{"id":925,"date":"2020-07-02T00:00:00","date_gmt":"2020-07-02T00:00:00","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/knowledge\/articles\/what-is-bona-fide-subcontractor-labour-only-subcontractor\/"},"modified":"2025-05-22T13:19:31","modified_gmt":"2025-05-22T13:19:31","slug":"what-is-bona-fide-subcontractor-labour-only-subcontractor","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/what-is-bona-fide-subcontractor-labour-only-subcontractor\/","title":{"rendered":"What\u2019s the difference between a labour-only subcontractor and a bona fide subcontractor?"},"content":{"rendered":"<p class=\"wp-block-paragraph\">Does your firm work with bona fide subcontractors (BFSC) or labour-only subcontractors (LOSC)? Maybe you are one of those subcontractors who works with a range of different firms. Does working with (or being) one type or the other affect your business insurance and legal responsibilities?<\/p>\n\n<p class=\"wp-block-paragraph\">Read on for our simplified guide to the difference between labour-only subcontractors and bona fide subcontractors.<\/p>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\"><a href=\"https:\/\/www.simplybusiness.co.uk\/business-insurance\/faq\/do-i-need-employers-liability-insurance\/\"><strong>Do I need employers&#8217; liability insurance?<\/strong><\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/faq\/do-i-need-public-liability-insurance\/\"><strong>Do I need public liability insurance?<\/strong><\/a><\/li>\n\n<\/ul>\n\n<p class=\"wp-block-paragraph\">It&#8217;s important to understand the difference between these terms so you can answer questions about them on an insurance quote form and get the right level of cover. But they still cause confusion for all types of tradespeople trying to buy their business insurance \u2013 from builders to electricians to plumbers and plenty more in between.<\/p>\n\n<h2 id=\"whatisasubcontractor\" class=\"wp-block-heading\">What is a subcontractor?<\/h2>\n\n<p class=\"wp-block-paragraph\">It might be easiest to answer this question using a made-up scenario.<\/p>\n\n<p class=\"wp-block-paragraph\">Company: <strong>Bob\u2019s Builders<\/strong><\/p>\n\n<p class=\"wp-block-paragraph\">Firm owner: <strong>Robert (Bob) Brickley<\/strong><\/p>\n\n<h3 id=\"employees\" class=\"wp-block-heading\">Employees<\/h3>\n\n<p class=\"wp-block-paragraph\">Bob works on site with his team renovating houses for the rich and famous. Two of his team always work with him. They don\u2019t work for anyone else. They are employees of Bob\u2019s Builders.<\/p>\n\n<h3 id=\"subcontractors\" class=\"wp-block-heading\">Subcontractors<\/h3>\n\n<p class=\"wp-block-paragraph\">Bob also works with subcontractors when he needs more help to complete certain jobs. These workers also work for other builders. Subcontractors can either be \u2018bona fide\u2019 or \u2018labour-only\u2019. Here\u2019s the difference:<\/p>\n\n<p class=\"wp-block-paragraph\"><strong>Bona fide subcontractor (BFSC) definition<\/strong><\/p>\n\n<p class=\"wp-block-paragraph\">Bob tells his BFSCs what job he wants them to do and when, but he leaves it up to the subcontractors to decide how they\u2019ll do the work.<\/p>\n\n<p class=\"wp-block-paragraph\">Like most BFSCs, the ones working with Bob\u2019s firm are experts in a skill other than building. In this case, Bob has hired two plumbers to work on his latest renovation project. Bob\u2019s a builder, not a plumber, so he wouldn\u2019t know how to direct their work anyway.<\/p>\n\n<p class=\"wp-block-paragraph\">Bob pays the plumbers for the whole job in one lump sum, which is how it usually works when paying BFSCs. If something goes wrong and the plumbers need to come back and fix the problem, Bob won\u2019t pay them any more because they\u2019re responsible for themselves and getting the job done properly.<\/p>\n\n\n<div id=\"nba-body-001\">\n<\/div>\n<p class=\"wp-block-paragraph\"><strong>Labour-only subcontractor (LOSC) definition<\/strong><\/p>\n\n<p class=\"wp-block-paragraph\">Bob tells his LOSCs what work to do, how to do it, and when to do it.<\/p>\n\n<p class=\"wp-block-paragraph\">Bob\u2019s LOSCs are labourers he brings in for certain jobs. Like most LOSCs, they\u2019re paid by the hour, day or week. They bring a few hand tools that they like to work with, but Bob provides them with any specialist equipment if they need it for certain tasks.<\/p>\n\n<p class=\"wp-block-paragraph\"><strong>Bona fide subcontractors v labour-only subcontractors comparison<\/strong><\/p>\n\n<figure class=\"wp-block-table\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Bona fide subcontractors (BFSC)<\/p>\n\n<\/th><th class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Labour-only subcontractors (LOSC)<\/p>\n\n<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Decide how to do their own work<\/p>\n\n<\/td><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Told how to do their work<\/p>\n\n<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Usually get paid by the job rather than per hour or day<\/p>\n\n<\/td><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Usually get paid by the hour, day or week<\/p>\n\n<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Responsible for completing the contracted job fully and properly<\/p>\n\n<\/td><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Work under the direction of the person or firm hiring them<\/p>\n\n<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Usually have a different skill to the person or firm hiring them<\/p>\n\n<\/td><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">May have similar skills to the person or firm hiring them<\/p>\n\n<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Treated like third parties (not employees)<\/p>\n\n<\/td><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Treated like employees<\/p>\n\n<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Need their own insurance<\/p>\n\n<\/td><td class=\"has-text-align-left\" data-align=\"left\"><p class=\"wp-block-paragraph\">Covered under the firm\u2019s insurance<\/p>\n\n<\/td><\/tr><\/tbody><\/table><\/figure>\n\n<p class=\"wp-block-paragraph\">Read on for more on how these differences can affect your insurance.<\/p>\n\n<h2 id=\"aresubcontractorstreatedasemployeesforthepurposesofinsurance\" class=\"wp-block-heading\">Are subcontractors treated as employees for the purposes of insurance?<\/h2>\n\n<p class=\"wp-block-paragraph\">Different insurers word their policies slightly differently. Some definitions of BFSC and LOSC might be considered open to interpretation. That said, it\u2019s generally safe to assume:<\/p>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\">labour-only subcontractor = employee<\/li>\n\n<li class=\"wp-block-list-item\">bona fide subcontractor = third party (not an employee)<\/li>\n\n<\/ul>\n\n<p class=\"wp-block-paragraph\">We can say the key distinction between these two types of subcontractors rests on who directs and controls the work.<\/p>\n\n<p class=\"wp-block-paragraph\">When you\u2019re answering questions on your insurance quote form relating to employees, you should always include any LOSCs you work with. This might seem a bit confusing, seeing as you may only work with your LOSCs on certain ad hoc jobs (unlike the way you work with employees who are with you all the time).<\/p>\n\n<h2 id=\"aresubcontractorscoveredunderemployersliabilityinsurance\" class=\"wp-block-heading\">Are subcontractors covered under employers\u2019 liability insurance?<\/h2>\n\n<p class=\"wp-block-paragraph\">We\u2019ll take another visit to the renovation project that Bob&#8217;s Builders are working on at the moment. One of Bob\u2019s permanent employees has accidentally hit another of his permanent employees over the head with a plank of wood.<\/p>\n\n<p class=\"wp-block-paragraph\">The first employee has been injured by the second employee, not Bob\u2019s Builders as a business. This means the first employee could take legal action against the second employee personally. But because the employee that caused the injury is working on behalf of Bob\u2019s Builders, the firm\u2019s insurance policy covers her. She doesn\u2019t need to worry about being personally liable.<\/p>\n\n<p class=\"wp-block-paragraph\">We said above that LOSCs can be considered equal to employees for the purposes of insurance, so they would be treated in the same way here. BFSCs, on the other hand, aren\u2019t considered equal to employees. They\u2019re treated in the same way as third parties. This means they\u2019re not covered under Bob\u2019s Builders\u2019 <a href=\"\/business-insurance\/employers-liability-insurance\/\">employers\u2019 liability insurance<\/a>.<\/p>\n\n<h2 id=\"whyispublicliabilityinsuranceimportantforsubcontractors\" class=\"wp-block-heading\">Why is public liability insurance important for subcontractors?<\/h2>\n\n<h3 id=\"ifabfscinjuresanemployee\" class=\"wp-block-heading\">If a BFSC injures an employee<\/h3>\n\n<p class=\"wp-block-paragraph\">If one of Bob\u2019s BFSCs injures one of his employees, this won\u2019t be covered under Bob\u2019s employers\u2019 liability insurance. This is because BFSCs are not treated as equal to employees and are not, therefore, covered under Bob\u2019s Builders\u2019 business insurance policy.<\/p>\n\n<p class=\"wp-block-paragraph\">In this case, the injured employee could claim against the BFSCs <a href=\"\/business-insurance\/public-liability-insurance\/\">public liability insurance<\/a>. If the BFSC didn\u2019t have this cover in place, the injured employee could still take action against her and she would need to meet any awarded claim out of her own pocket.<\/p>\n\n<p class=\"wp-block-paragraph\">The injured employee might try to take action against his employer, Bob\u2019s Builders. While the firm shouldn\u2019t be held liable, Bob may have to defend the firm in court and incur costs from the case. This is why Bob should always make sure any BFSCs he works with have their own public liability insurance.<\/p>\n\n<h3 id=\"ifanemployeeinjuresabfsc\" class=\"wp-block-heading\">If an employee injures a BFSC<\/h3>\n\n<p class=\"wp-block-paragraph\">If it was one of Bob\u2019s employees who injured the BFSC, she wouldn\u2019t be able to claim under Bob\u2019s employers\u2019 liability insurance. Instead, she could raise a claim under his public liability insurance. This is because BFSCs are treated as third parties (not employees) for the purposes of insurance.<\/p>\n\n<p class=\"wp-block-paragraph\">The injured BFSC might try to take action against Bob personally if Bob\u2019s Builders didn\u2019t have public liability insurance. This is why BFSCs should always make sure the firm they\u2019re working with has public liability insurance in place.<\/p>\n\n<h3 id=\"ifabfscinjuresamemberofthepublic\" class=\"wp-block-heading\">If a BFSC injures a member of the public<\/h3>\n\n<p class=\"wp-block-paragraph\">Insurance policy wordings vary on the exact level of cover for when a BFSC injures a member of the public. To be on the safe side, it\u2019s always a good idea for a BFSC and the employer to have their own public liability insurance in place.<\/p>\n\n<h3 id=\"ifaloscinjuresamemberofthepublic\" class=\"wp-block-heading\">If a LOSC injures a member of the public<\/h3>\n\n<p class=\"wp-block-paragraph\">This scenario is simpler than it is for BFSCs. LOSCs are treated as equal to employees so are covered under the firm\u2019s public liability insurance. LOSCs should check that the firm they\u2019re working with has this cover in place.<\/p>\n\n<p class=\"wp-block-paragraph\">If the firm didn\u2019t have public liability cover and the LOSC injured someone, that third party could take action against the LOSC personally or the firm &#8211; or most likely both.<\/p>\n\n<h2 id=\"dosubcontractorsneedtheirowntoolcover\" class=\"wp-block-heading\">Do subcontractors need their own tool cover?<\/h2>\n\n<p class=\"wp-block-paragraph\">Tools belonging to labour-only subcontractors would be covered under Bob\u2019s Builders\u2019 tools insurance because they\u2019re treated as equal to employees. Tools belonging to bona fide subcontractors working with the firm wouldn\u2019t be covered by Bob\u2019s insurance because they\u2019re treated as equal to third parties (not employees).<\/p>\n\n<p class=\"wp-block-paragraph\">Read more about <a href=\"\/business-insurance\/subcontractors-insurance\/\">subcontractor insurance<\/a> and our other popular trades:<\/p>\n\n<ul class=\"wp-block-list\"><li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/builders-insurance\/\">Builders insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/bricklayers-insurance\/\">Bricklayers insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/carpet-fitters-insurance\/\">Carpet fitter insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/contractors-insurance\/\">Contractor insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/flooring-contractors-insurance\/\">Flooring contractors insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/glaziers-insurance\/\">Glazier insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/handyman-insurance\/\">Handyman insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/joinery-insurance\/\">Joinery insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/plasterers-insurance\/\">Plasterers insurance<\/a><\/li>\n\n<li class=\"wp-block-list-item\"><a href=\"\/business-insurance\/tilers-insurance\/\">Tilers insurance<\/a><\/li>\n\n<\/ul>\n\n<p class=\"wp-block-paragraph\">Is your profession not listed? When you <a href=\"https:\/\/quote.simplybusiness.co.uk\/business\">run a quote<\/a> you can select your trade from over 1,000 options.<\/p>\n\n<p class=\"wp-block-paragraph\"><strong>Has this article helped your understanding of the difference between bona fide subcontractors and labour-only subcontractors? Let us know in the comments section.<\/strong><\/p>\n\n\n\t\t\t\t\t<div class=\"wp-block-group has-azure-200-background-color has-background has-global-padding is-layout-constrained wp-container-core-group-is-layout-94e519ba wp-block-group-is-layout-constrained\" style=\"padding-top:var(--wp--preset--spacing--80);padding-right:var(--wp--preset--spacing--40);padding-bottom:var(--wp--preset--spacing--80);padding-left:var(--wp--preset--spacing--40)\"><h3 id=\"areyouprotectingyourtools\" class=\"wp-block-heading has-text-align-center\">Are you protecting your tools?<\/h3>\n\n<p class=\"has-text-align-center wp-block-paragraph\">As the UK&#8217;s biggest <a href=\"\/business-insurance\/\" data-type=\"page\" data-id=\"5152\" >business insurance<\/a> provider, we know the importance of covering your tools. Why not take a look now and build a quick, tailored <a href=\"\/business-insurance\/tool-insurance\/\/\">tool insurance quote<\/a>?<\/p>\n\n\n\t\t\t\t\t<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n\t\t\t\t\t<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/quote.simplybusiness.co.uk\/business\">Start your quote<\/a><\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\n<div id=\"nba-body-end\">\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The terms bona fide subcontractor and labour-only subcontractor still cause confusion for tradespeople buying business insurance. Learn what they mean.<\/p>\n","protected":false},"author":3,"featured_media":26275,"comment_status":"open","ping_status":"closed","template":"","meta":{"sb_hreflang":"","sb_hreflang_url":"","disable_breadcrumbs":false,"sb_breadcrumbs":[],"sb_reviewed_by":"","sb_review_date":"","sb_enable_content_gating":true,"footnotes":""},"categories":[336,342,110,343],"hidden-category":[],"coauthors":[75],"class_list":["post-925","knowledge","type-knowledge","status-publish","has-post-thumbnail","hentry","category-business-structure","category-staff","category-business-news","category-trades"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Bona fide subcontractors v labour-only subcontractors explained<\/title>\n<meta name=\"description\" content=\"The terms bona fide subcontractor and labour-only subcontractor still cause confusion for tradespeople buying business insurance. 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