Contractor due diligence refers to the investigations, judgments, and care that an employer or primary contractor can reasonably be expected to undertake, both before hiring a contractor and during the period of contracted work.
Due diligence typically requires the contracting party (the employer or prime contractor) to understand the legal safety requirements that the contract is subject to, to have up-to-date knowledge of workplace hazards and the contractor’s health and safety program, to conduct ongoing monitoring of the contractor to ensure compliance, and to engage in regular communication with the contractor.
Due diligence activity is a legal obligation. It is, therefore, necessary for owners and primary contractors who wish to protect themselves against liability due to an accident involving a contracted party.
Understanding Contractor Due Diligence
Contractor due diligence is used as a legal standard to ensure that owners or prime contractors are not able to avoid taking reasonable safety measures by signing away their safety obligations to subcontracted third parties or by claiming ignorance of unsafe activity by a contracted party. The due diligence standard is a particularly visible requirement of Canadian OHS law, under which a project owner always retains responsibility for safety on the worksite except in specific instances in which the primary contractor can be assigned to act as the responsible party instead.
A large amount of an employer’s due diligence obligations must be undertaken before any contractor is hired, including a primary contractor. These include the employer’s obligations to understand their duties according to legislation, to assess and understand the hazards the exist in the workplace, and to pre-qualify contractors based on their health and safety programs. This pre-hiring process is also the point at which the employer determines whether they will delegate responsibility for the project, and its associated safety obligations, to a prime contractor. Once the contractor(s) have been hired, the employer must communicate all risks, obligations, and procedures to the contracted parties before construction begins.
During both the pre-construction aspects of due diligence as well as the ongoing compliance monitoring and communication aspects that occur during the construction project itself, employers are required to document their due diligence activity in order to have a record to provide to courts and inspectors if necessary.
Source: Safeopedia, November 1, 2019