Employers liability

Employers Liability, The Facts.

Nearly all businesses are required by law to have employers' liability insurance. This provides employers with the financial protection they need against those costly injury claims.

Why is employers' liability insurance required?

As an employer, it is your responsibility to ensure the health and safety of your staff; however if an employee suffers an injury at work, they might try to claim compensation if they believe you to be responsible.

Employers' liability insurance is designed to cover the cost of compensation and legal fees incurred from dealing with the claim. Remember accidents happen every day, so it is important you're appropriately insured.

Who really checks on employers' liability insurance?

Employers' liability law is enforced by the Health and Safety Executive (HSE). They will expect to see your certificate upon inspection and confirm it complies with HSE standards.

The fines for not having the valid insurance can reach up to £2,500 per day. You can also be fined £1,000 if you cannot display your certificate at their request.

How do my employees or the HSE know whether the company has employers' liability insurance?

You will be given a certificate of employers' liability insurance. According to the Employers' Liability (Amendment) Regulations 2008, this can now be displayed in electronic format, rather than being pinned to a notice board, as long as it is reasonably accessible to your employees.

What levels of cover are available and what do employers' liability laws demand?

The minimum level of cover demanded is £5 million. Most insurance policies however offer £10 million as standard. Although this may seem like an extremely large sum, you must consider that accidents often involve more than one member of staff. Legal representatives will also take into consideration the lifelong cost of care and lost wages when calculating damages.

Are any businesses given exemption by the Employers' Liability Act?

The following employers' do not need their own employers' liability insurance:

  • Public bodies such as government departments or local, police and health authorities.
  • Non-limited businesses employing only family members.
  • Sole traders and partnerships where their owners/employees owns at least 50% of the trading company.

I only use self-employed workers. Do I need employers' liability insurance?

The employers' liability insurance laws refer only to employees, however in practice this may mean people that you consider self-employed. Whatever their tax statuses or the nature of their contracts, the nature of your relationship and the amount of control you have over their work may determine whether the HSE consider them under your liability.

Things to consider when assessing the need for employers' liability insurance for someone who works for you include whether:

  • you make national insurance and income tax payments for them;
  • your company has to absorb any losses suffered connected to their work;
  • your company keeps any profit they generate- ignoring agreed commission or bonus schemes;
  • you have the same right to dictate the place and nature of their work, as you would expect from a normal employee;
  • you provide their materials and equipment;
  • they could employ someone to do the work if they are unavailable to work or if you require them to complete it (as you would an employee); or
  • they have a similar workload or conditions as one of your employees.

In most cases you will not need employers' liability insurance for volunteers or those who are:

  • unemployed people involved in training programmes;
  • students on work experience; or
  • unpaid, short-term interns.

It is important that you talk to your insurance company if you start to work with any volunteers or self-employed workers. They can help you stay compliant with the law and may even be able to add your volunteers/self-employed workers to your policy at no extra cost.

Where can I get more information about employers' liability insurance?

If you require further information on employers' liability insurance, you should speak to your local HSE office or the Department for Work and Pensions, both available online.

If you need independent legal advice regarding your company or the status of an employee, you should speak to a solicitor, a member of your local legal centre or the Citizens' Advice Bureau.

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