Employers' Liability: A Legal Requirement for Contractors

What is Employers' Liability Insurance?

Employers' liability (EL) insurance covers you if an employee is injured or becomes ill because of their work for you. If an employee makes a claim, EL insurance pays the compensation and legal costs.

This is different from public liability, which covers injuries to members of the public and third parties. Employers' liability specifically covers your employees.

The Legal Requirement

The Employers' Liability (Compulsory Insurance) Act 1969 requires most employers to have EL insurance. This law has been in place for over 50 years and is actively enforced.

Key legal requirements:

• Minimum cover of £5 million (most policies offer £10 million)
• Policy must be from an authorised insurer
• Certificate must be displayed at each workplace
• Certificate must be kept for 40 years after expiry

The Health and Safety Executive (HSE) can inspect your workplace and ask to see your EL certificate. If you can't produce it, you could face penalties.

Who Needs Employers' Liability?

You need EL insurance if you employ anyone. "Employee" has a broad legal definition and includes:

• Full-time employees
• Part-time employees
• Temporary staff
• Casual workers
• Apprentices and trainees
• Work experience students
• Volunteers in some circumstances
• Labour-only subcontractors (in some cases)

Exemptions

You don't need EL insurance if you:

• Only employ close family members
• Are a sole trader with no employees
• Only use bona fide self-employed subcontractors

What's Covered?

Employers' liability covers claims from employees for:

Workplace Injuries

• Accidents at work (falls, cuts, burns)
• Injuries from equipment or machinery
• Injuries from manual handling
• Vehicle accidents during work

Occupational Illnesses

• Respiratory conditions from dust or fumes
• Hearing loss from noise exposure
• Repetitive strain injuries
• Skin conditions from chemicals
• Stress-related illness (in some cases)

What's Paid

EL insurance pays:

• Compensation to the injured employee
• Legal fees to defend the claim
• Court costs
• Medical and rehabilitation costs

Claims can be made years after the injury or illness occurred, which is why you must keep certificates for 40 years.

Penalties for Non-Compliance

The penalties for not having EL insurance are severe:

• Not having insurance: Fine of up to £2,500 per day
• Not displaying certificate: Fine of up to £1,000
• Not producing certificate on request: Fine of up to £1,000

Beyond fines, operating without EL insurance exposes you to personal liability. If an employee is injured and you don't have insurance, you'll have to pay compensation and legal costs yourself. This could be hundreds of thousands of pounds.

Getting the Right Cover

When arranging employers' liability insurance:

• Ensure the policy provides at least £5 million cover (£10 million recommended)
• Check it covers all types of employees you have
• Verify it covers all locations where employees work
• Ensure it covers the types of work your employees do
• Keep certificates for 40 years after expiry
• Display the current certificate at your workplace

Combined Policies

Most tradesman insurance policies combine employers' liability with public liability and other covers. This is usually the most appropriate approach.

Certificate Display

You must display your EL certificate where employees can easily read it. If you have multiple sites, display it at each one. Electronic display is now permitted if employees can access it easily.

If you're a contractor working on different sites, you should be able to produce your certificate on request. Many contractors keep a copy on their phone or in their van.