What does employers' liability insurance protect me against?
The UK government introduced employers' liability insurance in 1969 to help protect staff members that might become ill or injured at work. Employers' liability insurance protects you and your business against compensation and legal costs should an employee makes a claim against your organisation.
It not only provides cover for your existing employees but also offers protection for claims made by prior employees (subject to employers’ liability insurance being in place when the past employees were working for you), who might become ill at a later date perhaps due to exposure to something in the workplace. It will be the responsibility of the employee to show that their illness is a direct result of their employment and that employees liability protection was in place at that time.
Who needs employers' liability insurance?
When your company begins to hire people to work for you - even if you're just hiring one person, you'll be legally required to take out employers' liability insurance.
You may need employers' liability insurance if you:
Your policy should include protection for student placements, temporary staff, advisors and volunteers.
Who counts as an "employee" for employers' liability cover?
In most situations, a person is an employee of a business if that business is registered with HMRC and deducts income tax and National Insurance contributions from their wages. This means that some kinds of subcontractors, such as labour-only subcontractors, will count as employees. However, legitimate independent contracts may not be deemed as employees.
It’s your responsibility to check with your provider that your employers' liability insurance covers all employees, paid or unpaid, who have hours with your business, including:
Do I need employers' liability cover for part-time workers and volunteers?
An employee doesn't have to be a full-time or permanent worker to require insurance protection. You'll still be legally required to take out employers' insurance for part-time workers unless you fall under one of the available exemptions. If you plan on hiring volunteers, then you should double-check with your insurer to make sure that your policy provides protection for those individuals.
Who is exempt from employers' liability cover?
Some businesses are "exempt" from paying for employers' liability cover. It's best to double-check your status with an expert, but some exempt organisations might include:
How much employers' liability cover do I need?
The cost and level of your employers' liability insurance will depend on what kind of work your business does and any risks your employees face. Costs can also change according to the level of cover you choose. As with many policies, your insurer will calculate your premium based on the risk that you will need to make a claim, and how much that claim will cost. If your business is particularly risky, then your insurance premium may be higher.
There's a good chance that your premiums will be high if employees work with dangerous materials, or in dangerous environments. It is possible, however, to reduce the risk of a claim, and potentially lower your employers' liability premiums by taking precautions to keep staff safe, such as ensuring workers are appropriately trained and using the correct safety equipment.
What are the penalties for lack of cover?
In the UK, employers' liability insurance is a legal requirement for all businesses with one or more employees, subject to specific exemptions. This means that you will be subject to penalties if you fail to take out the correct policy. For most companies, the cost of their employers' liability premiums is only a fraction of what they might expect to pay for neglecting to buy insurance.
The government can fine you up to £2,500 for every day spent without the correct employers' liability insurance in place.
Could claims come from former employees?
There are many businesses in which employees can suffer illnesses and injuries years after they have stopped working with a company. For instance, exposure to chemicals might lead to a disease that takes years to manifest. It is possible that a former employee will attempt to claim compensation from you a long time after they have terminated their contract.
Employers' liability insurance does cover claims made by previous employees if cover was in place at the time an individual was employed. However, it's important to make sure that you keep an accurate record of all documentation related to your insurance, even on accounts that have expired.
Do I need to show people my employers' liability certificate?
You are legally required to display your employers' liability certificate in a place where all your employees can see it. If you fail to do this, you will receive a fine. Additionally, you must be able to produce the certificate upon request if someone asks to see it. If you don't produce your certificate on request, the government can fine you for £1,000.
It is okay to display your employers' liability certificate digitally, such as on a website or your company's intranet. However, you will be responsible for making sure that your staff have access to that information and know where to find it.