EMPLOYERS LIABILITY INSURANCE OVERVIEW

Employers’ liability insurance is designed to protect your business against the cost of compensation claims arising from employee illness or injury, which may of occurred whilst working for you.

It is a statutory legal requirement in the UK if your business employs one or more people, each day. Without Employers Liability insurance your company may be fined up to £2,500 per day.


FOR EMPLOYERS

Employers are responsible for the health and safety of their employees while they are at work. Unforeseen occurrences can lead to your employees being injured at work. Also current and former employees can become ill as a result of their work while in your employment whether they are caused on or off site.

If they believe you or your company are responsible they may seek compensation.  The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have at least the minimum level of insurance cover against these claims. The possible exception to this is where injuries and/or illness relates to motor accidents that occur while your employees are working for you, as this may be covered separately by your Motor Insurance.

Public liability insurance is different. It covers you for claims made against you by members of the public or other businesses, but not for claims by employees. While public liability insurance is generally voluntary, Employers’ Liability Insurance is compulsory. You can be fined if you do not hold a current employers’ liability insurance policy, which complies with the law.


 

Do I need Employers Liability Insurance?

If any of your employees are normally based in England, Scotland or Wales (including offshore installations or associated structures) you must have Employers’ Liability Insurance. However under current law in the UK you do not need employers’ liability insurance to cover any of your employees who are based abroad.

It is advisable to check whether the law in the country where they are based requires you to take out insurance or take any other measures to protect your employees.

Important: If any employees normally based abroad, spends more than 14 consecutive days in Great Britain, or more than seven days on an offshore installation, you will need Employers’ Liability Insurance for them under current laws in Great Britain. 


 

How much does Employers Liability Insurance cost?

The Employers’ Liability (Compulsory Insurance) Act 1969 states that must be insured for at least £5 million. However, it would be prudent to assess your risks and liabilities and consider whether you need more than £5 million. 

If your business is part of a group, a policy for employers’ liability insurance can be taken out for the group as a whole.


 

Do I require Employers Liability Insurance?

If your company employs people the answer is invariably, yes.

Only the following companies would be exempt from the Employers’ Liability (Compulsory Insurance) Act:*

  • Most public organisations including government departments and agencies, local authorities, police authorities and nationalised industries;
     
  • Health service bodies, including National Health Service trusts, health authorities, primary care trusts and Scottish health boards;
     
  • Family businesses, i.e. if all of your employees are closely related to you, such as husband, wife, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister). However, this exemption does not apply to family businesses which are incorporated as limited companies;
     
  • Companies employing only their owner where that employee also owns 50% or more of the issued share capital in the company.
     
  • Some other organisations which are financed through public funds, such as passenger transport executives and magistrates’ courts committees;

* Further exemptions from the need to have employers’ liability insurance 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. Health and Safety Executive Employers’ Liability (Compulsory Insurance) Act 1969 Page 4 of 6


 

What happens if I don't have Employers Liability Insurance?

The law on Employers Liability Insurance is enforced by, ‘The Health and Safety Executive’ (HSE). HSE inspectors can check that you have employers’ liability insurance with an approved insurer for at least £5 million. They may ask to see your certificate of insurance and other insurance details. You can be fined up to £2500 for each and every day you are without this statutory insurance.

You can also be fined up to £1000 if you do not display the Certificate of Insurance or refuse to make it available to HSE inspectors when they ask.