Outsourcing services is common practice, allowing companies to focus on their core business and rely on specialists for specific tasks. However, outsourcing does not transfer all the risks. On the contrary, the contracting company remains accountable to its clients, the authorities and, in many cases, the contractor’s own workers. This is why the importance of contractor approval cannot be underestimated.
In this article, we explain why approval is essential, which risks it helps to control, what Portuguese legislation says and how to make the process effective without turning it into heavy bureaucracy. We also present a practical example, a checklist and answers to frequently asked questions.
What is contractor approval
Approval is the process of checking a service provider before it starts work. Specifically, the contracting company confirms that the contractor meets legal, technical and safety requirements. For example, it confirms that the contractor’s social security and tax affairs are in order. It also checks for valid workplace accident insurance and the qualifications required for the activity. Finally, it confirms that the workers have adequate training and medical fitness.
Approval does not end with the first sign-off. Many documents have a limited validity period, so checks must continue throughout the contractual relationship.
Why approval is so important
The contracting company’s legal liability
In Portugal, the Labour Code makes the contracting company and the project owner jointly and severally liable for certain breaches committed by subcontractors working on their premises or under their responsibility, including payment of the resulting fines. In addition, Law no. 102/2009 requires companies sharing the same workplace to cooperate in risk prevention. Checking the contractor’s documentation is, therefore, also a form of legal protection.
Worker safety
Many serious accidents involve workers from external companies, who are less familiar with the premises and their specific risks. Ensuring that these workers have adequate training, medical fitness and equipment is, therefore, a direct prevention measure.
Quality and continuity of service
A contractor lacking technical capacity or resources, or facing financial problems, may miss deadlines, deliver a poor service or abandon the work. Approval makes it possible to assess the contractor’s real capacity before entrusting it with critical activities.
The contracting company’s reputation
A serious accident or illegal employment involving a subcontractor always affects the contracting company’s image. Approval also protects its reputation with clients, investors and the community.
Effective approval without excessive bureaucracy
The aim is not to request as many documents as possible, but the right ones. First, requirements should be proportionate to the risk of the service: a one-off delivery does not require the same as work at height. Second, instructions should be clear, with examples of what is accepted. In addition, a document management platform lets the contractor upload documents once, receive alerts before they expire and always know what is missing. In this way, approval becomes quick for everyone.
How to structure the approval process
A well-designed approval process usually follows five steps. First, the company defines requirements by type of contractor and service, involving the safety, procurement and legal departments. Next, it invites the contractor to register and upload the requested documents. Then, an internal team or a specialist service validates the documents against clear criteria and explains the reasons for any rejections. When everything is compliant, the contractor and its workers receive authorisation to start work. Finally, the platform tracks expiry dates and requests renewals automatically.
This process should be linked to other stages of the relationship with the contractor. For example, procurement should only award work to approved contractors, and access control should only admit authorised workers. In this way, approval stops being an isolated step and becomes a real filter across the entire chain.
Approval and data protection
Approval involves personal data of contractors’ workers, such as fitness certificates, training certificates and sometimes identity documents. Accordingly, the contracting company must comply with the GDPR: request only the data needed, inform data subjects, restrict access to validators and set retention periods. In particular, fitness certificates should only state whether the worker is fit, without clinical information. In this way, approval protects people without creating new risks to their privacy.
Indicators for monitoring approval
To know whether approval is working, it is worth tracking a few simple indicators. These include the average time from invitation to approval, the percentage of documents approved on first submission, the number of contractors with expired documents and entries refused due to missing documentation. Furthermore, analysing the most frequent reasons for rejection shows where instructions can be improved. With this data, management has an objective view of contractor risk and can act before problems arise.
Practical example: Subcontractor without valid insurance
Consider an industrial company that hires an assembly firm for a two-week job. During approval, the platform detects that the contractor’s workplace accident insurance policy expired the previous month. Instead of authorising entry, the company requests renewal. The contractor sorts out the situation in two days, and only then do the workers receive access authorisation. As a result, the company avoids a serious risk: in the event of an accident, the workers would have had no cover and the contracting company could have been held liable.
The relationship with contractors
Contractors should not see approval as a sign of mistrust, but as a guarantee that everyone works by the same rules. Hence the importance of communication. First, it is worth explaining the reasons for each requirement. Second, the company should set realistic deadlines and offer support with the first submissions. Contractors who keep their documentation up to date should also be recognised, for example with simpler renewal processes. In this way, approval strengthens trust and contributes to longer-lasting, more professional partnerships.
Contractor approval checklist
- Requirements defined by service type and risk level.
- Social security and tax affairs in order.
- Valid, comprehensive workplace accident insurance.
- Qualifications and certifications required for the activity.
- Worker training and medical fitness.
- Safety induction before work begins.
- Automatic renewal of documents with an expiry date.
Common mistakes to avoid
A frequent mistake is treating approval as a one-off act and forgetting document renewal. Another is requesting too many documents, which delays processes and drives away good suppliers. Finally, allowing informal exceptions under deadline pressure undermines the credibility of the whole system.
Frequently asked questions
Is approval mandatory?
There is no single procedure imposed by law, but several legal obligations make document checks essential to protect the company and the workers.
Should self-employed workers also be approved?
Yes. They must also show workplace accident insurance, up-to-date tax and social security status and training suited to their tasks.
How long should approval take?
With a platform and an organised contractor, it can be completed in a few days. It is therefore advisable to start the process well ahead of the planned start date of the work.
What should be done when a document expires during the work?
The platform should send an alert in advance. If the document is not renewed in time, the affected workers’ authorisation should be suspended until the situation is resolved, in line with the rules set out in the contract.
Who should validate the documents?
An internal team trained for the purpose or a specialist external service, always using criteria defined by the contracting company. The key is that the criteria are clear, documented and applied in the same way to all contractors.
Conclusion: The importance of contractor approval
The importance of contractor approval stems from a simple reality: companies that outsource remain exposed to legal, safety, quality and reputational risks. Approval makes it possible to control these risks preventively and continuously.
With proportionate requirements, clear instructions and a document management platform, the process becomes quick and effective. As a result, the company builds stronger partnerships and protects the people who work on its premises.
Read also: AISP-GEDOC: A benchmark in contractor approval and Document management platforms: Contractor approval.
To learn about the legal obligations when contracting services, see the Portuguese Working Conditions Authority (ACT).