Businesses breaking law over employers liability insurance

Nearly a million small businesses are unwittingly breaking the law by not having compulsory employers’ liability insurance cover in place – and penalties are severe

Nearly a million UK small businesses could be unwittingly breaking the law by not having employers’ liability insurance.

Employers’ liability insurance is compulsory if you employ staff, with a few exceptions, yet, according to Aviva, 17 per cent of small businesses do not have employers’ liability insurance. Given that the UK has 5.5m small-and-medium-sized businesses, that’s over 900,000 breaking the law.

And businesses found to be without employers’ liability cover can be fined £2,500 for every day they are not properly insured.

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

Plus you can be fined £1,000 a day if you do not display your EL certificate or refuse to make it available to inspectors when they ask.

Not only is having employers’ liability insurance compulsory but it’s clearly needed. According to the Association of British Insurers, each year insurers pay out nearly £2m settling employers’ liability claims.

That means employers claiming for when their staff are off work either because of physical or mental hurt.

How much does employers’ liability cost?

For an office employee, the average cost of employers’ liability insurance is £61. This rises significantly to £213 per employee if you’re carrying out physical work, such as construction, according to Statista.

The minimum level of employer’s liability cover required for a business is £5 million, which protects businesses and tradespeople against claims for compensation from existing and former employees who are injured or become ill as a result of working for you.

Firms employing close relatives and not a limited company or those where the owner is the sole employee and owns at least 50 per cent of the company’s issued share capital are however exempt.

More on employer’s liability insurance

Employers’ Liability Insurance explainedJudith Rutherford gives a summary of which businesses need to get Employers’ Liability Insurance and why they should be getting it

Small business insurance: What to look for in a policyIn this piece, we look at the variety of business insurance cover you should consider in your small company

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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