Employers’ liability insurance – don’t get caught out!

Whatever the line of work, all small businesses will carry an element of risk which could affect its staff

What is employers’ liability insurance?

Employers’ liability (EL) insurance is compulsory insurance for most employers in the UK (under the Employers’ Liability Act 1969). It is to cover injury or sickness to an employee as a result of workplace conditions.

The insurance covers compensation and legal fees for every employee, whether they are full or part-time, working from home or temporarily. The bottom line is if they are working for you in some capacity, you’re required by law to cover them.

You will need to purchase employers’ liability insurance as soon as you take on your first employee. You can get help from an insurance broker to do this via the British Insurance Brokers’ Association (BIBA).

You must also be covered for at least £5 million and have your EL certificate displayed in the workplace or have it ready to produce to an inspector – otherwise, you could be fined £1,000.

Previous EL records/certificates should never be disposed of as claims can arise a long time later due to various diseases, for example, taking a long time to develop.

According to the gov.uk website, a company can be fined up to £2,500 for every day they are found to not be properly insured.

How do you purchase employers’ liability insurance?

Employers’ liability insurance is not often bought as a standalone policy. It is generally combined with a public liability (PL) insurance policy.

While employers’ liability insurance covers anyone working for the business, public liability insurance covers any injury to the public or any third party engaging with the business. Although PL is optional, it will be proven a valuable purchase if the business comes into contact with the public as it will cover any claims made by the public who have been negatively affected by business operations.

What is public liability insurance, and does it cover Covid-19 claims?Public liability insurance can cover your small business if a third party has an accident or injury. But does public liability insurance cover claims made against your business arising from Covid-19?

Your EL insurance policy premium will depend on the nature of the business, the number of employees and any previous claims.

Manage health & safety

An employer is responsible for the health and safety of its employees and is required by law to ensure they are protected while at work.

Minimise the risk of a liability claim by planning and implementing a coherent health and safety policy/strategy which include frequent risk assessments.

Managing health and safety in the workplaceWhat are your responsibilities as a small business owner when it comes to health and safety? Donna Obstfeld of DOHR explains

Additionally, the HSE perform random inspections to ensure that the working area is safe and complies with regulations. Not only will the health and safety of the business be inspected, they will also request a valid EL certificate – which should always be visible to employees. It can be displayed in an electronic format.

Employers’ liability insurance exemptions

There are some exceptions. These include most public organisations such as government departments and agencies, local authorities, police authorities and nationalised industries and health service bodies.

Sole traders with no employees and employers taking on only close family members (and which is not a limited company) are also exempt. Sole traders with any work experience students and voluntary/unpaid ‘helpers’, however, will be classed as an employee and employers’ liability insurance will be required.

If you think your business may be exempt, you can check on the Health and Safety Executive (HSE) website, here.

The purpose of this guide is to give an understanding. It is not a legal interpretation of the Employers’ Liability Act and has no formal legal status.

Find employers’ liability insurance now

Now that we’ve examined why employers’ liability insurance might be useful for your business, you may have realised you want to get protection.

Why not use our free tool to find a suitable provider for your needs.

Simply fill in our free quote-finding form, and answer a few questions about your business (it takes less than a minute).

Further resources

Employers’ Liability Insurance – What is it and do you need it? Here, we answer all of your questions around employers’ liability insurance – how much will you pay and what happens if you don’t have it?

Our Essential Guide to Small Business Insurance A look at what cover is out there and the key policies you should put in place.

Dom Walbanke

Dom Walbanke

Dom Walbanke is a feature writer for Growth Business and Small Business, focused on matters concerning start-ups and scale-ups. He has also been published in the Independent, FourFourTwo magazine and various...

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