Employers' Liability Insurance for Subcontractors (UK 2025)
When UK trade businesses need employers' liability insurance for subcontractors, how to assess risk, and what contracts should include.
Not financial advice
Pricing guidance here is educational. Model rate changes against your own books, suppliers, and market before implementing them.
The Reality: Labels do not protect you. HMRC and insurers care about control and working practices, not whether someone sends you an invoice. If a subcontractor looks and feels like an employee, you need employers' liability cover.
If you are building a subcontractor model, start with How to Hire and Manage Subcontractors in the UK.
The control test (simple version)
You are more likely to need employers' liability cover if you control:
- The hours or days they work
- The rate they charge
- The tools and materials they use
- How the work is done
If they can send a substitute, bring their own tools, and price the job themselves, they are more likely to be genuinely self-employed.
For a deeper classification guide, see Contractor vs Employee Decision Tree.
Red, amber, green checklist
Red flags (high risk):
- You schedule every job and set their hours
- They work only for you
- They use your vehicle or tools
- They cannot substitute another worker
Amber flags (medium risk):
- You provide materials
- They follow your SOPs for quality
- You approve time off
Green signals (lower risk):
- They quote jobs directly
- They set their own schedule
- They use their own tools
- They work for multiple clients
If you are in the red zone, assume you need cover.
Contract checklist
Include these in every subcontractor agreement:
- Scope of work and rate structure
- Responsibility for tools and materials
- Proof of public liability insurance
- Payment terms and dispute process
- Substitution rights (if applicable)
If IR35 applies to your model, read IR35 Checklist for Subcontract-Heavy Crews.
Evidence to store
- Signed contract
- Insurance certificate
- Verification of UTR or business details
- Job logs and payment history
If you manage people at scale, the Employee Handbook Template for Trade Businesses 2026 is a useful baseline.
Where Toolfy fits
Toolfy stores subcontractor documents, job logs, and payment history in one place so you can prove who did the work and under what terms. Start a free trial to keep compliance evidence tidy.
FAQ
Does a subcontractor need their own insurance? Yes. Require proof of their cover before they start work.
What if a subcontractor refuses to share insurance? Do not book them. The risk is on your business if a claim happens.
Should I use different terms for subcontractors? Yes. The contract should make their status and responsibilities clear.
⚠️ Important Disclaimer
This guide is for general informational and educational purposes only. It does not constitute professional advice of any kind (legal, financial, tax, insurance, or otherwise).
Before making business decisions: Consult with qualified professionals (solicitors, accountants, insurance brokers, etc.) who can assess your specific circumstances. Laws, regulations, and industry standards change frequently and vary by location and situation.
Toolfy and the article authors accept no liability for decisions made or actions taken based on information provided in this guide. You are solely responsible for ensuring compliance with all applicable laws and regulations.
Frequently Asked Questions
Do I need employers' liability insurance for subcontractors?
Is employers' liability insurance required by law?
What should I include in subcontractor agreements?
Need this workflow in Toolfy?
Spin up the exact checklist, scripts, and automations from this article inside your workspace.
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