How to safely manage contractors and external workers

How to safely manage contractors and external workers

One of the biggest priorities for business owners is mitigating their risks, so how do you handle contractors and external workers onsite? Do you have a framework for selecting and managing them? If not, you can leave your business exposed to legal and commercial risks that can damage your reputation and lead to significant financial loss.

Whether you engage contractors and external workers on a regular basis or not, you have a legal and statutory duty of care to these workers. This duty of care can be best managed by creating a contractor management system, which includes procedures for selecting, inducting, managing and supervising contractors and external workers onsite and also ensuring that they have the appropriate insurances in place.

Contractor management system

This is a document that sets out the procedures that need to be followed when you hire a contractor or external worker. It should include the steps taken to select the contractor or external worker, guidelines for their induction and supervision when onsite. You will need to ensure that all legislative and industry requirements for maintaining a safe work environment are addressed in this document. Free sample checklists (including Inductions, Toolbox meetings, Risk Assessments, Competency) can be found on your State or Territory WorkCover websites, for example the Tasmanian WorkCover site

  • Selecting contractors

When selecting your contractors, you need to make sure that they have all the necessary licences, registrations and insurances. You should also ensure that they have the correct experience and either ask for references or contact other businesses who have previously hired them.

If a contractor also brings their own employees or sub-contractors onsite, the contractor must confirm that these workers are qualified and acknowledge that they are responsible for ensuring that their workers will follow all onsite procedures. If the contractor sub-contracts the work, they need to confirm that the sub-contractors are qualified and the reasons why they were selected for the job. You as the principal need to check to ensure the sub-contractor is following all onsite procedures.

  • Inducting contractors

All contractors and their employees or subcontractors should attend an induction prior to commencing work onsite. Make sure that their attendance is not only recorded but also ensure each attendee signs a record of their attendance. This record should indicate the date of the induction, presenter and date of next induction, if appropriate.

At a minimum, the induction should include training on site specific safety and the procedures taken in the case of an emergency. They must also receive a copy of the relevant OHS/WHS regulations for onsite workers, as well as any specific safety procedures.

  • Supervising contractors

When onsite, a suitably qualified and experienced company employee should be allocated to supervise or oversee the contractor’s work. This includes the quality of their work and whether they are complying with all site regulations, including OHS/WHS. All meetings between the supervisor and contractor should be recorded, with any relevant action items identified, allocated and followed up. It’s recommended that a signing in process is put in place for admittance to the site each day, as this allows the supervisor to know who is and isn’t onsite at any one time, especially in the event of an emergency.

Additional steps for reducing your exposure when hiring contractors

There are two additional steps you can take to reduce your risks even further. The first is to have a formal written contract between your company and the contractor. This should include clauses that require the contractor and their employees or sub-contractors to follow all company and site specific procedures. It should also include reporting all accidents, attending inductions, and so on. The second step is to ensure that your company has all the relevant insurances in place, including Worker’s Compensation, Professional Indemnity and Public Liability.

To review your insurance policies for your business, talk to an insurance specialist today and find your local adviser.


Important Information

This communication including any weblinks or attachments is for information purposes only. It is not a recommendation or opinion, your personal or individual objectives, financial situation or needs have not been taken into account. This communication is not intended to constitute personal advice.

This type of insurance product is designed for small and large businesses, who want to be covered against financial loss relating to accidents or personal injury involving contractors or sub-contractors.

We strongly recommend that you consider the suitability of this information, in respect of your own personal objectives, financial situation and needs before acting on it. This document is also not a Product Disclosure Statement (PDS) or a policy wording, nor is it a summary of a particular product’s features or terms of any insurance product.

If you are interested in discussing this information or acquiring an insurance product, you should contact your insurance adviser to obtain and carefully consider any relevant PDS or policy wording before deciding whether to purchase any insurance product.

Workers’ Compensation

Workers’ Compensation

While some occupations and industries have a higher risk of workplace incidents and/or fatalities than others, Workers’ Compensation is compulsory for all Australian employers. It provides financial compensation to workers if they suffer a work-related injury or illness.

Professional Indemnity Insurance

Professional Indemnity Insurance

Professional Indemnity (PI) Insurance isn’t just limited to typical ‘professions’ such as accountants, engineers, lawyers, doctors and architects. Essentially, anybody providing advice or consultancy services for a fee has an exposure that needs to be considered.

Liability Insurance

Liability Insurance

Despite the very best of intentions, accidents can still happen in any business. Public and Product Liability Insurance  protects you against claims for personal injury or damage to a third party.

Find your local Insurance Adviser

Talk to your local Adviser to get advice about your insurance needs and to get a quote