What is it?
Employers’ liability insurance protects you against claims made by your employees for injuries and illnesses they suffer at work. It pays any compensation you’re liable for and your legal defence costs, too.
Who needs it?
The policy wording uses a really broad definition of ‘employee’, it’s safe to say that most UK businesses probably do. To make sure as many people as possible are covered, ‘employees’ aren’t just limited to permanent staff under contract. They don’t even have to be paid.
If you are an employer you are legally obliged to have employers’ liability insurance. You can be fined up to £2,500 for every day you do not have appropriate insurance
Who does it cover?
Your policy should cover claims brought by:
- all permanent employees
- contract, casual and seasonal employees
- labour-only subcontractors
An employee is someone:
- who has National Insurance contributions and income tax deducted from their salary
- whose location, hours and conditions of their work are controlled by their employer
- who cannot be replaced by their employer if they are unable to work
Your policy should also cover claims brought by:
- temporary staff, including students and people on work placements for more information see the ABI’s guide to insurance and work placements
- volunteers, advisers, referees and marshals for more information on insurance and volunteers see voluntary organisations
Don’t fall into the easy trap of thinking that because they’re not really ‘your’ staff, they’re not really your responsibility. They are – and so is their welfare.
Who doesn’t require this insurance?
Apart from publicly funded organisations, the only businesses that don’t need employers’ liability insurance are:
- Companies where the owner is the sole employee, owning 50% or more of the issued share capital.
- Family businesses notincorporated as limited companies where all employees are closely related to the business owner (for example father, son, brother, sister, husband, wife etc).
How much cover do I need?
A minimum of £5m for each claim. You’ll find most insurers only offer £10m.
What happens if I don’t have it?
The Health and Safety Executive (HSE) enforces the law on employers’ liability. If a health and safety officer comes knocking, you could be fined £2,500 for every day you should’ve had cover but didn’t, and £1,000 for not displaying your insurance certificate.
It’s likely you’ll be given a few days’ grace to sort your policy rather than fined there and then. But it’s best not to chance it, particularly when cover costs relatively cheaply in comparison.
Anything else I need to know?
When you obtain your policy documents, place your employers’ liability certificate in an easily-noticed spot on your office wall. If you don’t have a wall, you can store it electronically. Just make sure your employees know how to access it.
Employee claims for injury or illness
If you are an employee and you have suffered an injury at work or become ill as a result of your job, you should speak to your employer who will contact their insurer about making a claim.
If the company you worked for has gone out of business you may still be able to make a claim for compensation directly through the company’s insurer. You can trace your former employer’s insurance provider through the Employers’ Liability Tracing Office (ELTO)
Not sure if any of this applies to you?
The HSE have a handy guide for employers. It’s everything you need to know about employers’ liability in one document. If that doesn’t cover it, please feel free to give us a call. We’re happy to talk you through it.