Is it a legal requirement to have employers' liability insurance?
Does every business or tradesperson need employers’ liability insurance?
As soon as you employ someone, you are legally required to have employers’ liability insurance. You will also need to display your insurance certificate somewhere that is visible to and accessible by employees.
Who counts as an employee?
Anyone that works for you, including:
- full-time staff
- part-time staff
- trainees
- friends
- volunteers
- apprentices.
What about sub-contractors?
They may legally be considered ‘employees’ rather than self-employed. If they are classed as an ‘employee’ under the law, you will need cover.
For example, a labour-only sub-contractor may be classified as an employee if they:
- work under your direction
- use your equipment
- follow your instructions
This will mean that you need employers’ liability insurance in place.
If a sub-contractor is not an employee, it is likely that they will:
- work independently, under their own direction
- use their own tools and equipment.
If you’re in any doubt about the status of worker, you should check with your insurance company or a professional advisor.
Are there any exceptions to the requirement for employers’ liability?
You do not need employers’ liability insurance if you only employ close family members. However, this exception does not apply to incorporated bodies and limited companies.
Likewise, cover is not required if your employees are based abroad. However, you should check the law in the country where they are based to see if that requires you to have insurance.
Again, if you have any doubts or concerns, check with an expert first.
How much insurance cover is needed?
The law requires you to have minimum cover of £5 million. However, many polices typically provide cover up to £10 million.