Contractor Management Guide

Some of our clients manage thousands of contractors across 100 plus sites. Imagine trying to store insurance certificates, work permits, SWMS, contract information on these companies and keep them up to date. Over 10,000 documents stored across a hundred site in filing cabinets? Impossible.

This post includes a Contractor Management Guide for employers on what their responsibility is in managing contractors according to Comcare, the ACT, and Safe Work Australia. Where employers engage contractors to perform work, effective contract management is essential to ensuring that they meet their OHS duties both to the contractors and to others, such as employees and third parties.

As an employer, you should be aware of issues which may affect your obligations, including:

• How a contractor is engaged and under what circumstances
• Where the contractor is working
• Whether you or the contractor control the site, or the type of work and manner in which it is carried out.

A systematic approach which integrates health and safety requirements into contract management will prevent injury and assist to fulfill health and safety obligations. This Contractor Management Guide aims to help you understand the importance of contract management to achieve positive OHS outcomes.

The guide suggests key points to consider before, during and after engaging a contract provider and contractor. It also encourages you to manage OHS through the contract to ensure positive workplace safety outcomes. It is not meant to be an exhaustive resource on contractor management. For the purpose of this guidance, a reference to a contract supervisor may be a reference to a manager, an HR practitioner, an OHS practitioner or an employee with specific responsibilities to oversee or monitor the performance of the contract.

This guidance: What’s in it and how can it help?

• Clarify your OHS duty of care obligations to contractors
• Clarify control issues
• Improve the communication you have with contractors
• Get the selection of contractors right
• Get contractors on site
• Manage contractors on site
• Evaluate health and safety outcomes.

By using this guide effectively, you can expect the following benefits:

• Improved understanding of OHS obligations in relation to contractors
• Improved understanding of the effectiveness of your organisation’s contract management systems and procedures
• A more productive and safe working environment for contractors, employees and third parties
• Access to further resources that may be useful in designing support tools, policies and procedures for your organisation
• Improved workplace safety culture

Contractors: Who is a Contractor?

The term ‘contractor’ is defined by the Act and as such, common law understandings do not apply. A contractor under the Act might be a Commonwealth contractor, a Commonwealth authority contractor or a non-Commonwealth licensee contractor (see section 9A of the Act). To be a contractor under the Act, a person must:

• Be a natural person (who is not an employee as defined in section 9 of the Act). A natural person is a human being and not a company.
• Perform work on Commonwealth, or non-Commonwealth licensee premises. Commonwealth and non-Commonwealth licensee premises are those owned or occupied by the Commonwealth, a Commonwealth authority or a non- Commonwealth licensee. A person will only be a contractor if they perform work on these premises on at least one occasion.
• Perform the work in connection with a contract between the Commonwealth, a Commonwealth authority or a non- Commonwealth licensee and that person or another person.
• The work performed by a contractor must be performed in connection with a contract (or arrangement) between the contractor themselves or another person (often the contractor’s employer), whether a natural person or company.
• Under the Act, the term ‘contract’ is broadly defined and includes any arrangement or understanding’. A contract need not be in writing and may also include a subcontract.
• Employer: Enters into a contract with contract provider for provision of services Contract provider: is a corporation, natural person (who may or may not be a contractor) or other legal entity who enters into contract Employer owes duties under section 16(4) Contractor: a natural person (who may be a contract provider) or more commonly an employee or sub-contractor of the contract provider
• Set out appropriate health and safety requirements and management arrangements in tender specification documents
  • Ensure a systematic approach to evaluating tendered OHS capabilities and resources is in place
  • Incorporate health and safety requirements into contractual documents, as well as details about how they need to be monitored
  • Identify high risk activities involved in the service provision under the contract assess the potential impact contractor activities place on your employees or members of the public
  • Make the contract provider aware of high risk activities
  • Check the contract provider can supply contractors who are competent and qualified to conduct the activities to be undertaken
  • Ensure the contract provider has an OHS management system in place that is individualized for the site and type of job required
  • Ensure the contract provider’s OHS management system is tailored to appropriately meet OHS compliance for the type of activities to be undertaken
  • Design a process to evaluate the contract provider’s performance.

Selection: Getting your selection right

Getting the selection of your contract provider right will assist in meeting your organisations OHS obligations and ensuring positive safety outcomes. This stage should be used as a screening process which enables both parties to identify expectations and establish working relationships. We suggest you take the following steps in the selection process:

1. Engagement: Getting Contractors On Site

To help meet your obligations as an employer, you should ensure that contractors are aware of your specific OHS requirements. You should also make sure contractors are appropriately inducted to work sites. Even if a contractor you engage frequently works in the Commonwealth OHS jurisdiction, your organisation will have individualized systems and procedures for managing its unique operational OHS risks. Including OHS requirements in a contract is important but these should be reinforced when contractors come on site. You can do this by having a contractor-specific induction process. Some items that might be covered in an induction process are:

• Contact points (supervisors, first aid officers, HSRs etc.)
• Specific hazard and incident reporting requirements
• Emergency procedures
• Specific work practices
• Access and exit requirements and arrangements
• Relevant policies (for example, health and safety management arrangements or HSMAs)”

2. Management: Monitoring Contractors

To assist you in meeting your OHS obligations as an employer, you should monitor contractors’ safety compliance after you engage them. You should ensure you are familiar with specific contract requirements and you are made aware of any issues on-site that impact on your employer’s OHS obligations. You could do this by requiring a contractor to promptly notify you of any incidents.The contract should provide the framework for managing contractors. All parties should be provided with a copy of the contract as well as summary documents that provide an overview of the contractor’s responsibilities.

It is important to have a competent contract supervisor to ensure that you are able to effectively oversee the terms of the contract, including those relating to OHS. Providing the contract supervisor with any necessary information, training and resources to manage the contract will help you meet your OHS obligations. This might include a range of supporting material to assist in the management of contractors, such as checklists and decision-making flowcharts. These materials should be aligned with the contract itself and linked to the accountabilities defined in the contract. Knowing who is accountable for what and by when should be clearly defined in the contract. Make sure these accountabilities are regularly monitored and reviewed as a priority using established reporting processes.

In most circumstances you, as the employer, will owe contractors duties under the Act. Contractors are owed duties in relation to matters over which the employer has, or would usually be expected to have control. Where this is the case, contractors should be treated and supervised in the same way as employees. Where an employer owes a duty of care to contractors under the Act, this duty is non-delegable and cannot be overridden by terms in the contract to the contrary.

3. Consultation and Representation: Contractor Management

Contractors or sub-contractors can be represented by a person or persons, including Health and Safety Representatives (HSRs), in respect to health and safety issues. However, such representation is not considered formal representation for the purposes of the Act, but a local arrangement between the employer, contractor and employees.

Where the person representing the contractors or sub-contractors on health and safety is an HSR under the Act, they are not exercising their powers under the Act, but are fulfilling a role provided for by the local arrangement. Issues that may be raised by contractors may also be issues that affect employees in the Designated Work Group, and in the latter instance, the HSR would be exercising their HSR powers. Comcare supports the active involvement of contractors in health and safety issues on sites controlled by employers under the Commonwealth OHS legislation.

It is good practice for work sites where employers under the Commonwealth OHS legislation work with employers under state and territory OHS legislation to establish mechanisms for co-operation and communication on health and safety matters. These mechanisms need to be clearly defined and should be communicated to contractors through, for example, induction sessions. The mechanisms should allow for contractors input when required.

4. Control: Who has Control Over the Activity?

As the employer, you owe duties of care to your contractors, in the same way you owe duties of care to your employees in relation to matters over which you have control (see section 16(4) of the Act). Who has control over an activity or matter affecting safety, and what level of control exists, are important to determining the duties you have.

Whether an employer has control over a relevant matter will need to be determining taking into account all the circumstances. Control over a particular activity or matter will be indicated by, for example, levels of contractual and practical control. These are likely to be different in every situation. Before developing a contract, consider specifying the matters you will control or seek to have to control over. Also consider the specialist tasks that will need contractors with specialist expertise.

You may wish to maintain control over some aspects of work procedures, but not seek to control the precise manner in which the specialist activity is performed. Does the contract provide you, as the employer, with a legal right to direct the contractor to perform work or a work activity in a certain manner? If so, and the particular activity or matter creates a risk to health and safety, it is likely that you will be found to have the requisite level of control such that the health and safety duties set out in sections 16(1) and 16(2) of the Act will apply in respect of a contractor.

5. Communication: Who, What, When, Where and How? Considerations

Communication is essential to effective contract management. You should ensure clear lines of communication are established between all relevant parties. You should also identify who needs to communicate with whom and when. This will help you, the contract provider and the contractor to meet their OHS obligations. Communication requirements or expectations may also be included in the contract. The following assumes you, the employer, takes on the role as the contract supervisor.

As with any work project, it is important to review the effectiveness of the contract management process at the end of each project undertaken. This will be partly reflected by the contract provider’s compliance with predetermined targets set out in the contract. Reviewing at these times is an opportunity to capture useful intelligence in relation to each contractor providers’ safety performance which can then be fed into a preferred contract provider list and be of assistance in maintaining and updating that list.

Follow all the steps in this Contractor Management Guide and you will be sure to have implemented effective Contractor Management practices.