When is an employee not an employee?

Have you been affected by the compulsory pension schemes for all employees? Do the potential savings in Employers National Insurance and Pensions contributions appeal to you? Are you encouraging your workforce to become self-employed? If you answered yes, you could be incorrectly declaring your workforce as Bona Fide Sub-Contractors (BFSCs) in respect of your insurance. Both employee and Labour Only Sub Contractor (LOSC) costs need to be taken into account as part of your overall employee payroll figures when calculating your Employers’ Liability premium. Incorrectly declaring employees or LOSCs as BFSCs could mean that, in the event of an accident, your claim may be rejected. The claimant’s solicitors may argue that BFSCs should have been considered an employee, which could invalidate any potential claim settlement. Do you know the difference between an employee, Labour Only Sub Contractor (LOSC) and a Bona Fide Sub Contractor (BFSC)? Labour Only Sub Contractor (LOSC)
  • Payment on an hourly, weekly or monthly basis
  • Able to receive overtime or bonus pay
  • Work a fixed number of hours
  • Use your materials, tools and equipment
  • Work under your supervision
Bona Fide Sub Contractor (BFSC)
  • Payment on a fixed-price contract
  • Decide their own work schedule
  • Decide on how, when and where to do their work
  • Responsible for correcting unsatisfactory work
  • Work without supervision
At Safeguard, we are committed to helping you protect your business from potential risks. To make sure you are not exposed, always check that any BFSCs working with you have arranged their own Liability insurance, and contact our expert advisers to check your Employers’ and Public Liability policies cover you and your workforce correctly.

DO I NEED PROFESSIONAL INDEMNITY INSURANCE IF I’M SELF-EMPLOYED?

More and more of us are discovering the joys of working for ourselves, leaving traditional workplaces to become self-employed or start our own small companies. Since 2008, the number of freelancers working in the UK has increased 36% from 1.4million to a staggering 1.91million. According to a report by the Association of Independent Professionals and the Self Employed (IPSE), freelance workers are present in most of the UK’s major industry groups but are most strongly represented in education, health and social work (21%), professional, scientific and technical activities (20%), and arts, entertainment and recreation (12%). The report states that 255,000 freelancers take on independent work as a second job, whilst for 1.65 million freelancers it is their main occupation. With so many self-employed individuals getting to grips with their own tax, laws and insurance covers, we ask if professional indemnity insurance should be on your shortlist… What is professional indemnity insurance? Professional Indemnity (PI) insurance covers individuals or organisations providing professional services to clients against things going wrong which lead to expense, either for the client or the provider. This could include claims stemming from breaches of professional duty, negligence, or just plain human error. Protecting your finances with PI insurance means you would be able to continue trading in the event of a case. More and more of us are discovering the joys of working for ourselves, leaving traditional workplaces to become self-employed or start our own small companies. Since 2008, the number of freelancers working in the UK has increased 36% from 1.4million to a staggering 1.91million. According to a report by the Association of Independent Professionals and the Self Employed (IPSE), freelance workers are present in most of the UK’s major industry groups but are most strongly represented in education, health and social work (21%), professional, scientific and technical activities (20%), and arts, entertainment and recreation (12%). The report states that 255,000 freelancers take on independent work as a second job, whilst for 1.65 million freelancers it is their main occupation. With so many self-employed individuals getting to grips with their own tax, laws and insurance covers, we ask if professional indemnity insurance should be on your shortlist… What is professional indemnity insurance? Professional Indemnity (PI) insurance covers individuals or organisations providing professional services to clients against things going wrong which lead to expense, either for the client or the provider. This could include claims stemming from breaches of professional duty, negligence, or just plain human error. Protecting your finances with PI insurance means you would be able to continue trading in the event of a case. Do I need it? Certain professions are more likely to need PI than others, and whilst it’s an industry requirement for some, for others it is simply good common sense. In a nutshell, you need PI if you provide advice, services or designs which clients depend on, for example accountants, medical professionals, financial advisors, architects and property surveyors. Solicitors and legal professionals are required to have their own kind of PI insurance. It is also a good idea to arrange this protection if you are an advisor of any kind. From HR and IT consultants to marketing gurus and graphic designers, if a business acts on your advice or uses your work and it results in damage to its finances or reputation, they could take action against you. Without insurance you may have to pay legal costs and damages out of your own pocket. How do I choose the right policy? Unlike home, car and travel insurance policies, which usually have a standard upper limit (the maximum amount your insurer will pay out in the event of a claim), PI Policies often have a choice of limits depending on your industry and your clients’ needs. Your relevant industry bodies may well make a recommendation on which one you should choose. An insurance broker is often the best source of advice. At Safeguard Insurance, we can offer independent Professional Indemnity advice tailored to your profession and circumstances. Certain professions are more likely to need PI than others, and whilst it’s an industry requirement for some, for others it is simply good common sense. In a nutshell, you need PI if you provide advice, services or designs which clients depend on, for example accountants, medical professionals, financial advisors, architects and property surveyors. Solicitors and legal professionals are required to have their own kind of PI insurance. It is also a good idea to arrange this protection if you are an advisor of any kind. From HR and IT consultants to marketing gurus and graphic designers, if a business acts on your advice or uses your work and it results in damage to its finances or reputation, they could take action against you. Without insurance you may have to pay legal costs and damages out of your own pocket. How do I choose the right policy? Unlike home, car and travel insurance policies, which usually have a standard upper limit (the maximum amount your insurer will pay out in the event of a claim), PI Policies often have a choice of limits depending on your industry and your clients’ needs. Your relevant industry bodies may well make a recommendation on which one you should choose. An insurance broker is often the best source of advice. At Safeguard Insurance, we can offer independent Professional Indemnity advice tailored to your profession and circumstances.