Q: Can you tell me the extent of my obligation and limit of my liability while engaging contractors?

When we engage contractors we expect proof of:

• an Australian Business Number;
• a Certificate of Currency for insurances, such as public liability, workers’ compensation, professional indemnity, motor vehicle and income protection;
• proof of work and driver’s licences; and
• examples of safe work systems, e.g. accreditation or examples of safe work method statements.

We also induct them to the business and the worksite, and ask them to demonstrate understanding of the induction by a brief test.

This system is fine for smaller contractors. However, for larger companies it becomes unwieldy to inspect licences, induct all workers and demand proof of competency. Some larger contractors have more than 15 employees, which is a problem logistically.

To what extent, and to what level of control, can we provide the same level of governance for a number of contractors and subcontractors?

A: You have a non-delegable duty to provide a safe workplace. Although contractors are primarily responsible for the safety of their own workers, your business can be liable under health and safety laws if contractors are injured and your business failed to take reasonably practicable steps to protect their safety. You must therefore ensure that the contractor, as well as your business, has taken all reasonably practicable steps to identify hazards and adopt a safe system of work.

In order to limit such liability, your business should implement and maintain an effective contractor management system. This includes taking the following steps:

1. Perform a due diligence check to ensure you are only engaging properly qualified and experienced contractors.
2. Induct all contractors to your worksite.
3. Review safe work procedures provided by contractors.
4. Monitor contractors.

A potential option for your business, as it engages a number of contractors of various sizes, is to consider implementing an online contractor management system, which requires the provision of the requested documents and completion of an induction before they can commence any work.

The advantage of these systems is that it also assists in managing a number of contractors and subcontractors as all workers, including new workers who commence work during periods of turnover, are not allowed access to the worksite unless they have received online approval.

However, you should be aware that these systems are not perfect and you may prefer to prepare an induction handbook that is provided to all contractors before they commence work. This handbook could include information about risks in your business and risks that are specific to the worksite. It should also include a statement to be signed by each contractor that they have read the handbook and completed the induction.

In terms of the extent of your liability, as long as you undertake the four steps outlined above, you will be able to discharge the duty of care imposed on your business.

Please refer to chapter C1 Contractors for more information on your duties when engaging contractors.

Please note: The answer is correct at the time of publishing. Be aware that laws may change over time. Refer to Contractors for current advice.