NZ & AU Compliance Risk Management Specialists

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Subbies using Subbies

When the economy is challenging, it is not uncommon to use more subcontractors. It provides greater flexibility to reduce head count quickly either up or down.

Typically, you would get the relevant competency information as part of the subcontractor’s site-specific documentation and through the vetting of your subcontractors. You may even use the same prequal framework that the Tier 1 operators use where your subcontractors need to have the Tōtika Prequal.

Over the last two weeks we have been doing an ICAM investigation on behalf of a client that highlighted a few challenges we know are only too common.

Before we dive into what these are, it is worth reflecting on our risk profile using subcontractors.

Subcontractors are deemed ‘workers’, no different to our own employees. As such, we have a duty to cover the same Health, Safety & Wellness (HS&W) expectations covering risks, competencies, etc. If Worksafe were to be involved in an investigation, we would need to provide the same type of evidence for our subcontractors as we would for our employees.

The challenges we noted in our investigation are not uncommon. In fact, if you use subcontractors yourself, I am sure you will resonate with this.

  • Workers: the subcontractor has different staff on the job than what they listed in their SSSP / competency register. As such, you would have no evidence to support competency.

  • English: the subcontractor uses international workers whose English may not be of a level where the site rules, site inductions, etc are understood. These workers are considered vulnerable workers and we have a duty to make sure they understand.

  • Subcontractors: your subcontractor is using other subcontractors that you had no knowledge of. Aside from not having competency information, you actually have zero evidence of anything given you did not know they are another business altogether.

All there are concerning whilst the last point challenges us in a number of ways. No vetting. No onboarding. No nothing. Ignorance is no defense, and your level of risk is substantial.

‘How do you manage this?’ you ask. Great question.

It is actually quite simple.

1.     Legal: firstly, is it allowed under your contract with your client / main contractor?

2.     Expectations: what are your rules on a subcontractor using another subcontractor which by the way, also includes labour hire?

3.     Contract: if you allow it, do you cover this in your subcontractor agreement? If you do not have an agreement, why not?

4.     Evidence: if you allow it, what evidence are you collating covering the risk management, competencies, insurances, etc.?

Ultimately, it all comes down to communication.

Marty Wouters