Do you know that, as a business owner, you’re legally required to take out a minimum £5m employers’ liability insurance cover?
Many employers in Great Britain are confused about the compulsory cover. In March 2013, the Health & Safety Executive fined a self-employed maintenance worker £1,200 after a friend he had taken on was injured on the job. He also had to pay £1000 in costs.
But the price could be much higher.
Here are some details on Employers’ Liability (EL), including possible exceptions to liability insurance for small business. For full details, contact your insurer or the DWP.
Employers’ vs Public Liability Insurance
Under the Employers’ Liability (Compulsory Insurance) Act 1969, EL is compulsory. It covers businesses for claims brought by employees, during or after their period of employment, for injury or illness contracted on the job.
Public liability insurance is voluntary. It covers businesses against claims brought by members of the public who sustain injury or damage to property while on the premises for business purposes.
Where to Get Employers’ Liability Insurance
You must buy cover from an insurer that is licensed under the Financial Services and Markets Act 2000.
Does Your Business Qualify for EL Exemption?
In general, EL is compulsory for people you employ under a contract of service or apprenticeship. It is not compulsory for:
- Employees working outside England, Scotland, and Wales. Though you must have EL for employees based abroad who spend more than 14 days at one stretch per year in Great Britain
- Family businesses that are NOT limited companies and where all employees are close relatives
- Businesses where the sole employee is also the business owner and he/she owns 50% of the issued share capital
- Check if your motor insurance covers employee injury and illness due to motor accidents they are in while working for you
Check with your policy provider about EL for:
- Students working unpaid, people unemployed but doing youth/adult training, and school students on work experience
- Freelance contractors, even if they work for others, supply their own equipment, and you don’t deduct income tax/NI. HMRC may still see them as employees for tax and insurance purposes
Remember that you must make your certificate of Employers’ Liability Insurance accessible to employees and to Health & Safety Executive Inspectors. If you don’t, you face a fine of £1000.