What happens after FIL makes these remarks? Do you challenge his attitude?
"Good luck keeping him out of the water."
"No, that's your job since you are watching him. Should I get a sitter instead?"
"It's 3pm he won't get burnt"
"It'll take 2 minutes. Stop complaining please."
"Please don't lift him up by his arms."
<lifts him>
"FIL I don't want you to carry him if you can't lift him from the waist. Hold his hand instead please."
I disagree, the first two suggestions are rude, and if you're that upset, you should, just end the arrangement. If you don't feel your child is safe with them, or if the relationship just isn't working, you can definitely arrange other care and tell them that it wasn't working for you. Or you can express the same thing more nicely, but still firmly.
"Good luck keeping him out of the water."
Our rule is that he needs to stay out of the water, and we need you to follow that.
"It's 3pm he won't get burnt"
I understand that you think it isn't necessary, and I'm not going to debate the rights and wrongs of the issue. Even if you are correct, our rule is that he needs to wear sunscreen.
"Please don't lift him up by his arms."
<lifts him>