How Do Subcontractor Statements Work?

Articles > Contracts

How Do Subcontractor Statements Work?

July 28, 2022         Alana Jonovski

A subcontractor statement is a written contract between a subcontractor and principal contractor. It is provided by a subcontractor and applies to specified periods of subcontracted work, most commonly performing work on a construction site. 

Purpose of Subcontractor Statements

Through subcontractor statements, subcontractors declare that they have met insurance premium payment, payroll tax payment and remuneration obligations. 

Subcontractor statements also give the subcontractor the right to work on the principal contractor’s project, be paid for working on the project and take full responsibility in case of non-compliance with the law.

What is included in a Subcontractor Statement?

A subcontractor statement may include a subcontractor agreeing to the following: 

  • You have paid and compensated your employed workers with appropriate insurance premiums.
  • You have paid your employees with their respective payroll taxes for their work.
  • You have paid remuneration, or the amount payable relevant to the employees of the project.

An example of a subcontractor statement is available on the NSW government website.

Do I need to provide/obtain a Subcontractor Statement?

A subcontractor statement must be submitted to the relevant principal contractor in order to comply with three laws; Workers Compensation Act 1987, Payroll Tax Act 2007, and the Industrial Relations Act 1996. 

As a principal contractor, you should make sure you obtain a subcontractor statement from the subcontractor that relates to the period for which work has been done, otherwise you may face liability for the subcontractor’s obligations. 

As a subcontractor, you should make sure the subcontractor statement you provide is trustworthy. If information you stated in the subcontractor statement is false, then you may be subject to an offence.

Consequences of failing to provide/obtain a Subcontractor Statement

Two main consequences of failing to provide a subcontractor statement are:

  • The principal contractor may be liable for the payment of the workers compensation premiums, payroll tax and wages due or payable by the subcontractor.
  • The principal contractor may withhold payment to a subcontractor until the subcontractor provides a subcontractor statement.

Key Takeaways

A subcontractor statement is a written contract provided by a subcontractor to a principal contractor that applies to specified periods of subcontracted work. It is a declaration that the subcontractor has met their insurance premium payment, payroll tax payment and remuneration obligations.

Should you require further legal advice please contact OpenLegal by filling in the form on this page or calling 1300 337 997.

About Alana Jonovski

Alana JonovskiAlana is a legal intern at OpenLegal whilst studying a Bachelor of Laws at Macquarie University. Alana’s key areas of interest include commercial law and property law.