Application of health and safety legislation and Employers Liability Compulsory Insurance (ELCI) to agricultural machinery rings

SIM 01/2001/02

Open Government Status

Fully Open

Target Audience

FOD Inspectors

Summary

This guidance advises inspectors of the responsibilities under health and safety legislation in relation to transactions between members of agricultural machinery rings and the responsibilities of the rings themselves.

Most machinery rings also offer other commercial services directly to their members. These other services are not the subject of this guide and should be considered as any other commercial undertaking.

Introduction

Machinery rings were set up as a form of agricultural cooperative to provide a means for farmers and other agricultural businesses to reduce their costs and improve their efficiencies. They are open to any business offering or seeking (demanding) services broadly related to agriculture from farmers, contractors and self employed workers to hire companies, consultants and training providers.

The main function of a machinery ring is to act as a management broker, putting members who can provide a service or do work with their equipment or labour (Suppliers) in touch with members who require work to be done (Demanders).

Many rings now offer members a wide range of additional services such as commodity and fuel supplies, machinery hire, business services and training. For this reason, it is important to establish the exact nature of the undertaking with a member specific to the activity being considered.

For most transactions between ring members  the responsibilities for health and safety and compulsory insurances (where relevant) lie between the  members transacting directly with each other. The machinery ring that brokers the transaction usually has only limited duties in relation to that activity.  However, because of the additional services that rings offer they may have  some duties in relation to these roles, for example as an employer, a hirer of machinery, supplier of goods or as an employment agency.

Action

If enforcement is under consideration in relation to machinery safety, inspectors should treat the Supplier member as being a 'hirer out' of machinery.

If enforcement is under consideration in relation to the health and safety of labour provided, the duties on ring members will vary according to the level of control exercised by either party has. ie A Demander's duties differ from an employer's duties to those of any employer/self employed person towards persons working on his/her premises, where they are not his/her employees.  If the Supplier has supplied a person to operate machinery then they may have the duties of an employer in relation to the machine operator.

Further guidance on specific examples is given in Appendix 1.

Background

How machinery rings are organised

The Machinery Ring Association of England and Wales  and the Scottish Machinery Ring Association are the umbrella bodies that represent the interests of machinery rings throughout Great Britain.

• Most rings are limited liability Industrial and Provident Societies registered under the Industrial and Provident Societies Act 1965. They are therefore legal entities in their own right..
• Membership is not limited to farmers and can include contractors and other rural businesses..
• Rings have their own full time staff for administrative purposes but generally have no employees or machinery of their own for hire.
• Rings do not handle any of the machinery involved in the transactions they broker between members.
• Some rings have subsidiary companies which employ staff for hire and these should be treated simply as distinct and separate employment agencies and so are not covered by this guidance.

The rings facilitate the transfer of machinery and services between members (termed the Demander and the Supplier) which include:

• the hire of plant only;
• the hire of plant with an operator/labour;
• the hire of labour only.

It is possible that some rings also deal in commodities.

A member wanting a service will contact his/her ring which will inform them of a Supplier and advise a guide price; the members then negotiate the deal themselves. The ring charges a commission to each member for the service and carries out the invoicing for the service. Members are hiring in plant/services owned by other members, not owned by the ring.

The following is the current advice from the Legal Adviser's Office in relation to hiring out machinery and labour via agricultural machinery rings.

General duties of machinery rings under the Health and Safety at Work Etc Act 1974 (HSWA)

As a minimum, most machinery rings employ administrative staff, making it an employer within the meaning of HSWA. Along with the general duties to its employees under Section 2 of the Act, it will also have duties to non-employees under Section 3. It is therefore possible for circumstances to arise in which a machinery ring may breach its Section 3 duties in relation to a member.

An example of such a breach might be where a ring has put a Demander in touch with a Supplier whose equipment it had reason to believe was unsafe without first taking reasonable steps to ascertain that the equipment was in fact safe before it is supplied. Machinery rings do usually try to deal with this kind of situation in their terms and conditions by highlighting the onus on suppliers and demanders to ensure the safety of their arrangements, but that may not always be enough to discharge any duties imposed on the ring itself.

Examples of these responsibilities in practice are given in Appendix 1.

Training and certification standards of persons hired out

Responsibilities under PUWER depend on whether the person "hired out" is considered to be employed or self-employed for the particular contract. The other party to the contract can also have general duties under Health and Safety at Work etc Act.

The ring does not have direct responsibilities for training and certification standards under these regulations, but again should make clear rules for its members on training requirements. It is then up to the individuals concerned on each occasion to check the experience/training of the operator involved before letting his/her services out or receiving those services in.

Requirement for Employers Liability Compulsory Insurance (ELCI)

The Employers Liability Compulsory Insurance Act requires an 'employer' to carry ELCI for any employee who works for them.

Any machinery ring that employs staff (and most employ administrative staff/managers at least) are required to have ELCI cover in relation to those employees. Insurers require any employer seeking insurance with them to declare all the business activities it carries out, in order to ensure that all that the correct level of cover is in place and the risks are properly understood.

Under the varied circumstances for transactions between machinery ring members  it may be difficult to determine the employment status of a person undertaking work for a Demander and therefore which party has a duty, if any, under ELCI. Depending on the circumstances of the transaction, it is possible for the person either to be an employee of the Demander for the duration of the work, or to remain an employee of the Supplier who provided them (eg for operating machinery or labouring). It is also possible that the person is a ring member in their own right and is therefore acting in a self-employed capacity.  For this reason employment status should not be presumed.

Inspectors should check advice in leaflets HSE40 (rev4) Employers' Liability (Compulsory Insurance) Act 1969: a brief guide for employers and HSE39 (rev2) Employers' Liability (Compulsory Insurance) Act 1969: a brief guide for workers for guidance.  These set out a list of factors which indicate whether a relationship is likely to be an employment relationship (requiring ELCI) or a contract for services (ie self-employed contractor relationship) which does not require ELCI.

Insurance companies may have their own view of whether ELCI is required for persons carrying out services for the Demander.  However inspectors must decide for themselves whether the requirements of the Employers Liability (Compulsory Insurance) Act 1969 are fulfilled.   If an individual has sought advice from his insurance company and been told that they do not need cover, the reasons given for that advice may be helpful to the inspector in determining the position – but will not be conclusive.

Contacts

For further advice please contact OPSTD Agriculture, Waste and Recycling Sector – Agriculture Safety Team, HSE Nottingham Office

Appendices

Appendix 1 - Examples of machinery and labour arrangements involving machinery rings