Employers’ liability insurance

Employers’ liability insurance covers you and helps you to protect your employees in case one of them is injured or becomes ill as a result of the work they do for your business. You are legally required to take out this cover if you employ one or more people.

You must take out employers’ liability insurance if:

• You deduct National Insurance contributions and income tax from the money you pay your employees.
• Where, when and how your employees work is controlled by you.
• Any profits made by your staff can be claimed by you.
• You provide your employees with most of the materials and equipment required to do their job.
• You require each member of staff to perform the duties of their role themselves, and they cannot hire a substitute for themselves if they are unable to work.
• You employ part-time or temporary staff.

Employers’ liability insurance covers you against any claims by staff members who suffer an injury or become ill while performing duties for your business.

This cover will take care of legal costs, including legal fees and compensation payouts, should a complaint made by an employee go to court.

The legal requirement for most businesses is to hold cover worth £5 million. However, many policies include £10 million of cover as standard. Businesses where staff face a higher risk at work should make sure any cover taken out is sufficient for the needs of the business.

It is important to note that claims can still be made even when a person is no longer employed by you, as certain illnesses or symptoms may take time to develop. Check that your policy includes cover for these instances, as overlooking it can be a costly mistake.

While you may not be legally required to cover volunteers, independent contractors and students on work experience, some policies might offer cover for these types of employees as well. This can be helpful, as claims might still be made against you.

Do I need employers’ liability insurance?

In the majority of cases, employers’ liability insurance is a legal requirement.

There are some exceptions to this rule. If the following applies, you do not have to take out this cover:

• You own a limited company and the only employee also owns more than 50% of the share capital.
• Your company is not a limited company, but the only employee is a sole trader who is the principal of the business.
• All employees in your companies are directly related family members.
• You and your business partners are all directors with an equal share in the business and no other persons are employed.
• Your business is a public organisation, health service or government body (some exceptions apply).

You might be exempt from employers’ liability insurance if any of the following applies:

• You employ unpaid student workers.
• Your staff are people in training programmes that are not directly employed by you.
• Your workers are volunteers.
• Your staff are work experience school children.

Employers’ liability insurance cost

The cost of a policy would depend on your level of cover, the size of your business and your individual requirements.

In many cases, employers’ liability insurance comes as part of a general business insurance policy, which often also includes public liability insurance (to protect against claims by members of the public, as opposed to your own staff).

With some providers, you might even be able to include other elements of business cover in your policy, such as protection for your equipment or van insurance.

Common claims examples

• Injury to cleaning staff. One of your cleaners might fall over a piece of equipment or slip on a wet floor.
• Falling from height. If your staff members work with ladders, scaffolding or cranes, or have to climb to dangerous heights while at work, they might fall and injure themselves.
• Exposure to dangerous substances. If you work with chemicals or any other damaging materials, accidents can sometimes happen, even if you take all the required precautions.
• Injury caused to clerical staff. Prolonged and repetitive use of computer equipment can cause some health conditions, such as back problems, muscle and joint pain or eyestrain.
• Accidents in the office. Unexpected incidents, such as an item falling from a shelf, the ceiling collapsing or someone tripping over an obstacle can happen.

These are just a few examples of potential claims that employers’ liability insurance can cover you for. Whether the incident is your fault, the employee’s fault, or a freak accident, the staff member affected might have a case.

Depending on the circumstances, these claims can run to millions of pounds, so taking out adequate cover is important.

Frequently asked questions

• How much employers' liability cover do I need?

  The minimum legal requirement is £5 million, but many insurance companies offer £10 million as standard. The more risk involved in the work your employees do, the more cover you should take out.

• What is the difference between employers' liability cover and public liability cover?

  Employers’ liability insurance protects you against claims made by your own members of staff for injuries or illnesses caused by the work they do for your business. Public liability insurance covers you in case a member of the public is injured on your premises or becomes ill as a result of the work you do.