Subcontracting in UKs Security Industry and the risks

Subcontracting involves engaging an outside company or individual to satisfy specific parts of a contract. In other words, through subcontracting, a security company employs another company or individual to provide the number of security guards committed on contract to the client. At first, this practice may seem appropriate given the circumstances; after all, even the best security companies in the UK cannot possibly have adequate people resources in every corner of the country. However, just like any managerial strategy, subcontracting comes with risks that the clients are often unaware of. 

Reduced wages 

For a client concerned about fair work and fair pay, the most significant risk subcontracting presents is a reduction in wages for the security officer in the field. Consider this; a client engages a security company, 'Company-A', to provide two security operatives at their premises in Lundy Island. The client agrees to pay £14 per hour for each security operative. These security officers must be SIA licenced, BS7858 vetted, and professional. Company-A does not have such officers in Lundy; however, they have previously worked with 'Company-B', who has a presence in Lundy. So, Company-A pays Company-B £2 per hour for each security officer and subcontracts them. Before paying security officers in Lundy, Company-A deducts a commission of £3. Therefore, the final wage these security officers receive is £9 per hour, as opposed to £11 per hour had there been no subcontract. 

With each subcontract, the principal company (the one that signs a contract with the client) will have to pay a commission to meet the contract requirements. This has a cascading effect on the security officer's wages.

Limited Due-Diligence and compliance issues

An exhaustive due diligence process is required before engaging any security officer. These include SIA licence checks and BS7858 vetting. Without these checks, there is no way of knowing if the 'security officer' engaged can legally work in the UK's security industry. In the case of subcontracting, the client may be briefed about the in-depth due-diligence process Company A conducts for each of its officers; however, the client may not be informed about the quality of the screening process conducted by Company B. 

Consequences are severe for employing individuals who do not have a right to work in the UK, with a civil penalty of up to £20,000 for each illegal worker. Besides financial implications, an unlicenced security officer may pose a risk to the community they operate in and the client's reputation. 

Wage responsibility and ownership  

Ownership of responsibilities is simple and straightforward when only two parties are involved in a contract, the client and the security company. The client is responsible for expressing their requirements clearly and agreeing on the wages and payment schedules. The security company is responsible for understanding and agreeing to satisfy the client's requirements and taking ownership of the legal requirements for engaging security operatives. In the instance of a subcontract, commonly, the client does not sign a contract with the subcontracted company and, therefore, cannot pursue them in case there is an undesired occurrence. Furthermore, the principal company may pin the responsibility on the subcontracted company. This back and forth creates chaos for all involved. 

How to avoid the chaos 

Subcontracting is a common practice in UK's security industry, and if executed properly (which is rare), it can assist in reasonably facilitating the client, the security company, and the security officers. However, the risks are substantial and warrant careful consideration backed up by legally binding black and white. Here are elements that can ensure subcontracting is fair for all parties involved. 

1. Put a 'Subcontracting clause in the principal contract' - Clients should ensure the contract with any security company has a subcontracting clause mentioned in the agreement and that the terms and conditions are appropriate. This is not to encourage subcontracting; it is a legal measure to ensure in case subcontracting is done, the terms, responsibilities and expectations are formally agreed upon between the client and primary security company. 
    
2. Agreement on fair wages – While signing a contract with any security company, there needs to be a formal agreement between the client and the principal security company regarding the actual wages paid to the security officers in the field. 
    
3. Responsibility for due diligence – There needs to be a clear understanding between the client and the principal security company regarding due diligence. If subcontracting is employed, the principal security company should ensure all due diligence steps are taken before sending security officers in the field.

Contracting EarnFlex (Ltd) 

We understand subcontracting has more risks than advantages. As an industry-leading front-line resource provider, our top two priorities are to ensure clients' requirements are satisfied, and our people resources receive fair payment for their service. Reach out to us today, and let us discuss how we can assist you with fairly paid professional security operatives across the UK.