Running an internal exercise in your business to identify all the critical documents that are relevant to you, your business and your jobs now and into the future will be worth its weight in gold. This forms the foundation of whether your onboarding process is going to be successful or not.

The exact documents, their structure and how detailed they need to be will vary from industry to industry and even from job to job. It’s important to get professional advice if you are unsure of what your requirements are in any given scenario. That being said, here are some of the most common documents that need to be collected.

Subcontracting Documents

• Subcontractor business and contact details

The stock standard basic information to collect from a subcontractor include their business name, ABN, address and phone number. It’s also important to identify the primary contacts for the contractor for anyone who is going to be involved with your business. Also identifying the GST status of the subcontractor and doing a quick search on the ABN lookup to check it is valid and accurate can save some headaches later on. In some circumstances it can be worthwhile to store a copy of the contractors logo, business card and/or other advertising material for reference.

• Commercial contract

The contract spells out the terms and conditions of your arrangement with the subcontractor and is the most critical document of all. Failing to get a valid written contract signed and agreed to before work begins is opening your business to untold and unnecessary risks. It is also important to remember that a contract may also include several documents for larger projects and may be subject to change throughout the duration of a job when variations occur and are agreed by both parties.

• Scope of work

A scope of works is a thorough and detailed description of the work that needs to be completed. The size, scope and detail of your scope will vary depending on the complexity of the work involved. Be sure to get the subcontractor to sign-off on the scope to show they have taken in all the information and addressed any concerns ahead of time.

• Insurance certificates

Typical insurances include Public Liability, Workers Compensation, Professional Indemnity and/or Personal Accident & Sickness insurances. Insurance can extend to individual situations where specific insurances are required such as tools and equipment. When it comes to insurance, you need to get a copy of their ‘certificate of currency’ which details the insurance and triple check the contractor is covered for the level of insurance you require. Also important to note with insurance is that it can expire if the contractor misses payments, so you need to get updated copies regularly.

• Qualifications, licenses and tickets

Ensuring that your subcontractor has the correct skills and qualifications is important for your peace of mind that they’re capable but may also be a legal requirement. Allowing a subcontractor who is not adequately qualified or that has lapsed qualifications is a huge risk to your business and your clients. Licenses and qualifications expire and need to be monitored to be confident they meet their requirements.

• Right to work e.g. VISA, police checks, working with children.

Depending on your industry it may be important to check that the subcontractor has the right to work as a contractor in Australia. While their ABN is the most significant factor for a contractor to run a business in Australia it may also be necessary to get copies of their Visa conditions to stay within the law. Running background and police checks is a regular occurrence in industries where personal safety is paramount.

• Terms & conditions

When you sign a contract with a subcontractor spelling out the terms and conditions of the agreement, it may be worthwhile to check if the contractor has terms and conditions of their own. In some cases where a subcontractor provides their T&C’s attached to a quote or invoice, they can have a bearing on the engagement. Watch out for any inconsistencies and make sure they are dealt with in writing prior to work commencing.

• Safety documents e.g. SWMS, Site assessments & inductions

Safety documentation is another non-negotiable step to ensuring you are meeting your compliance requirements. Whether the subcontractor is working from home or working on a commercial construction site, there are important safety steps you need to address. Typical documentation includes Safe Work Method Statements (SWMS), location specific Site Assessments, General and site specific inductions as well as ongoing Tool Box Talks all contribute to a safe working environment. The checks and balances in a safe working environment are constant and need to be regularly addressed and updated.

• Payment documentation

The subcontractors invoice is the most obvious piece of payment documentation that you will need to collect. Once again, you need to scrutinise even an invoice to ensure that it meets minimum standards e.g. is the ABN supplied valid and current? You may also be required to or at least benefit from also collecting quotes, details of any negotiations and in NSW a subcontractor statement supplied with each invoice.

The main takeaway here is to thoroughly examine what documentation you need for any work you are hiring a subcontractor to complete. Understand that each piece of documentation is important for different reasons and any gaps in your paperwork may expose your business to unnecessary risks. If you would like more information on best practices for collecting all this documentation you can read on here.

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Why hire subcontractors?

Subcontracting is an essential tool for small businesses across Australia to connect and engage with other small businesses. It allows for two businesses to combine forces to deliver the best possible outcome and meet timeframe requirements.

Small businesses by their very nature don’t have the resources to have professional experts across every field employed within their business, it just simply isn’t possible. Without subcontracting, small businesses would loose out on the ability to bring in specific professionals to complete a job.

The result of subcontracting is a continual intermingling of small businesses across Australia who use each other’s services and skills when and where they need them. This helps not only the businesses, but the communities they work in and creates a diverse range of jobs.

In a broader context these relationships are key drivers in producing a productive workforce. The incentive of being paid to achieve a result rather than being paid by the hour creates a driver that can create substantial productivity boosts to businesses, the community, and the economy.

A simple example

A simple example is your everyday builder, who generally operates more as a project manager than an on the tools carpenter. The builder wins the contract to build a specific building and then assembles a team of the best suppliers they can to complete the job. In the process, the builder will typically subcontract out the individual aspects that go into the building e.g. electrical, plumbing, framing, gyprocking and the list goes on. These other businesses have a niche set of skills and are great at what they do. Together, they get the job done in a way that any single small business would struggle to do on their own.

It’s a commercial contract

A subcontracting relationship is made possible by creating a commercial relationship (the contract), where each of the businesses agrees to perform a job for an agreed compensation. The key here is that it’s a commercial contract and is governed by the laws of contract which gives subcontracting the flexibility it needs to adapt to the specifics of the two businesses joining forces.

Australia is built on the back of small businesses, we know this and we hear the rhetoric regularly in the media. Contracting forms the glue that allows these small businesses to thrive and grow with each other.

The end game

The role of subcontracting is the mechanism for small business to share skills, experience and expertise in a business environment that demands increasing change, specialisation and flexibility.

For subcontracting to thrive in the business community it is essential that all participants follow the laws that apply to subcontracting in their entirety. The laws are diverse and range from the common law to state, federal and local legislation. Having access to professional support for small businesses to understand and manage their compliance responsibilities will be a key factor in ensuring the highest standards are maintained.

The benefits of a well-functioning community of inter-connected small businesses flows down to almost all aspects of Australian life and should be supported and nurtured.

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