Employers’ Liability Insurance

If you employ at least one other person in your business, it is very likely that you will need to have Employers’ Liability Insurance in place. It’s important to note that an employee includes anyone that works for you in a full–time or part–time capacity, as part of a work experience placement or apprenticeship or on a voluntary basis. However, if any of the following apply, you may be exempt:

• You do not have a limited company and only employ close family members, such as your spouse, civil partner, parents, grandparents, children, step family or half siblings.
• You employ workers such as cleaners or gardeners but they work for more than one organisation.
• You have only one employee who owns 50% or more of the business’ capital.
• You are self employed.
• Your business consists of equal partners with no other employees.

The situation is more complex when it comes to contractors and subcontractors, so it is best to seek advice if your business uses these workers.

The law says that you need at least £5 million of cover, although most insurers offer at least £10 million. This is because the £5 million also needs to cover legal fees and other costs, which can diminish the amount remaining to pay compensation and damages.

If you own a group of businesses, you can take out a group policy of £5 million rather than separate policies for each business. However, you may want to increase this limit for additional peace of mind.

Your insurance is in place to ensure that your employees receive the compensation and damages they are owed if they make a successful claim against you. Your insurer cannot refuse to make a payment because:

• You have not provided reasonable protection for your employees.
• You have not kept records or provided your insurer with those records.
• You have done something they told you not to do.
• You have not done something they told you to do.
• You have not met any legal requirement relating to the protection of your employees.

However, just because your insurer will need to pay out despite these conditions, this does not mean that you cannot fulfil your legal obligations. It is your responsibility as an employer to protect your workforce. If your insurer does not believe that you have fulfilled these obligations, they may take legal action to reclaim their costs.

While there are lots of websites and companies from whom you can buy Employers’ Liability Insurance, we recommend speaking to an independent insurance broker like ourselves for a quote. We will carefully assess your risks and recommend the most suitable policy for your needs.