Freelancer liability

[Jivemaster]

It is my understanding that a freelancer as a self employed person has to have insurance as (s)he is a place wnere the HSE could apportion blame and liability in the event of an incident.

 

Firstly is this correct?

 

Secondly can anyone offer the reference to official literature that makes this the case?

 

Very specifically I need reference to hard evidence NOT custom and practise, nor "normal behaviour". I'm looking for correct insurance and the small print ..........

[eventstudio]

Firstly go here and speak to these people - they sell specific policies for people like you

 

PSA - Insurance Services

 

Secondly, whoever is employing / contracting you MUST carry employers liability insurance that covers the work that you may be doing. In addition they must have public liability insurance which should cover any claims arising in issues relating to work that you may have been involved with whilst working for them.

 

hope this helps...

 

 

It is my understanding that a freelancer as a self employed person has to have insurance as (s)he is a place wnere the HSE could apportion blame and liability in the event of an incident.

 

Firstly is this correct?

 

Secondly can anyone offer the reference to official literature that makes this the case?

 

Very specifically I need reference to hard evidence NOT custom and practise, nor "normal behaviour". I'm looking for correct insurance and the small print ..........

[gareth]

Jamie ... firstly, the OP is not asking where to get insurance. Nor are they asking for unqualified statements as to who needs what in insurance terms.

Very specifically I need reference to hard evidence NOT custom and practise, nor "normal behaviour".

 

Also, I'm not sure that one of your statements is even correct. If a freelancer is operating as a limited company and is in a situation where they can be considered a supplier of goods and services rather than a contractor or an employee (the last of which they wouldn't be in any case, as a freelancer), would the client really need employers liability insurance? I don't have to have it if I engage the services of a plumber to do some work for me, I don't need to carry insurance to cover his actions - in the same way, why would a client have to have employers liability to cover a contractor who might be onsite to, say, program a lighting desk or undertake some lantern maintenance?

[zonino]

They could have employers liability, but it almost certainly wouldn't cover contractors... Third Party liability on the other hand might be covered

[drsound]

Whether you're covered by employers liability depends whether the contractor is bona-fide or not. Regardless of the type of contract you have, a contractor may be considered an employee if you fail to demonstrate that he is a bona-fide contractor. The guidance we have from our insurance company is that regular freelancers (more than 3 or 4 times per year for example) will be considered employees (for the purposes of insurance at least) and must be insured accordingly. I'm not an expert but there are some guides on the internet explaining how to maintain contractor (as opposed to employee) status. This could be argued to tie in closely with IR35.

 

Bear in mind that civil liability (insurance) is often very different from criminal liability (HSE). It's not unkown for insurance companies to come to an arrangement to pay a claim even where criminal liability has not been proven. In complex cases an insurance claim might be settled by multiple companies all accepting a portion of the liability even though no criminal prosecution is made.

 

The moral of the story is to make very sure of your status and to have adequate insurance for that purpose which is presumably the reason for your question. I would urge you to talk with an insurance broker who is qualified to answer. While BR members will offer very good advice this is perhaps one of those areas where it would be wise to check your ground with a professional.

 

To answer your question about HSE blame, their website contains details of cases they have brought along with the findings of the court and will be able to give you guidance as to the process of apportioning blame.

 

The HSE will apportion blame as they see fit due to the reverse burden of proof principle applied to these cases. It is up to each party involved to prove that they did all that was reasonable practicable to prevent the incident occurring. An example I have encountered: a contractor was working on site installing cable tray. He was instructed that he must use a mobile scaff tower to carry out the work and was provided with the equipment to do so. He did most of the work from the scaff tower but used a ladder to get to a tricky area then fell off it breaking his leg. In this case the HSE decided that the employer was to blame for failing to provide adequate equipment to do the work but the contractor was also prosecuted for failing to prove that he had taken all reasonable steps to prevent the accident - in effect he should have known better and asked for the right equipment to be supplied.

 

Interestingly there is, as far as I'm aware, no legal obligation to carry public liability insurance for most business purposes. It's merely commom sense to avoid being bankrupted in the event of a claim by a third party.

[boac]

The contractor was prosecuted for breaking his leg??

[drsound]

Yes he was. The reason is that he was at least partially liable for causing a reportable accident. The fact he was injured in that accident is neither here nor there.

 

Think of it this way - you can be prosecuted for dangerous driving for causing a car crash even if you are injured in the crash.

[Guest lightnix]

It is my understanding that a freelancer as a self employed person has to have insurance as (s)he is a place wnere the HSE could apportion blame and liability...

 

...can anyone offer the reference to official literature that makes this the case?

...there is, as far as I'm aware, no legal obligation to carry public liability insurance for most business purposes...

David is right, there is no law that says, "Freelancers must have their own insurance."

 

...It's merely commom sense to avoid being bankrupted in the event of a claim by a third party...

Yes - but if you are found to be liable for an accident, or to have failed to abide by H&S regs, then the insurance company could sue you back for any payouts. Insurance should not be regarded as a Get Out Of Jail Free card.

 

Clients have a Duty of Care to ensure that contractors are "competent" to do a job and required to use "investigative means" to establish this. If there's an accident and it emerges that they never checked their contractors' had insurance, that could (and probably would) be seen as negligence.

 

It's a bit like the Electricity At Work Regs: There's nothing that actually says, "You must do PAT testing", but there's no way of avoiding it, if you want to stay within The Law.

 

Also: Possession of your own insurance is an indicator of genuine self-employment in the eyes of HMRC.

 

Those are the two main reasons that clients require their freelancers to carry their own insurance.

 

Whether you're covered by employers liability depends whether the contractor is bona-fide or not.

I'm not sure whether it's changed, but the HSE at least used to say that an "employee" was anyone "acting under your instruction" - which could include local crew. I used to err on the side of caution and started carrying employers insurance towards the end of my freelance years.

 

The contractor was prosecuted for breaking his leg??

...The reason is that he was at least partially liable for causing a reportable accident.

 

Think of it this way - you can be prosecuted for dangerous driving... even if you are injured in the crash.

Oh yes - you can be done by the HSE for hurting yourself, even if nobody else is involved. I know a guy who was once handed a three year suspended sentence for injuring himself. He got Arc Eye, after overriding the lamp cutoff switch on the access panel of a Golden Scan; so he could adjust a text gobo, without waiting ten minutes for the lamp to restrike

[drsound]

...It's merely commom sense to avoid being bankrupted in the event of a claim by a third party...

 

Yes - but if you are found to be liable for an accident, or to have failed to abide by H&S regs, then the insurance company could sue you back for any payouts. Insurance should not be regarded as a Get Out Of Jail Free card.

Yes, quite right. Your insurance company will also look for any possible loophole to avoid paying a claim on the first place. It's what they do.

 

In industry it used to be not uncommon to inform your insurance company of a known H&S breach and then pay an additional premium to "buy off" the liability (Ford Pinto syndrome for those who recall it?). It's becoming less used now as H&S legislation catches up with all the dodges and prosecutions take the place of compensation.

[Jivemaster]

OK my original dilema was a work provider who took me on to do a job saying it would be PAYE which suits me, then they ask me to send an invoice as self employed, -which doesn't suit me. I'm very unhappy with this as this seems to shift liability onto me after the event. Hence the reason why I was looking for hard evidence, and hard links to HSE or other info.

[Guest lightnix]

...a work provider who took me on to do a job saying it would be PAYE...

At the risk of being a bore, did they say it in writing?

 

Even if they didn't, I'd write to them, remind them of the terms under which they first booked you and threaten (yes - threaten) to report the matter to HMRC, as an attempt to "disguise employment" (the official term), if they don't stick to the original deal.

 

The possibility of the taxman investigating their freelancer affairs might be enough to make them see reason, although I wouldn't expect any further bookings from them (not that I'd want any, if that's how they treat their crews).

 

Any chance of a name and shame, so that others know who to avoid?

[drsound]

Yup, I'd agree your more immediate concern is from HMRC than from either HSE or your insuraance company. Demonstrating to the HSE that you have done the job safely has nothing to do with your employment status.

 

Demonstrating to HMRC that you are doing things right is a different matter. Having said that most of the problems result from attempting to pass yourself off as a bona fide contractor when you are in fact PAYE (see IR35) so you should personally be ok as you appear to have tried to do things legitimately.

 

Do you have a contract of employment? As an employee, even if you are a "casual" (there's really no such thing any more but there is a distinction between an "Employee" and a "Worker"), you need to have been given a contract within 8 weeks of first doing work for them. This must define how your contract is to be managed. As an employee you are entitled to various rights. For example if you are employed (as opposed to a contractor) the employer MUST give you paid holiday under the working time regulations (4.8 weeks per annum, pro rated etc etc).

 

To be honest this one is a bit of a hornet's nest and I would advise getting yourself to either your local CAB or a lawyer if you think that you might be on the receiving end of dodgy contractual shenanigans. I think that most of the Blue Roomers who have run companies or freelanced have probably been stitched up at least once, even if they're very clued up on these things.

[Guest lightnix]

...most of the problems result from attempting to pass yourself off as a bona fide contractor when you are in fact PAYE (see IR35)...

True - for those trading as one-man Ltd. Co's., but if Jivemaster is a sole trader, then it's the IR56 regulations that come into play.

 

These are, in essence, exactly the same as IR35; except that under IR56, the tax liability falls with the client - if HMRC decides they've engaged the services of their freelancers under T&C's, which make them employees.

 

This is why so many hire companies are so keen to have Ltd. Co. freelancers on their books, rather than sole traders ;)

 

If Jivemaster is a sole trader, then he will possibly have less to fear from HMRC than his errant client; although it might be worth checking with his accountant (the same one I use IIRC) to see what the potential for "backfire" may be :D

 

Mind you, if the HMRC's findings in last year's Dragonfly IR35 case are anything to go by, you can but only wonder how long the self-employed freelancer model can survive in the backstage industry - regardless of the non-PAYE trading vehicle concerned :unsure:

[Jivemaster]

I am currently exclusively paye employed outside the ents industry. I really wish to have additional paye employment on the odd occasions that I get paid for something I otherwise regard as a hobby. because the accountants fees would exceed the micro turnover!

 

This was last November assisting a fireworks company. Before the work, I was offered paye so I expected just a pay slip and cheque for a week of tha annual leave from my main employment.

 

The reference to insurance was because firework insurance is expensive and I really don't want to need my own insurance on what they pay for one week, or just for one week in a year.

 

As a result of a chat with one of the two major insurers, he has now circulated all his clients with the limits to which he is prepared to extend cover. As I went out with an employee of the company I may be OK but the husband and wife team that went out with shows were certainly not insured and the two students likewise not employees so not insured.

[jonathanhill]

It is my understanding that a freelancer as a self employed person has to have insurance as (s)he is a place wnere the HSE could apportion blame and liability in the event of an incident.

 

Firstly is this correct?

 

Secondly can anyone offer the reference to official literature that makes this the case?

 

Very specifically I need reference to hard evidence NOT custom and practise, nor "normal behaviour". I'm looking for correct insurance and the small print ..........

 

A couple of lighting hire companies that I have worked for as a freelance/self-employed define a freelance as an individual who has PLI, can supply their own tools for the job and can work without supervision. Not sure that this helps but this obviously covers the respective companies derriere's.

 

I know that you are not looking for it, but the BECTU PLI arranged via Aon Insurance is great value for money. £5/3m cover for your subs and another £20 per year.