Employers’ Liability Insurance can be a particularly difficult issue; in fact a recent survey revealed that over 210,000 small and medium sized businesses in the UK are breaking the law by operating without such cover. That means there are possibly around 1.8 million employees that have no cover in the workplace.
Key Takeaways
- Employers’ Liability insurance is compulsory in the UK for any business that employs staff, including part-time and casual workers, to cover workplace injury or illness.
- Exemptions exist for family businesses not set up as limited companies where all employees are close relatives, and for companies with a single employee who owns 50% or more of issued share capital.
- Legal minimum indemnity is £5 million, with £10 million commonly provided by insurers.
- Policies cover injuries during the period of insurance, so historic insurer identification is needed for industrial disease or late-manifesting claims.
- Employers must display the Employers’ Liability certificate prominently or electronically if all staff can easily access it, and retain certificates for 40 years.
- Non compliance can lead to fines and uncovered claims, with surveys suggesting over 210,000 UK SMEs may lack required cover leaving around 1.8 million employees unprotected.
If you are an employer in the UK, you are responsible for the Health and Safety of your employees while they are at work. If you employ anybody in your business – even if they are part-time or casual staff, you must purchase Employers’ Liability insurance.
Where you employ workers you are required to hold such insurance, unless one of the following exemptions applies:
- You have a family business, which is not set up as a limited company. For this to apply, all of your employees must be closely related to you – which includes a husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandchild, stepchild, brother, sister, half-brother or half-sister.
- You have a company where you are the only employee and you own 50% or more of the company’s issued share capital.
Employers’ Liability insurance is compulsory. The Government first introduced the Employers’ Liability Compulsory Insurance Act in 1969. This ensured that all employers had the protection of a minimum level of insurance cover against claims from employees, should they seek compensation following injury or illness as a result of their work.
The introduction of the Employers’ Liability (Compulsory Insurance) Regulations in 1998, resulted in a legal minimum cover of £5 million, although the more usual limit of indemnity offered by insurers is £10 million.
Employers’ Liability policies cover injury that is caused during the period of insurance. Consequently, when injury or disease manifests itself years after the original cause, for instance an industrial disease, there is a need to identify the Employers’ Liability insurers dating back to the when the original cause occurred.
You should display your Employers’ Liability certificate in a prominent position within your usual place of work, as you may need to produce it on demand. Failure to do this may result in a fine from the Health & Safety Executive. The displaying of a copy of the certificate of insurance now includes being displayed electronically, if all employees have easy access to it at work and know where to locate it. In addition, the certificates should be retained for a period of 40 years so you must ensure that adequate storage procedures are in place. The display of a copy of the certificate of insurance now includes being displayed electronically, if all employees have easy access to it at work and know where to locate it.
For more information about Employers indemnity insurance, please contact us on 0118 916 5480 or complete one of our online enquiry forms.
*Information correct as of 1st May 2016
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