Employers liability insurance

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If you employ anyone in Great Britain — full-time, part-time, casual, temporary or on a zero-hours contract — you usually need employers liability (EL) insurance. It covers compensation and legal costs if an employee is injured or becomes ill because of work you are responsible for.

Under the Employers’ Liability (Compulsory Insurance) Act 1969, most employers must hold at least £5 million of EL cover (policies typically provide £10 million as standard). You can be fined up to £2,500 for each day you trade without valid cover when it is required.

What it typically covers

• Employee injury at work — slips, falls, burns, cuts or accidents with machinery or equipment
• Work-related illness — conditions caused or made worse by the job, such as dermatitis from chemicals or hearing loss from noise exposure (subject to policy terms and limitation periods)
• Legal defence — costs of defending a claim, and compensation if the business is found liable

Cover applies to employees as defined in the Act. That includes many people you might not think of as “staff” — for example some volunteers, apprentices and labour-only subcontractors in certain circumstances. If you are unsure whether someone counts as an employee for EL purposes, ask us before you renew.

Who is exempt?

Some businesses do not need EL insurance, including:

• Most companies where the only employees are close family members living in the same household as the owner (not all family businesses qualify — check your situation)
• Sole traders with no employees
• Certain public-sector bodies already covered by other arrangements

Even if you are exempt, you may still choose to buy EL voluntarily if you take on staff later or use subcontractors whose status is unclear.

What it does not cover

EL is for employees only. It does not replace other covers:

• Injuries to customers or members of the public are normally covered by public liability insurance, not EL
• Fines from regulators, contractual penalties and deliberate acts are excluded
• Some policies exclude claims from certain overseas employees unless extended — check territorial limits if staff work abroad

Displaying your EL certificate

You must display your current EL certificate where employees can easily read it — physically in the workplace or electronically if your staff can access it. When an insurer issues a new policy, you receive an updated certificate. Keep old certificates for your records; you only need to display the current one.

EL and subcontractors

If you use bona fide subcontractors who employ their own staff and hold their own EL insurance, their workers are usually their responsibility. If you hire labour-only subcontractors who work under your direction using your tools and materials, they may be treated as your employees for insurance purposes. Getting this wrong leaves gaps in cover — tell your broker exactly how you use subcontractors when you get a quote.

Typical limits and premiums

The legal minimum is £5 million; most policies provide £10 million per claim and in the aggregate. Premium depends on your trade, number of employees, claims history and payroll. A pub with bar and kitchen staff, a salon with several stylists, or a building firm with a larger workforce will pay different rates. Your policy excess may apply to some sections but EL claims often have no excess — check your schedule.

Getting cover for your business

EL is included in many commercial packages on our specialist sites. We arrange cover for pubs, salons, trades, medical practices and airside operators through the relevant brand. Contact us and we will direct you to the right site for your sector, or see our guide on choosing business insurance.