Do You Need Employers Liability Insurance?

18/06/2013 -- Mary Simpson
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The Employers' Liability Act (Compulsory Insurance) Act of 1969 made it a legal requirement to have Employers Liability Insurance from 1972.

This means you must have Employers’ Liability Insurance (EL) as soon as you employ someone.

Exemptions exist and include:

  • Family businesses (unless incorporated as a limited company).
  • Companies employing only their owner where he/she also owns 50% or more of the issued share capital in the company.

Your policy must cover you for at least £5 million to pay compensation if an employee is injured or falls ill through work.

Employers must display their Certificate of Employers Liability Insurance wherever employed persons are covered by the policy.  You can also make it available electronically.

You can be fined £1,000 if you don’t display your EL certificate, or refuse to make it available to inspectors when they ask.

You can also be fined £2,500 every day you are not properly insured.

Do I need Employers Liability Insurance if I work from home?

If you are self employed or employed by your own company and have one or more employees then you will need EL cover, and you must display a certificate to this effect.

Limited companies with just one employee - where that employee also owns 50 per cent or more of the issued share capital in the company - are exempt.

If your business isn't a limited company, and you're the only employee - or you only employ direct family members - you don't require Employers' Liability Insurance cover.

You do need it if you deduct National Insurance contributions and income tax from the salary you pay to someone who works for you, and you control when, where and how they work for you.

If you have customers, clients, or partners who visit your home to conduct business then you can take out a combined Employers' and Public Liability Insurance policy cover.

Do I need employers liability insurance if my staff work abroad or my company is based outside the UK?

If employees are normally based in the UK (including offshore) you do need employers' liability insurance cover.

You don't need EL insurance under British law to cover personnel based outside the UK or staff on secondment. But check whether the law in the country where they are based requires you to take out insurance or take other steps to protect your staff.

If employees are based abroad but spend more than 2 weeks continuously in the UK, or more than 7 days offshore, you do need employers' liability insurance.

The Health and Safety Executive is responsible for enforcing the law on Employers’ Liability Insurance.