What is it?

Employers Liability insurance provides compensation to employees in the event that they have a valid claim of bodily injury, sickness, disability or disease caused by the work they carried out as part of their employment with you. It will also cover the legal costs involved in the claim.

Do I need it?

In accordance with the Employer's Liability (Compulsory Insurance) Act 1969, Section 2, if you have 'employees' then it is a legal requirement to have a minimum of £5 million of employer's liability insurance. Failure to have this insurance in place can result in a fine of £2,500 for every day you are not insured.

It is very important to understand the definition of 'employee' in relation to this insurance. It is not only people with whom you have a written employment contract.

Extract from http://www.legislation.gov.uk

For the purposes of this Act the term “employee” means an individual who has entered into or works under a contract of service or apprenticeship with an employer whether by way of manual labour, clerical work or otherwise, whether such contract is expressed or implied, oral or in writing.

• So, any of the following would be considered employees:
  • - Part-time and full-time employees
  • - Sub-contractors that provide labour only, and work with your tools, equipment and materials and operate under your guidance
  • - Work experience students
  • - Anyone on a work placement
  • - Temporary staff

• You do not need Employer's Liability insurance if:
  • - You are not incorporated, and
  • - Your employees are close family members only (husband, wife,civil partner, father, mother, grandfather, grandmother, step-father, step-mother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister)