Contractors are hired across a range of industries, often to complement the duties of existing staff. You may also need them to complete more specialist or dangerous construction jobs.
This article covers health and safety hazards associated with using contractors in the construction industry. You will also find effective risk management measures that could help safeguard your business.
The contractor market is growing
In 2023, 101,080 contractors worked in the UK construction industry alone, a 4% increase from 2022. Contractors in the sector might be asked to carry out several responsibilities, including:
- Building permits application
- Providing facilities on site
- Taking care of generated waste
- On-site personnel management
- Site surveying
- Site engineering
- Schedule monitoring
They play integral roles in driving building projects towards completion. Businesses will usually employ contractors for specialist construction expertise.
Contractor risks to look out for
Some of the key risk categories include:
1. Health and safety
Delivering building projects can be labour intensive with lots of heavy lifting. Around 42,000 people in the UK construction industry develop musculoskeletal disorders each year. Many sites are rife with hazards. These include heavy machinery, moving objects and harmful materials. The slightest safety lapse can lead to serious injury.
Construction reportedly has the largest number of occupational cancers among all industries. This accounts for over 40% of occupational cancer deaths and registrations. Post-exposure caused more than 5,000 occupational cancer cases and about 3,700 deaths. Asbestos was the leading cause at 70% of total cases.
2. Liability and insurance
Employers may be held responsible for any contractor performance issues. Grievances usually relate to the quality of work or any materials used. You should also consider cost of Health and Safety Executive investigations. Severe penalties may include threat of imprisonment for directors of negligent companies.
Public liability insurance protects your business from third party claims of injury or property damage. This isn’t a legal requirement but can protect you from the financial and legal costs of mistakes, theft and damage. Employers across different industries often have different insurance requirements. It’s important to have the right level of cover in place.
At RSA, we offer expert cover across all types of liability risk, from products to regions. Our claims management service aims to reduce any financial or reputational damage.
3. Financial
Construction firms accounted for 16.9% of all insolvencies in England and Wales in June 2024. 397 registered businesses became insolvent. In the year to June 2024, 4,690 construction firms became insolvent which was a 53.3% increase on the 3,060 in the year to June 2020.
Financial risk management is something that all companies and contractors should consider. Contractors might also face cash flow shortages, late payments, and increased costs of materials. These may stem from outside social or economic events.
Employers should try to understand the financial impact of different factors. It’s also important to conduct risk assessments specific to your business and activities. Credit checks of company accounts can be filed at Companies House. You may also choose to conduct due diligence on past track records.
4. Environmental
In 2022, the construction industry was second only to road transport for pollution in the UK. 97% of people working in the industry saw air quality as a priority environmental health concern. Still, there was frustration at the lack of action and ambition to tackle the issue.
There are other environmental factors to consider, such as:
- Contact with corrosive substances
- Wear and tear caused by impact or abrasion
- Damage by movement of vehicles and structures
Legal responsibilities when hiring contractors
Hiring contractors to carry out building work means you have legal responsibilities under the Health and Safety at Work Act. The legislation outlines that, as a commercial client as per the Construction Design and Management (CDM) regulations, you should provide:
- A safe place to work
- Safe equipment
- Proper training for staff
- Risk assessments
- Adequate facilities
- A competent person to oversee health and safety
You are also responsible for the welfare of all contractors. This includes any duties related to CDM regulations. The Health and Safety Executive (HSE) has produced invaluable advice around the CDM. They clearly identify the responsibilities for each person involved in a construction project.
Where work is planned to exceed any of the following, you must notify the HSE of the project:
- Last longer than 30 working days
- With more than 20 workers on-site at the same time during any part of the project
- If the project exceeds 500 person days in total
Your main duties as the client under CDM is to:
- Ensure that suitable management arrangements are made for the project
- Select and appoint a competent principal designer
- Select and appoint a competent principal contractor
- Where a project is notifiable, the employer must give notice in writing to the HSE
- Sufficient time and resources must be allocated
- Ensure all work can be carried out without risks to health or safety
- Provide the pre-construction information to the designers and contractors
- Ensure that the principal designers produce a health and safety file. As the project progresses, the file must be regularly reviewed and updated
- Ensure that welfare facilities are provided
- Ensure the necessary information, instruction and training is received with appropriate supervision
Health and safety measures
Steps you can take to reduce the risk of contractor harm:
1. Complete background checks
All contractors must be competent to carry out the required tasks. This means having the required skills, knowledge and training, plus being clear about what they don’t know in relation to the job being specified. The last part is an important but often overlooked element when appointing contractors.
You may want to consider:
- Appointing contractors who are members of trade and professional associations
- Asking for testimonials and references
- Checking the HSE website for previous and current enforcement action against an organisation
- Completing other regulatory checks such as safeguarding
- Driving licence checks
The principal contractor’s insurance needs to be validated. Check that the period of cover of relevant policies extends beyond the duration of the project. If not, then it's critical that the insurance covers are renewed and evidence provided as the project proceeds. Failure to do so could leave you, as the client, exposed in the event of a claim
2. Appoint a supervisor
Appoint an individual within your management team to liaise with the principal contractor daily. Address immediately if you have any concerns over the contractors:
- Competency
- Effectiveness
- Lack of safety measures
3. Carry out health and safety inductions
The principal contractor must carry out a formal site induction to make all on-site contractors aware of their health and safety. The induction should cover:
- Site access control procedures
- Sign in and sign out requirements
- Fire drills and emergency arrangements
- Accident reporting requirements
- Shared facilities
- Authorisations for operating plant
- Welfare and first aid facilities
As the client, you are responsible for monitoring the health and safety performance of the principal contractor. The level of monitoring will vary depending on the circumstances of the work.
Many clients are not aware of their supervisory requirements. It’s important to spot when a contractor is doing something potentially dangerous. If you had the chance to intervene but failed to do so, you can be held liable for any resulting damages.
RSA is here to help
It can be hard to totally mitigate contractor risk. However, employers must be aware of the different risk factors and prevention measures. This may help reduce the chance of anything going wrong. If something does happen, you'll know the correct steps to safeguard your business.
RSA provides comprehensive risk consulting support to customers, spanning from property to liability. Our flexible service can help businesses of all sizes identify and manage risk where needed.
