What Is A Bona Fide Subcontractor (BFSC)?

21/10/2025

10/21/2025

Professional Heavy Industry Engineer Worker Wearing Safety Uniform and Hard Hat, Using Tablet Computer. Serious Successful Female Industrial Specialist Walking in a Metal Manufacture Warehouse.

In the UK, there are several types of subcontractors; understanding their differences is crucial for compliance, insurance, and effective project management.

One key classification is the Bona Fide Subcontractor (BFSC). This guide will dig into what a Bona Fide Subcontractor is, how they differ from Labour Only Subcontractors (LOSC) and the implications for your business.

What Is A Bona Fide Subcontractor?

A Bona Fide Subcontractor is an independent contractor hired to perform a specific task or service within a larger project. They operate autonomously, supplying their own tools, materials and expertise. BFSCs are responsible for their own work quality, health and safety compliance and carry their own insurance. They typically invoice for their services upon completion of the agreed work.

Key Characteristics Of BFSCs:

Operate under their own direction without supervision from the main contractor.
Provide their own tools, equipment and materials.
Carry their own public liability and, if applicable, employers’ liability insurance.
Invoice for work completed, often under a fixed-price contract.
Responsible for their own health and safety assessments and compliance.

Related Reading: What Is Contractor Management? A Guide

How Do Bona Fide Subcontractors Differ From Labour-Only Subcontractors?

Understanding the difference between BFSCs and LOSCs is important as the classification impacts insurance responsibilities and legal obligations.

Criteria	Bona Fide Subcontractor (BFSC)	Labour Only Subcontractor (LOSC)
Supervision	Works independently	Works under the main contractor’s supervision
Tools and Materials	Provides own	Uses the main contractor’s supplies
Payment	Fixed-price contract	Paid hourly/daily/weekly
Insurance	Holds own insurance	Covered under the main contractor’s insurance
Health & Safety Compliance	Responsible for own	The main contractor is responsible
Employment Status	Self-employed	Considered an employee

What Insurance Does A Bona Fide Subcontractor Need?

Before hiring a Bona Fide Subcontractor (BFSC), verifying that they hold valid and adequate insurance is crucial. This typically includes Public Liability and if they employ others, Employers’ Liability Insurance. Always request a copy of their insurance certificates and check that the coverage is current and appropriate for the work being carried out.

Importantly, the policy should include an “indemnity to principal” clause. This ensures that the principal contractor is also protected if the subcontractor causes an incident that leads to a claim.

Free Contractors Compliance Checklist

This useful health and safety tool is a quick and easy way to help ensure all contractors arriving on-site have their compliance status checked.

Enter your details, and we’ll email you a free checklist that’s ready to use.

By submitting this form you confirm you are happy to be contacted by CHAS in accordance with our Privacy Policy

Best Practices For Working With BFSCs

If you’re going to be employing a Bona Fide Subcontractor, here are some best practices you should follow:

1. Use Detailed, Written Contracts

A formal written contract is extremely important when working with BFSCs. The agreement should clearly outline the scope of work, timelines, deliverables, payment terms and liabilities.

Unlike Labour Only Subcontractors (LOSCs), BFSCs operate independently, so it’s critical to avoid language or provisions that imply employer-style control (such as specifying exact working hours or task execution methods).

Well-drafted contracts help prevent disputes and support proper classification, reducing the risk of challenges from insurers, regulators or HMRC.

2. Ensure Health And Safety Responsibilities Are Clear

BFSCs are responsible for their own health and safety procedures, including risk assessments and method statements. As the principal contractor, however, you have a duty to coordinate health and safety on-site. You must ensure that the BFSC is competent and that its practices are compatible with your site’s overall safety management plan.

Conducting checks on their safety records and requesting evidence of qualifications or training (such as CSCS cards or Veriforce CHAS certification) can help verify their capability and commitment to safe working practices.

3. Conduct Regular Reviews And Keep Documents Up To Date

Your subcontractors should be reviewed regularly, especially as the nature of their work or your relationship with them evolves. For instance, if a BFSC begins to use your tools, work under direct supervision, or integrate into your team’s day-to-day operations, they may become a labour-only subcontractor.

Maintaining up-to-date records of contracts, insurance documentation, and communications can protect you if disputes or audits arise.

Legal And Financial Considerations When Working With BFSCs

While Bona Fide Subcontractors operate independently, principal contractors still carry significant legal and financial responsibilities when working with them. Misclassification or failing to understand the associated obligations can expose your business to substantial risks, from fines and invalid insurance claims to costly tax investigations.

Accurately identifying whether a subcontractor is a BFSC or a LOSC is critical. HMRC, the Health and Safety Executive (HSE) and insurance providers all use specific criteria to define employment and contractor status. If a subcontractor is treated as a BFSC but, in reality, works under your direct supervision, uses your tools and integrates into your workforce, they may legally be considered an LOSC or even an employee.

This kind of misclassification can result in backdated liabilities for PAYE, National Insurance contributions, holiday pay and pensions. In extreme cases, HMRC may investigate for tax avoidance, which could lead to penalties and reputational damage.

Penalties For Non-Compliance

Failing to meet your legal obligations when working with subcontractors can lead to serious financial and regulatory consequences. These risks are particularly high if you misclassify a subcontractor or fail to ensure adequate insurance and health and safety compliance.

For example, if a subcontractor should be covered by Employers’ Liability Insurance and you fail to arrange it, your business could face fines of up to £2,500 for every day the insurance is not in place.

Similarly, if a health and safety breach occurs, such as an accident involving a misclassified subcontractor, your business could be subject to an investigation by the Health and Safety Executive (HSE). If non-compliance is found, this could result in prosecution, significant fines, and reputational damage.

How Veriforce CHAS Helps To Mitigate Risk

At Veriforce CHAS, we support organisations in navigating the legal and financial challenges of subcontractor management. Through our certification and supply chain compliance services, you can:

Get access to our prequalified contractor list to ensure compliance and competency
Maintain up-to-date documentation across your supply chain
Reduce the risk of penalties and reputational damage from non-compliance

Ready To Strengthen Compliance And Reduce Subcontractor Risk?

Get in touch with Veriforce CHAS today to streamline your contractor management, verify BFSC compliance and safeguard your business from legal and financial exposure.