Do I need employers' liability insurance if my staff are self-employed?

You may need insurance if you work in the construction industry and run your own business, especially if you have employees. As a result, it is important you know who counts as an employee and whether you need insurance for them.

What is employers’ liability insurance?

Employers’ liability insurance is a type of insurance that protects you and your business in the event a current or former employee successfully sues you for an injury or illness they suffered as a result of working for you.

It is a legal requirement to have employers’ liability insurance. You can be fined for every day you don’t have it.

When must I get employers’ liability insurance?

Employers’ liability insurance is a legal requirement for all businesses that employ someone, whether you’re a sole trader, partnership or limited company. It’s needed for:

• full- and part-time staff
• temporary staff
• apprentices
• volunteers
• people taking part in work experience or training schemes.

The only time you may not need it is if your employee is a family member or someone who is based abroad.

Do I need employers’ liability for my self-employed staff?

This will depend on the exact employment status of the person concerned, and whether you are hiring ‘labour-only’ or ‘bona-fide’ sub-contractors.

What is a ‘labour only’ contractor?

Sub-contractors who are ‘labour only’ work under your direction, and use your tools and materials. You will usually give them detailed instructions of what to do and supervise their work.

In these circumstances, they are legally considered to be an ‘employee’. You will need to get employers’ liability insurance for them.

What is a ‘bona fide’ sub-contractor?

A ‘bona fide’ sub-contractor works under their own direction and provides their own tools and materials.

If you hire bona fide sub-contractors, they are not directly employed by you. They should have their own liability insurance.

You should still check that they have the equivalent level of public liability insurance as you.

If you have any doubts about a worker’s employment status, bear in mind that they are more likely to be a bona fide sub-contractor if they are on a fixed-price contract (i.e. they get paid the same regardless of the time or materials needed to complete the project).

Other factors to look out for are:

• whether they set their own hours
• how, when and where they do the agreed work
• whether they work for other clients

If you are still in any doubt, check with your insurance company or accountant.