I run a small consulting operation and I have taken on more clients than I can service on my own. There is a contractor who can I sub-contract the extra work out to, who will do the work in the same quality as if I did it myself.
Is it legal and ethical to do this without telling the client that their work is being sub-contracted out to someone else?
Do note that the quality of the work would be the same, and I would be overseeing all deliverables.
Depending on where you are in the world, you should check:
1) The contract you have with the client(s)
2) Your terms and conditions of doing business
3) Your client's terms and conditions of doing business
Assuming that there's nothing explicitly said in any of these documents, then it's up to you to do what you feel is right.
In my opinion, there is a difference between you taking a contract from a client, and having a contracted 'employee' doing some of that work without disclosing, and you getting a contract and subbing out the entire thing - which I feel you should definitely disclose.