terms contractor and subcontractor as below.

“Contractor is described as a person or business that enters into a contract with another person or business for work, whilst subcontractor is an independent contractor that is hired by another independent contractor to help them to complete their contracted work.”

Subcontracting has been widely practised due to its capability to adapt to labour flexibility, rapidly meeting changes following the market demands, faster completion of tasks, push down labour costs, and transferral of financial risks. In construction, subcontracting has become an integral part of the industry where it is a norm of subletting of a part or parts of the project to a specialised contractor.

Subcontracting has a high significance in adverse health and safety. The study conducted by Manu et al. (2012) is consistent with a research by the Health and Safety Executive (HSE) (Hide et al. 2003), which outlined a series of OH&S issues in subcontracting practices such as ambiguity about responsibilities and unclear work relationships between principal contractor and subcontractors, poor communication and teamwork among contractors, and differences in safety cultures between principal contractor and subcontractors. Such ambiguity can lead to legal issues, therefore it is important to discover the legal imperative in the subcontracting environment.

In the context of a construction project, it is typical for a corporation to engage external expertise. Thus, a principal contractor will be engaged to oversee the project. The principal contractor then engages subcontractors to undertake various jobs and they could engage specialised service providers to execute the tasks. The model WHS legislation in Australia imposes the primary duty of care for a Person Conducting Business or Undertaking (PCBU) to protect the health and safety of the workers and others. This implies the PCBU obligations for the health and safety of their subcontractors, as stated in the legislation that, “a person is a worker if the person carries out work in any capacity for a person conducting a business or undertaking, including work as: 

(a) an employee, or 

(b) a contractor or subcontractor, or 

(c) an employee of a contractor or subcontractor, or 

(d) an employee of a labour hire company who has been assigned to work in the person's business or undertaking, or 

(e) an outworker, or 

(f) an apprentice or trainee, or 

(g) a student gaining work experience, or 

(h) a volunteer, or 

(i) a person of a prescribed class.”

When a PCBU engages an independent contractor they are required to stipulate any conditions needed to avoid the risks (R. v Associated Octel Co Ltd 1996). In practice, this means that to ensure the primary duty of care is met, PCBU should ensure a proper selection of principal contractors, contractors and sub-contractors and the management of contractors and subcontractors through the principal contractor. Additionally, all principal contractor, contractors and subcontractors can be PCBUs and their health and safety obligations are not delegable, shared or transferrable. Hence, individual PCBU is required to apply reasonably practicable steps in managing the health and safety risks at each layer in the responsibility chain. Such redundancy or overlapping duties could lead to complex legal situations and also problems for the individual workers trying to use tools to manage their risks on the job site. The Australian WHS legislation mandates that a PCBU must manage all WHS risks on site, as far as reasonably practicable.

Take-away questions:

Who are your contractors / subcontractors?

Do you have a process to evaluate and control your contractors / subcontractors?

Do you implement and review your contractors/subcontractors management process?

Does the contract between you and your contractors / subcontractors includes WHS/OHS requirements?

Do you consult your contractors / subcontractors?

  • If you can, consider helping your contractors manage safety within their own organisation.

  • If you have established safety resources (such as sample policies, forms for doing job safety analysis or other pre-job checks) share them with your contractors, especially if they are a small business.

This helping hand ensures improved safety standards and outcomes for everyone.

212 views0 comments