How does employers' liability work?

What is employers’ liability?

It’s insurance cover for any business that employs someone. It is different from public liability insurance in that you are legally required to have it as a business owner.

If you don’t have cover, you can be fined up to £2,500 a day. For not displaying your insurance certificate or not producing it when requested by an inspector, you can be fined £1,000.

Insurance is required regardless of a business’ structure or size.

Businesses must also be covered to a value of at least £5 million.

Who does employers’ liability insurance cover?

If you employ anyone, you must be covered. This includes full- and part-time staff, volunteers, friends helping you out, trainees and apprentices.

Is insurance needed for sub-contractors?

This will depend on the precise nature of the working relationship you have with the contractor, and whether they are legally considered to be ‘employee’. You may need professional advice to determine whether you need cover for your sub-contractors.

Who is not covered under employers’ liability insurance?

If you only employ ‘close’ family members or people who are based overseas, you may not need employers’ liability insurance. However, it is still recommended. If you are unsure, it is recommended that you check with your insurer or a knowledgeable professional.

What does employers’ liability insurance cover?

Claims made against your business by current or former employees, which relate to an injury or illness they may have suffered as a result of working for you.

If the claim is successful, your insurance will pay the damages, compensation, and legal fees (subject to the exact terms of your policy).

What should an employer do if an employee makes a claim?

If you think an employee or former employee may have a claim against you, you should notify your insurance company as soon as possible and check the terms of your policy.

You may be entitled to legal representation. This will save you the time of dealing with case administration, and can ensure that the matter is resolved quickly and reasonably.