Employers Liability insurance pays your legal fees and compensation costs if you are sued by an employee who has been injured as a result of an accident at work or who has become ill as a result of their job.
When you buy an employers liability policy, the insurance company issues an Employers Liability certificate.
The Employers Liability certificate shows:
- the name of the company that is covered for employers liability
- the dates when the cover starts and finishes
- the minimum £5 million indemnity limit
- the signature of an authorised insurance company
The certificate must be displayed where your employees can see it. Since 2008 it has been possible to display your Employers Liability certificate electronically, as long as you make sure all your employees know where to find it and can access it easily.
If an employee is injured at work or becomes ill due to their job, they may decide to make a claim against you for compensation. Employers liability insurance will pay your defence costs and any compensation awarded to your employee.
Employers Liability insurance is, with very few exceptions, a legal requirement in the UK, if you employ anyone, under a contract of service or apprenticeship, in your business.
The cost of Employers Liability insurance depends on the type of work your employees are doing and how many employees you have. The premium is sometimes rated on the number of staff and sometimes on the wage roll. Manual work is more likely to result in an accident than non-manual or clerical work and so insurers may ask for a split in the wages between the two. If you have woodworking machines and employ woodworking machinists you will need to declare any wages relating to this.
The Employers Liability (Compulsory Insurance) Act 1969 requires employers to have a minimum limit of indemnity of at least £5 million. Most insurance policies provide a limit of £10 million.
If you are an employer and do not have Employers liability insurance, you are breaking the law and could be fined up to £2,500 for each day you are not covered.
If one of your employees is injured or becomes ill, they may try to claim compensation from you if they believe you are responsible. Without Employers Liability cover, you may have to meet the costs of legal fees and any compensation award yourself.
Yes, volunteers, unpaid students and students on work experience placements are treated as employees for the purposes of insurance.
Employers Liability law does not require you to have additional Employers Liability insurance for unpaid students and volunteers, so if you already have insurance for Employers Liability there's usually no need to inform your insurer.
If, however, you don't have Employers Liability cover in place, you should contact an insurance broker to arrange this before you take anyone on.
If a volunteer or unpaid student is injured whilst working for you, there is a possibility that this could result in a compensation claim against you.
The best thing to do is discuss this with a local business insurance broker, who understands the issues and will be able to offer expert advice. The cost to add the cover is often less than you might expect.
If you are closely related to all your employees, and the business is not a limited company, then you are not legally required to have Employers’ Liability Insurance. If your business is a family business and also a limited company, then Employers Liability insurance is compulsory.
Yes. Employers Liability law requires that limited companies have Employers Liability insurance if there is more than one person working in the business.
If you are an employer and do not display a current Employers Liability certificate, either in hard copy or electronically, so that all employees have access to it, you can be fined up to £1,000.
If you have a business insurance policy that includes Employers Liability, you will be asked by your insurance company to provide your Employer Reference Number (or PAYE reference number) This is so that the industry can build a database of Employers Liability policies. Then, in the event of a claim occurring years after an alleged incident, you should more easily be able to track down the relevant insurance policy and prove that you had Employers Liability cover at the time the claimant was employed by you.