Managing Subcontractors
When you put a subbie on your job, their work is your reputation and their gaps are your cost. Here's what to check before they start, what belongs in the agreement, and how to run the job so the scope doesn't leak.
Bringing subbies on is how most trade businesses take work they couldn't otherwise take. It's also where a lot of margin quietly disappears — in the gap between what you promised your client and what your subbie thinks they're doing, in variations nobody wrote down, and in defects that surface after everyone's left site. The trade skill is rarely the problem. The management is. This guide covers what to verify before a subbie starts, what a subcontract agreement needs to cover, how to run the job, and how to pay in a way that keeps good subbies coming back.
Doing this job for a living? See job management in ServiceYak.
Check before they set foot on site
This is fifteen minutes of work that people skip because the subbie came recommended and starts Monday. It's the fifteen minutes that stops a defect becoming an uninsured claim.
| What to check | How |
|---|---|
| Trade licence, current and in the right class | Verify it on your state regulator's public register — not from a photo of a card |
| Public liability insurance | A current certificate of currency, with a limit appropriate to the work and the site |
| Their workers compensation or personal injury cover | Confirm what they carry, including for anyone they bring with them |
| Business details | Legal entity name, ABN, and who's actually contracting — the person on site isn't always the business you're engaging |
| Tickets for the work | White card, plus anything specific — heights, confined space, EWP, asbestos awareness |
| Their safety documents | SWMS for the high-risk work they're doing, before it starts rather than after |
| Evidence of the work | Photos, a site you can look at, or a builder who'll answer a phone call honestly |
Diarise the expiry dates for licences and certificates of currency the day you record them. Cover that lapses halfway through a job is the version of this problem nobody catches, because everyone checked once at the start.
Make sure the arrangement is genuinely subcontracting
Before the agreement, one thing needs to be settled: whether the arrangement is actually contracting. Whether someone is a contractor or an employee is a legal characterisation of the whole relationship, and it isn't determined by the ABN, the invoices or the words in the contract.
The risk grows quietly with long-running arrangements — the subbie who works only for you, on your roster, in your uniform, with your materials. Our guide on whether someone is a subcontractor or an employee covers what the question turns on and what's at stake. The short version: check the Fair Work Ombudsman and ATO guidance, check the workers compensation and payroll tax positions with your state authorities, and get advice on anything that isn't clear-cut.
What the agreement has to cover
A handshake is fine right up until there's money in dispute, at which point it's worth nothing. You don't need a thirty-page document — you need the arguments settled in advance, in writing, before anyone starts.
- Scope, in detail, with the exclusions written down. The exclusions do more work than the inclusions. "Supply and install as per drawing" leaves out who's cutting the penetrations and who's making good.
- Price basis — lump sum, rate, or day rate — and how variations get priced and approved before the work happens.
- Program — start, finish, and what happens if the site isn't ready for them or they're not ready for you.
- Who supplies what — materials, plant, consumables, access equipment, waste removal, site amenities.
- Site rules and safety — induction, SWMS, PPE, your rules on subbies bringing their own people on.
- Defects — what happens if something's wrong, how long they're on the hook, and how they'll be called back.
- Insurance — what they must hold and maintain for the duration.
- Payment — the amount, the terms, how they claim, and what has to be with the claim.
- What flows down from your head contract. If your client's contract binds you to a program, a standard or a set of site rules, your subbie needs to be bound to the same thing.
Construction work in every Australian state and territory is covered by security of payment legislation, which sets rules about payment claims, timeframes and responses — and restricts some clauses that appear in older subcontract templates, including "pay when paid" arrangements. Don't copy payment clauses out of a template you found online. Get your subcontract terms checked once by someone who knows the legislation in your state, and reuse them.
Where the money actually leaks
Almost every loss on subcontracted work comes from the same place: the gap between what you promised your client and what your subbie priced. You carry that gap. Three habits close most of it:
- Give them everything before they price. Drawings, specification, site conditions, access constraints, the program, and the standard your client is expecting. A subbie who prices off a phone description will price the easy version of the job.
- Reconcile their scope against yours, line by line. Read their quote next to your client scope and find what neither of you has covered. It takes twenty minutes and it's the highest-value twenty minutes on the job.
- Approve variations in writing before the work happens. Both directions — theirs to you, and yours to your client. A variation agreed verbally on site is a claim you'll be arguing about in six weeks with no way to win it.
Our guide on writing a scope of work covers how to write the client-side scope so the gap is smaller to begin with.
Running the job
A subbie is running their own business, so you're not managing them the way you'd manage an employee. What you're managing is the information, the sequence and the standard.
- One point of contact. Contradictory instructions from two people on your side is the fastest way to a variation claim and a bad relationship.
- Tell them the priority and why. Sequence matters more than effort on a job with several trades on it, and they can't see your program from where they're standing.
- Give them the job information, not just the address. Access, keys, parking, the client's expectations, what happened last visit.
- Photos before anything gets covered. Once it's behind a wall or under a slab, the photo is the only evidence anyone has.
- Raise defects while they're still on site. A snag list issued after demobilisation is a negotiation. The same snag raised on the day is a five-minute fix.
- Your safety duties don't transfer. Engaging a subcontractor does not hand off your work health and safety obligations — inductions, SWMS for high-risk work and site rules are still yours to manage. Our SWMS guide covers the paperwork side.
Paying them — the cheapest retention tool you have
Good subbies choose who they work for, and they choose on how they get paid at least as much as on the rate. In a trade where late payment is the norm, being the builder who pays on the day is worth real money in priority, availability and price.
- Pay to the agreed terms, every time. Reliability beats generosity — a subbie who knows exactly when the money lands can run their own business around you.
- Tell them what a claim needs — job reference, breakdown, approved variations attached, photos if required — so nothing sits in your tray waiting for information.
- Don't use your subbies as a bank. Funding your own cash flow gap out of their payment terms is how you end up with the subbies nobody else wants.
- Query things quickly. If an invoice looks wrong, say so within days. Silence followed by a deduction two months later ends the relationship.
- Look after the good ones. Steady work, honest programs and prompt payment will get you a better subbie than a higher rate will.
ServiceYak keeps subcontracted work on the same job record as everything else — scope, photos, site notes, variations and what's been claimed — so when a subbie's invoice arrives you can check it against what was actually agreed and done, rather than against what you remember discussing on site.
Frequently asked questions
What should I check before hiring a subcontractor?
Their trade licence on the state regulator's register, a current certificate of currency for public liability, what injury cover they carry for themselves and anyone they bring, the legal entity and ABN you're actually contracting with, the tickets the work requires, and their SWMS for any high-risk work. Diarise the expiry dates rather than checking once at the start.
Do I need a written subcontractor agreement?
Yes, and it doesn't need to be long. Scope with exclusions, price basis and how variations get approved, program, who supplies what, site and safety rules, defects, insurance and payment terms will settle almost every dispute that arises. Have your terms checked once by someone who knows the security of payment legislation in your state, then reuse them.
Can I use a pay-when-paid clause with my subbies?
Be careful — security of payment legislation applies to construction work in every Australian state and territory and restricts clauses that make payment to a subcontractor conditional on you being paid. Older subcontract templates still contain them. Get your payment terms reviewed against the legislation in your state rather than copying a clause that may not be enforceable.
Am I responsible for a subcontractor's safety on my site?
Engaging a subcontractor doesn't hand off your work health and safety duties. You still have obligations around the site, the induction, and coordinating with other duty holders. Get their SWMS before high-risk work starts, induct them properly, and record that you did — and check your specific obligations with your state's work health and safety regulator.
How do I stop scope disputes with subbies?
Give them the full information before they price — drawings, specification, site conditions, program and the standard expected — then read their quote against your client scope and find what neither covers. After that, approve every variation in writing before the work happens, in both directions. Most subcontract losses come from that gap rather than from bad work.