Subcontractor agreements for electricians
Do you use self-employed electricians for long-term projects? Do you have a written contract in place outlining the terms of your agreement? Do you even need one?
The answer to that last question depends on the nature of your business, how you work with your subbies, and whether your subbies are genuinely self-employed or just employees disguised as subcontractors.
Do electricians need a contract?
Contracts are always useful in business – they can protect you and help you solve disputes quickly. But just because they are beneficial doesn’t mean they are essential, which is why so many companies don’t bother.
Using bona-fide subbies
Bona-fide subcontractors are usually brought in for a specialist job as part of a bigger project. For example, if you are a builder and you are building an extension for a client, you might bring in an electrician to complete the electrical work.
Bona-fide subcontractors operate as an entirely separate business. They use their own tools and equipment, work under their own direction, have their own insurance, hold the required licenses, and are liable for their work.
Some bona-fide subbies will be happy to work without a written agreement as long as you have verbally agreed terms. Others may ask you to sign a simple service agreement for each project.
Using labour-only subbies
Labour-only subbies are more like an extension of your team, working under your instruction. For example, if you are an electrical contracting firm, you might bring in extra electricians when you have big projects.
However, labour-only subbies are not employees.
An employee is someone who works for your company in return for a salary. You are responsible for paying their income tax, national insurance and pension contributions. They have a contract of service (an employment contract).
Labour-only subbies are self-employed. They work under a contract for service and are responsible for managing their own tax liabilities. They are not obligated to work for you on an ongoing basis and you are not obligated to give them work on an ongoing basis.
If you use labour-only subbies long-term, it is sensible to have a written agreement in place to help avoid confusion around their employment status.
Why is it important for a contractor to have a subcontractor agreement with labour-only electricians?
If a subcontractor believes they are an employee and things go wrong, they could take you to court. And if the courts deem the relationship to be one of employer and employee, you could be liable for backdated tax as well as unpaid holiday pay, sick pay and other employee benefits.
And, even if your subbies understand their employment status, there is a risk that HMRC might decide they should actually be employees. If this happens, and they are reclassified, you will be liable.
A bespoke electrical subcontractor agreement makes it clear the relationship is one of contractor and subcontractor, ensures all parties understand their responsibilities, and offers some legal protections. If a subcontractor agrees to the terms of your contract, it’s harder for them to argue that they thought they were employed.
A contract also helps demonstrate to HMRC that the subcontractor is genuinely self-employed and not a disguised employee.
To help you understand what should go into an electrical subcontractor agreement, we’ve created an electrical subcontractor agreement template. You can access our check out our sub contractor agreement template here.
What should be included in an electrical subcontractor agreement?
As outlined in our electrical subcontractor agreement template, your subcontractor agreement should cover three key areas – the commercial aspects, the business factors and the ‘three tests’. Some of the things you might also want to include are:
Scope of work
What electrical services will your subbies provide? Are they providing these as part of a long-term construction project or will they be required to complete more than one job?
Payment terms
What are the payment terms for your electrical contractors? Will payment be made at an hourly rate, daily rate or fixed payment? When will payment be made?
Employment status
Your agreement should make it clear that all parties involved understand that the relationship is one of contractor and subcontractor – one business providing services to another.
Dispute resolution
You might also want to include clauses for managing disputes between parties. Who is liable for what? If work is not carried out to the required standard, do your subcontractors have to put it right at their own cost?
Having clear terms in place for your bricklayer contractors will help you avoid legal fees as you can resolve any disputes by reviewing the terms of the contract.
Industries our contractor-subcontractor agreements can be used for
Our contractor-subcontractor contract template can be used for any main contractor engaging independent contractors within the construction industry, including:
Plumbing
Our subcontractor agreement template can be used if you are hiring subcontractors for domestic or commercial plumbing work.
Electrical engineering
If you’re an electrical contracting company and you use subbies on a regular basis, you can use our contractor to subcontractor agreement template.
Bricklaying
If you’re the main contractor on a construction project and you are bringing in bricklayers, our template will help you ensure that everyone is clear on the terms.
Construction
You can use our agreement template if you’re using labour-only subbies for the following services: bricklaying, scaffolding, plumbing or electrical, groundwork, roofing, landscaping or any other element of a construction project.
Landscaping
Want to bring in other parties to work on landscaping projects? Use our agreement template to make the relationship and the terms clear.
HVAC
If the agreement you have with a subcontractor warrants a formal contract, our subcontractor agreement template covers all the basics for Heating, ventilation, and air conditioning contractors.
Contact HardHats for watertight contracts with electricians
We have created a helpful contract template that explains the various things that should be covered in a contractor-to-subcontractor agreement to protect both parties (you can access it for free here).
However, if you would prefer to leave it to the experts, our team can put together a bespoke contractor-to-subcontractor agreement for you. All you need to do is tell us exactly how you work with your subbies.
We’ll create your bespoke agreement and send it to your subbies via text, WhatsApp or email so they can view and sign online.
Find out more about how it works here or book a call to get started.
