Insurance - gig economy

HAVE YOU GOT YOUR COVERED?GIGECONOMY

It is becoming increasingly popular in the asbestos industry to employ staff on short-term contracts or freelance work as opposed to having them on the pay roll, known as a ‘gig economy’. Although this has its benefits, it is becoming more complicated to understand the distinctions between contractors, workers and employees.

Employing people on this basis can cause confusion between the different rights of an Employee and a Self-Employed Contractor, and there have been a number of legal cases whereby individuals have been fighting to be recognised as workers rather than Self-Employed Contractors. A ‘Self-Employed Contractor’ has fewer rights compared to a worker who has rights to benefits such as minimum pay, paid holidays and sick pay. An Employee also has further rights relating to wrongful or unfair dismissal.

Getting your insurance right is critical

Whilst workers’ rights are an important concept to understand, of equal importance is how you ensure your business has the right insurance programme in place. To get the right insurance programme in place, you must consider who is covered by a standard UK Liability policy. The following list of workers are usually covered while working in connection with the business, for example anyone who is: a) under a contract of service or apprenticeship with the insured; b) borrowed by or hired to the insured; c) a labour master or supplied by a labour master; d) employed by labour only sub-contractors; e) self-employed; f) under a work experience or training scheme; The important point here is that both a standard employee (under a contract of service or apprenticeship) and a self-employed person are both included within the definition above. However, there is no insurance definition for “worker”. Under the Employment Rights Act 1996, a ‘worker’ is defined as:

“An individual who has entered into or works under a contract of employment or any other contract whereby the individual undertakes to do or personally perform any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer”.

Factor Labour Only Subcontractor

Remuneration

Weekly or monthly by wages. This can include overtime and bonuses

Materials and Equipment Usually supplied by the employer. (This may include tools too although a LOSC may have his own)

Supervision and Control Under the direct supervision of the employer who can dictate how, where and when work is to be done

Bona-fide Subcontractor Labour Agency Contractor

Contracted price for the job Paid by the agency

Usually supplied by the BFSC as part of the contract Provided by the hirer

Under their own control and supervision Under control and supervision of the hirer

Working hours

Usually a fixed number Decide their own hours for the job in hand

Required Task

Other Factors

Own Insurance

Do it all themselves

NO Can do it themselves or hire in others to do it at their own expense

YES

Deficiencies corrected at own expenses and time

Not necessarily YES

Income consequences for wrong pricing

NO YES

Work for other parties Not usually at the same time YES Could be either a fixed number of hours or the required hours for the job in hand

Responsibility of the hirer

Contractor may or may not have their own insurance

Responsibility of the agency

N/A

Possibly

Can employer assign them another task

YES NO. Would have to renegotiate contract Possibly

In other words, a worker is doing work under a contract but not for their own client or customer, which would fall under the insurance Employee definition above. To ensure a worker is covered under your insurance it is important to determine whether they are a Labour Only Subcontractor (LOSC) or Bona-fide Subcontractor (BFSC). In insurance, an LOSC is regarded as an Employee where as a BFSC is not. In addition, it is important to consider if you are sourcing a labourer from a labour hire company. Sometimes it is difficult to differentiate between the three, but it is critically important to do so.

Your Employers’ Liability premium will be based on your payroll, which will be the annual amount paid to all persons who fall within the insurance definition of ‘Employee’. Because Employees carry a risk, insurers will want to collect a premium to commensurate, so it is vital to know who are your LOSCs and include them in the wage roll figure.

A LOSC supplies their own labour, whereas a BFSC can supply materials and equipment as well and, importantly, should have their own insurance. More specifically though it comes down to control. The table outlines the key differences between the three types of ‘workers’. This is an increasingly tricky issue to navigate and therefore, it is important to understand who a “worker” is and who just does work to ensure your business is appropriately protected.

How we can help

Specialist Risk Insurance Solutions can work with you to educate you and undertake a thorough and fully confidential review of your current insurance provision, to ensure you have the appropriate cover in place.

“At Specialist Risk Insurance Solutions, we are fully aware this is an increasingly tricky issue for businesses in the asbestos industry, but it is necessary due to the busy periods you experience during the year. It is important to work with your insurance broker to establish the difference between employment status and responsibility for insurance purposes to minimise potential future liability”. John Madden, Client Director, Risk Insurance Solutions.

Contact us for more information on our insurance offering for businesses operating in the asbestos sector: call 020 7977 4800 or email srisenquiries@specialistrisk.com