Employers’ liability insurance requirements

This is an important question and the answer depends on the structure of your business and whether you employ anyone.

Legal position:

Under the Employers' Liability (Compulsory Insurance) Act 1969 and the Employers' Liability (Compulsory Insurance) Regulations 1998, most employers in Great Britain are required by law to have employers' liability insurance. The minimum level of cover must be at least five million pounds, though in practice most policies provide ten million pounds of cover.

The insurance must cover you against liability for bodily injury or disease sustained by employees in the course of their employment. You must display the certificate of insurance, or make it available electronically in a way that is reasonably accessible to employees.

Who needs it:

If you employ one or more people under a contract of service or apprenticeship, you almost certainly need employers' liability insurance. This includes full-time, part-time, and temporary employees. It also covers trainees and apprentices.

It is worth noting that the legal definition of "employee" for these purposes can be broader than you might expect. Even some workers who are not formally on your payroll may be treated as employees depending on the level of control you exercise, the nature of the relationship, and how the arrangement works in practice.

Who is exempt:

There are limited exemptions. You do not need employers' liability insurance if you are a sole trader with no employees, or if you only employ close family members. Certain public bodies and some companies where every employee holds at least a specified financial interest in the company may also be exempt. The full list of exemptions is set out in Schedule 2 to the 1998 Regulations.

Consequences of non-compliance:

Failing to have the required insurance is a criminal offence. You can be fined up to two thousand five hundred pounds for each day you are without appropriate cover. Failing to display or make available the certificate can also result in a fine of up to one thousand pounds.

Beyond the criminal penalties, operating without cover exposes you to potentially ruinous personal or business liability if an employee is injured or becomes ill because of their work and brings a claim against you.

Practical points:

1. If you have anyone working for you, even on a casual or part-time basis, check whether the relationship is one of employment for these purposes. If there is any doubt, it is safer to have the insurance in place.

2. If you use agency workers, contractors, or volunteers, the position can be more nuanced. Some agency arrangements may require you to hold employers' liability insurance depending on the terms of the contract and the degree of control you exercise.

3. Make sure your policy is with an authorised insurer and keep your certificate available for inspection. The Health and Safety Executive is the enforcing authority.

4. Review your cover annually to ensure it reflects any changes in your workforce or activities.

If you can tell me more about the structure of your business and who works for you, I can give you a more tailored answer.