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What you need to know about Subcontractor Agreements.

What is a Subcontractor Agreement?

A Subcontractor Agreement is a legally binding contract between the head contractor and the subcontractors.

This contract defines who is responsible for:

  • The work
  • Protection of people and property
  • Control of employees and who pays them
  • Materials and equipment
  • Site cleaning
  • Dispute resolution
  • Programme of works and variations
  • Insurance
  • Licences
  • Progress claims and payments

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Subcontractor or Independent Contractor Agreement?

Subcontractor Agreement

For the construction industry only

Independent Contractor Agreement

For non-construction industries

e.g. truck drivers, freight, cleaners, couriers, sales, contractors.

Independent contractor or employee?

The head contractor must get an independent contractor agreement signed by the independent contractor to formalise and define the relationship between them.

If someone is hired for a few hours, or a couple of days at a time, this does not define them as an independent contractor.

Just because someone works under an NZBN, this does not define them as an independent contractor.

A person submitting an invoice for works completed does not define them as an independent contractor.

Contracting arrangements are commonplace, but it does not mean that a particular person can be treated as an independent contractor.

If a worker is legally an employee; having a signed agreement will not override the employment relationship or make the worker an independent contractor.

How does a signed Subcontractor Agreement help?

Clearly sets out the rights and obligations of each party, the head contractor and the sub contractor.

Assists the head contractor, thereby ensuring they are working within the limits of the law in providing a strong, concise foundation for the basis of the business relationship.

Starting work without a signed Subcontractor Agreement means the head contractor’s position is not clear; or even worse, extremely weak.

Greatly reduces the risk of uncertainty.

Why a head contractor requires a signed Subcontractor Agreement.

  • Firstly,

    • A signed agreement ensures the subcontractor does the work on the site in the manner and time frame required by the head contractor
    • Makes the subcontractor fully liable for all tax obligations of themselves and their employees; as well as any superannuation, leave or work cover entitlements.
    • Ensures the subcontractor is liable for their own insurance and relevant industry licenses as required.
    • Lets the head contractor terminate the subcontractor or their employees for a breach of the contract, due to poor workmanship, unreliability and behavioural issues.

    Lastly,

    • The subcontractor is liable for all OH&S issues for themselves and their employees; plus anyone else that is directed to do work by the subcontractor.

Types of Subcontractor Agreement we can supply your business.

Mid-Range

Used by the head contractor for low-medium cost, average-term jobs.

Two versions:

-Multiple projects for a defined period of time (Eg.12 months)

-One-off project.

Comprehensive

Used by Head Contractor for high-cost, long-term jobs.

Must be signed by the Sub Contractor for every new project.

Make sure your business is protected.

Did you want to know more about our building contract services?

We have local Business Support Specialists available throughout the country to assist you with your Terms and Conditions of Trade.

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What our clients are saying:

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12. April, 2024.
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