When is employers’ liability insurance required?

What is employers’ liability insurance?

It protects your business if a current or former employee brings a successful claim against you for injury or illness suffered as a result of working for you.

Which employers need to have employers’ liability insurance cover?

Any business that employs someone must have employers’ liability insurance of up to £5 million in cover, whether they are a limited company, a partnership, or a sole trader. It doesn’t matter what sector you’re in or how big your business is.

Is it a legal requirement?

It is a legal requirement if you employ anyone, with only a couple of exceptions. You must also display your insurance certificate somewhere that your employees can easily see it.

You can be fined up to £2,500 for every day that you don’t have cover. You can also be fined for not displaying the certificate or presenting it when requested by an inspector.

Who counts as an employee?

Almost anyone who works for you, whether they are part time, a volunteer or a trainee. It doesn’t matter whether a written contract is in place between you.

In some cases, sub-contractors will be considered ‘employees’ under the law. However, this will depend on how much freedom they have as to how or where they work, as well as how they actually do their job.

It is not always clear whether a sub-contractor is really your employee. Don’t assume that they are not. Always take professional advice if you’re not sure.

What are the exceptions?

If you only employ ‘close’ family members or people who work overseas, you may not need employers’ liability insurance. However, it is still recommended. Again, it is important not to assume that you are exempt. Be sure to check with a knowledgeable professional if you have any doubts.