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Early use of Contractor Policy Check, a handy policy review function that can be used through Status Review, shows that approximately 20% of contractors were unable to document business insurances that met their end client’s requirements.
End clients requiring contractors they engage to hold certain insurances is by no means unusual, in fact, it’s considered commonplace in the flexible working industry.
These requirements will be specified within the contract between a recruiter and end client (and recruiter and contractor) alongside any specific limits of indemnity for those insurances.
Contractors can lean on these insurance policies, where relevant, to defend them against legal action brought by clients or third parties relating to services provided by the contractors limited company. Where the contractor has no insurance policy or an insufficient policy this may have significant consequences for the recruiter, who may inadvertently be in breach of their own contract with the hiring organisation as a result.
As a recruiter, and the party in the contractual chain that sits between contractor and end client, you have certain obligations towards end clients that must be fulfilled.
One of the obligations of a recruitment agency is to ensure that each contractor they engage on behalf of an end client meets the specified insurance requirements of that end client. Failure to meet this obligation could result in the liability and the error/omission of the contractor becoming the responsibility of the recruiter.
Not only is this detrimental to the contractor who may still be required to defend themselves during legal proceedings, but also to the recruiters that are failing to meet their obligations to their end clients. Recruitment agencies must offer assurances to end clients that workers engaged have sufficient insurance in place.
In many cases we see that recruitment agencies don’t have measures in place to see that this cover is correct and maintained.
Contractor Policy Check isn’t designed to catch out contractors. It’s designed as a safety net, an extra layer of protection that ensures that contractors aren’t unsure or misinformed about their business insurance needs, and act as evidence of suitable due diligence. This then means that recruiters can be sure that they’ve met their obligations to their end clients.
We found through use of Contractor Policy Check that 20% of contractors didn’t have the right kind of cover in place, whether this related to the coverage of the policy or the level of indemnity purchased. Contractor Policy Check has helped a number of recruitment agencies by identifying and addressing gaps in policy coverage for the individual contractors they’ve engaged.
In essence, we work with a recruiter or hiring organisation to establish insurance requirements, before going on to collect policy information directly from the worker on their behalf.
Following this, a series of checks are carried out on the policy to ascertain levels of cover and identify the presence of any red flags which may suggest inadequate cover, or fraudulent documents.
A report is then produced confirming all key insurance details, which can be used to evidence utmost due diligence. Crucially, Policy Check will maintain records, and ensure contractors provide up to date policy documents once their initial policy has expired.
Sam Cox, Commercial Director at Qdos notes that “The CPC service removes a significant administrative burden from recruiters and provides surety around contractor insurance arrangements which may not be achievable without expert assistance. Combining the policy check with a contractor’s IR35 assessment has also helped a number of our clients streamline their onboarding processes, and free up considerable time for internal teams, allowing them to focus on income generation.”
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