Working on a project may take more than one person to finish. Sometimes many tasks exist which need different people with different expertise to complete. An example of this is remodeling a home. Experts are needed to perform electrical, plumbing and carpentry tasks before the house can be finished. In order to do this, the homeowner will need to hire a contractor to oversee all the individual projects. In turn, the contractor will hire subcontractors to perform each individual task. There are many differences between contractors and subcontractors, including their roles, responsibilities and how they are paid.
Contractors are viewed differently from subcontractors by the person requesting the project. The employer will hire the contractor to complete a project. The contractor will not be hired as an employee but will enter into an agreement with the employer to perform one specific job. The contractor receives full payment once the project is finished from the employer. The employer discusses the project only with the contractor and brings any concerns directly to him.
In contrast, the subcontractor is hired by the contractor to perform one specific task for the overall project. The subcontractor's role is defined by a contract between him and the contractor. This contract identifies the tasks to be performed by the subcontractor and how he will be paid. The subcontractor can be an independent worker. He does not need to be an employee of the contractor. The subcontractor reports directly to the contractor for all issues which may arise during the job.
The job responsibilities differ between a subcontractor and contractor. A contractor is responsible for the entire project and every issue that arises in completing the job. He reports directly to the employer and answers all of the employer's questions. A subcontractor is only responsible for his specific task in the overall job. The subcontractor only takes responsibility for issues that arise with his specific task and he is answerable to the contractor.
Payment differs between a subcontractor and contractor. A contractor receives his payment directly from the employer. The payment terms are outlined in the contract and may come in installments or one payment when the project is completed. A subcontractor is paid directly by the contractor and his payment is due once his specific job is finished. The contract between the contractor and subcontractor may provide for installment payments.