Sub-contractor

A sub-contractor is engaged to carry out a defined portion of work on a project. They operate as a separate business or as a self-employed individual - supplying their own tools and insurance, controlling how the work is executed within an agreed schedule, and submitting their own invoice on completion. This distinguishes them from a direct employee who is paid through payroll, works under continuous supervision, and whose costs are absorbed as an employment overhead.

Sub-contractors are used across construction, AV, lighting and electrical, and renewables wherever specialist capability is needed for a defined scope: a joinery contractor engaging a CNC machining business, an AV integrator bringing in a specialist programmer, or an electrical contractor using a certified fire detection firm on a multi-trade fit-out. The relationship is commercial, not employment-based.

In the United Kingdom, the Construction Industry Scheme (CIS) governs tax treatment for construction sub-contractors. In the United States, the IRS 1099 classification applies. Misclassifying an employee as a sub-contractor carries significant legal and financial risk in both markets, and the distinction is increasingly scrutinized by tax authorities.

Managing Sub-contractor Costs on Live Jobs

The three disciplines that prevent sub-contractor cost overruns are straightforward to implement but frequently skipped under deadline pressure:

Written booking confirmation before work starts - specifying scope, site dates, agreed rate (day rate or fixed price), and access requirements. A verbal agreement that becomes a cost dispute after completion is difficult to resolve without a written record.

Purchase order raised per sub-contractor per job - linking the cost to the job record before work begins. This ensures the cost is captured in the job budget rather than discovered as a surprise when the sub-contractor's invoice arrives after the customer invoice has already been sent.

Completion sign-off - brief written confirmation that the work was completed as agreed. This authorizes the invoice for payment and records that the deliverable was met.