Having Employers Liability Insurance in place is a legal requirement

Employers Liability Insurance covers you as an employer against claims made by employees who have suffered an injury or disease whilst working for you. Even the most trivial accident such as an employee tripping over a raised carpet could trigger an employers liability claim.

The Employers Liability (Compulsory Insurance) Act 1969 makes it compulsory for employers to have employers liability insurance in place.

There are penalties for not holding a current employers liability policy with fines up to £2,500 for each day for which you do not have insurance or you can be fined up to £1,000 if you do not display the employers liability certificate or if you refuse to make it available to the Health and Safety Executive inspectors when they visit.

To help protect your business, Employers Liability insurance can also be bought with our Public Liability Insurance. You can read more about Public Liability Insurance here

Frequently Asked Questions

How much employers liability insurance do I need?

You must be insured for at least £5 million. However, it must be considered whether your risks and liabilities require cover of more than £5 million. Most insurers offer cover of at least £10 million as standard.

What can determine the cost of your premium?

• The nature of your business;
• The number of people you employ;
• Previous claims history

Do I need to tell my employees that I have employers liability insurance?

When you take out or renew a policy your insurer issues you with a certificate of employers liability insurance. This states the minimum level of cover, whether any companies are covered by the policy and must be displayed at your place of work.

As of 1 October 2008, employers can display their employers liability insurance certificate electronically, subject to employers ensuring their employees know where and how to gain reasonable access.

Does the law apply to me?

The following paragraphs may give you some indication as to whether or not someone is considered an employee under the Employers’ Liability (Compulsory Insurance) Act 1969. Remember, the responsibility lies with you to satisfy the status of persons employed by you and if in any doubt you must seek legal advice.

Who does your policy cover?

• Permanent employees
• Contractual, casual and seasonal employees
• Labour only subcontractors
• Temporary staff
• Volunteers

Working out employment status for an employee

Although each case is considered on its own merits, below are some essential elements that must be satisfied when working out the employment status of an employee.

• The company deducts tax and national insurance contributions from their wages
• The location, hours and conditions of their work are controlled by their employer
• An employee cannot send someone else to do their work
• The company provides the materials, tools and equipment for their work
• The company’s dismissal and disciplinary statutory grievance procedures apply
• An employee works at the company’s premises or at an address specified by the business

Employees are also able to claim for unfair dismissal, are entitled to redundancy payments, have various family leave rights including the right to flexible working and parental and paternity leave.

Exempt Businesses

Some businesses are not required to have employers liability insurance in place, including the following:

• Companies that have no employees
• Family businesses that employ only family members; this exemption does not apply to family businesses trading as limited companies
• Companies employing only their owner where that employee also owns 50% or more of the issued share capital
• Most public organisations including government departments and agencies, local authorities and primary care trusts

Who else is exempt?

• Anyone who does not work for you exclusively (for example, if they’re operating as an independent contractor)
• They are in business for their own personal benefit
• They can employ a substitute when they are unable to do the work themselves
• They supply most of the equipment and materials they need to do the job
• If you do not deduct income tax or national insurance. However, even if someone is self employed for tax purposes they may be classed as an employee for other reasons and you may still need employers liability insurance to cover them.

Further exemptions are listed at section (3) (1) (a) and section (3) (1) (b) of the Employers’ Liability (Compulsory Insurance) Act 1969 and Schedule 2 to the 1998 Regulations.

Should I retain copies of certificates of my employers liability insurances that have expired?

You need to retain copies of your employers liability certificates for at least 40 years (for policies in force since 1998). Some diseases can appear some decades later after exposure to their cause and former or current employees could claim compensation a long time after they have stopped working for you.

How do I reduce my claim risk?

Managing health and safety is an integral part of managing your business. Carrying out regular risk assessments and a proactive approach to health and safety regulations will most certainly reduce claims.