Employers’ Liability Insurance

Employers’ Liability Insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you. It can also cover legal and defence costs resulting from a claim.

Yes. Under the Employers’ Liability (Compulsory Insurance) Act, all organisations that have staff are required by law to have EL Insurance.

Employers' Liability insurance is compulsory by law for most businesses. As an employer, you are responsible for the health and safety of any worker under a contract of service. If a worker suffers an injury or an illness that they believe is your fault, they may try to claim compensation from you. Employers' Liability insurance provides cover for claims made by past or present employees, volunteers, and the like.

It is a legal requirement for most UK businesses to have employers' liability insurance. However, if you are:

• the sole director of your limited company, and
• own 50% or more of the shares, and
• have no employees

then employers' liability insurance isn't a legal requirement. You may find that it is a requirement by any client contracts you have to take employers' liability insurance cover out.

 You require employers’ liability cover from the day your business starts employing staff. From the moment you have any person to whom you are responsible, whether paid or not, you are at risk of legal action. To qualify as "staff" a person does not have to be paid or under contract to you. It includes any person to whom you have a legal duty of care. This means that sometimes even sole traders will need employers’ liability insurance.

You need Employers’ Liability Insurance for all types of staff that work for you. Note that an ‘employee’ is not necessarily someone who is paid by you – this can be anyone under a contract of service including volunteers or any person under your temporary control, whether on a contract or not:

• full-time employees
• part-time employees
• directors
• voluntary workers
• seasonal staff
• contract staff
• labour only sub-contractors
• students or work placements

You may not need cover if you only employ a family member or someone who is based abroad – see http://www.hse.gov.uk/pubns/hse39.pdf for information. If you are a limited company most exceptions will not apply to you, unless the company employs only its owner, with that owner also holding over 50% of the issued share capital.

Yes. Employees injured because of your negligence can seek compensation even if your business goes into liquidation or receivership.

You are legally required to have cover for compensation of at least £5 million, but most policies will offer cover for £10 million. The cost of your premium is usually based on a number of factors including: the nature of your business; the number of people you employ (and/or the payroll cost); your previous insurance claims. In the case of larger organisations or where a number of employees are in one location, increased limits are recommended.