Public liability insurance
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Employer’s liability insurance
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- Compare and buy business insurance online
- Cover is tailored to your business profession or trade
- Employer's liability is a legal requirement if you employ staff who aren't direct family members
What is employer’s liability insurance?
Employer' liability cover is a type of business insurance which protects you against the cost of compensation claims due to employee illness or injury because of their work for you.
It’s a legal requirement if your business employs one or more people, and you could be fined £2,500 for each day you’re not covered.
Insuring temporary workers
Even if you employ short-term, volunteer, work experience, part-time staff, casual workers or contractors, you will usually be required to have employer’s liability insurance.
Who needs employers’ liability insurance?
You’ll need employer’s liability cover for your employees if:
- You deduct National Insurance contributions and income tax from their wages
- You provide most of the equipment and materials
- You control when, where, and how your employees can work
- You have the right to claim any profit made by your employees
- You need them to perform the job you employ them for, and if the employee is unable to work they can’t find a substitute
Is employers' liability insurance a legal requirement?
Yes. But if you’re running an unincorporated family business, then you don’t legally need to have employer’s liability cover.
That's because you, as the business owner, are personally responsible and liable for what your company does and for any family members you might employ.
What does employer's liability insurance cover?
Policy details can vary between different insurers, but an employer's liability insurance policy should cover compensation costs if an employee becomes injured or ill due to their work, including:
- Medical fees
- Legal costs
- Loss of income
- Any other damages
Claims from former employees
Some illnesses take a while for symptoms to develop, so it’s possible that a former employee might claim compensation, even if it’s been a long time since they worked for you.
Employer’s liability insurance can cover this, but you’d need to check your policy or ask the insurer to make sure.
Who is usually exempt from employer's liability insurance?
You don’t need employer's liability cover if one person, or an equal partnership, works at the company. That’ll be the case when:
- A director sets up a limited company but remains the only employee
- The sole employee owns more than 50% of the share capital
- The company isn’t limited but employs one sole trader who’s the principal of the business
- Partnerships where the directors are equal partners in the business and do not employ others
Many public organisations, health services, and government bodies and companies which employ direct family members also won’t need employer's liability insurance.
How to reduce your claim risk
Even though you'll have insurance, no one wants to be making claims unnecessarily. Take some steps as a good employer to protect yourself:
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Make sure you have good health and safety practices to reduce the chance of accidents and illness.
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Know your industry’s regulations and carry out regular risk assessments to address any issues.
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Check your employees feel safe and happy – they’ll be more productive and it’s good to know your staff enjoy coming to work.