Legal Requirements for Employers' Liability
Employers' liability insurance is a legal requirement in the UK for most businesses that employ staff. Under the Employers' Liability (Compulsory Insurance) Act 1969, you must have at least £5 million of cover, though most policies provide £10 million as standard.
Who Must Have Employers' Liability Insurance?
You need employers' liability insurance if you employ anyone under a contract of service or apprenticeship. This includes:
Full-Time and Part-Time Employees
Anyone on your payroll, regardless of hours worked.
Temporary and Casual Workers
Staff employed on short-term or zero-hours contracts.
Apprentices and Trainees
Anyone learning a trade or skill under your supervision.
Labour-Only Subcontractors
Workers who provide only their labour (not materials) may be considered employees for insurance purposes.
Exemptions from the Requirement
Some businesses are exempt from compulsory employers' liability:
- Sole traders with no employees
- Family businesses employing only close family members
- Certain public organisations
- Companies employing only the owner (with more than 50% shareholding)
What Does Employers' Liability Cover?
The insurance covers claims from employees who suffer:
- Work-Related Injuries - Physical injuries sustained during work activities
- Occupational Illnesses - Diseases caused by working conditions
- Psychological Harm - Stress-related conditions arising from work
- Historic Claims - Claims for conditions that develop years after exposure
Penalties for Non-Compliance
Failing to have adequate employers' liability insurance can result in:
- Fines of up to £2,500 per day without insurance
- Additional fines of £1,000 for not displaying the certificate
- Personal liability for any claims that arise
- Potential criminal prosecution
Displaying Your Certificate
You must display your employers' liability certificate where employees can easily read it, or make it available electronically. The certificate must show:
- Your policy number
- The insurer's name
- The start and end dates of cover
- Confirmation of the minimum £5 million cover
Claims Examples
Common employers' liability claims include:
- An employee injures their back lifting heavy equipment
- A worker develops hearing loss from prolonged noise exposure
- An employee suffers stress-related illness due to workplace bullying
- A staff member is injured by faulty machinery
Risk Management and Premiums
Insurers assess premiums based on:
- Number of employees and total wage roll
- Industry sector and associated risks
- Claims history
- Health and safety procedures
- Training and supervision standards
Working with a Specialist Broker
A specialist broker can help ensure you have compliant cover at competitive rates. They can also advise on risk management strategies to reduce premiums and prevent claims.
Next Steps
If you employ staff and need employers' liability insurance, or want to review your existing cover, contact our team for a no-obligation discussion.
This article is for general information only and does not constitute advice. Please contact us to discuss your specific requirements.
