Employers' Liability Insurance for Subcontractors (UK 2025)

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.