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If you are a removalist and you engage subcontractors to help you with jobs, you should have a contract with them. This is a good way to govern the relationship between you and the subcontractor so that you can appropriately manage disputes. Although it is tempting to have an informal arrangement with a subcontractor and avoid the paperwork, a well-drafted subcontractor agreement is important. It ensures that each party clearly understands their rights and obligations, including how payment will work and what services you will provide. This helps you to manage the risk of hiring someone to help you out. This article unpacks the key terms you should include in your removalist subcontractor agreement.

Subcontractor or Employee 

The first step when you look to engage someone to assist your work is to consider whether they will be considered an employee or a subcontractor. This will affect the legal entitlements of the worker.

For example, an employee is entitled to sick leave and annual leave, whereas a contractor is not. 

There are many tools and tests to help you understand what the arrangement with your worker is. Two of the key factors to consider are:

  • how much control the person has, given an employee usually has little control over the hours and place of their work whereas a subcontractor has the discretion to choose these arrangements; and
  • integration of the worker into your business processes.

Integration essentially looks at whether the worker: 

  • provides their own equipment, such as their own truck;
  • has their own insurance; and
  • bears the risk of the work that they undertake.

This is because subcontractors are conducting their own business, distinct from employees who are participating in your business. Importantly, it does not matter whether you call them a subcontractor or your contract refers to them as a subcontractor. The law is more concerned with the actual relationship between you and the worker.

You need to take the distinction between an employee and a subcontractor very seriously. If you incorrectly classify a worker as a subcontractor when they are in fact an employee, the Fair Work Commission or Federal Court may order you to pay:

  • fines; and
  • superannuation, plus other entitlements on top of what you have already paid.

4 Key Terms to Include in Your Subcontractor Agreement

Once you have determined that your worker is a subcontractor, you should consider how your arrangement will work with them. Below, we run through some key considerations and terms you should include in your subcontractor agreement.

1. Services

Your removalist subcontractor agreement should outline what services you expect the subcontractor to provide.

For example, will they only be responsible for driving a delivery truck, or will they also be responsible for packing and unpacking customer’s belongings?

Throughout the term of the arrangement, you will want to ask them to help out on different jobs. Your subcontractor agreement should set out how you will offer jobs to them. This could be as simple as a text message or a phone call. Alternatively, it could be through a more formal platform. In any case, it should be clear: 

  • how the subcontractor will accept the job; and 
  • at what point they enter into a binding contract with you to perform the services for that particular job.

When you offer them a job, you should clearly let them know the:

  • date and time of the job;
  • services required;
  • location; and
  • the fees you will pay them.

2. Fees

Your subcontractor will want payment for the services they provide to you. Typically, a subcontractor will invoice you either: 

  • on completion of a job; or 
  • at a pre-agreed interval, for example every fortnight, for the fees for any services they have provided.

Your subcontractor agreement may set out how you will pay them, which could be:

  • an agreed hourly rate; or 
  • a set fee for each new job that you offer the subcontractor. 

Either way, you should decide these fees in advance. If you are paying your subcontractor at an hourly rate, it should be clear when the job starts and finishes. It is also a good idea to ask them to complete a timesheet. Your subcontractor agreement should make it very clear that you will only pay the subcontractor for work actually performed. 

If there are any expenses that the subcontractor may incur, such as fuel or travel, you should decide in advance who will cover these costs.

3. Equipment

Your removalist subcontractor agreement should set out who will be responsible for providing equipment

For example, if a subcontractor is responsible for providing their own truck, you will want to make it very clear that you have no responsibility for any damage that the truck incurs. 

If you are providing equipment for the subcontractor to use, then it should be clear that the subcontractor is responsible for: 

  • keeping them in good condition; 
  • ensuring that they do not get sold, lost or stolen; and 
  • using the equipment only for the purpose which you provided it for.

4. Liability

A key risk for any business when engaging a subcontractor is the liability that you could incur for their actions. As a removalist business, your subcontractor could cause a large amount of damage to your customers’ property and belongings. You will want to make sure that they are accountable and responsible for this potential damage. Your contract should seek to limit your liability so that you are not out of pocket if things go wrong. An important part of this is ensuring that your subcontractor has their own insurance to cover them.

Key Takeaways

If you engage a worker to help with your removal business, you should work out how you will engage them. If you are engaging them as a subcontractor, it is a good idea to use a subcontractor agreement to set out the relationship between the parties. A well-drafted subcontractor agreement will: 

  • seek to limit your liability; and 
  • provide a clear understanding of what services the subcontractor will provide and how you will pay them. 

If you would like assistance preparing you removalist subcontractor agreement, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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