Employers’ liability insurance is a legal requirement if you employ staff in the UK (there are a couple of exceptions, see below). Whether you have one employee or 6000 employees, if you do not have insurance, you are breaking the law. Not only will you be breaking the law, you also leave yourself vulnerable to being sued by your employees which could cripple you financially if employers’ liability insurance is not in place.
The current regulations were put in place in 1969 as part of the Employers’ Liability (Compulsory Insurance) Act.
Why is Employers’ Liability Insurance Necessary?
This form of insurance comes into play if one of your members of staff is injured or becomes ill at work through any fault on your part. If this staff member choses to take the matter further and demand compensation through the courts, employers’ liability insurance will cover the costs involved and the potential pay-out required as a result.
Where Can I Get Employers’ Liability Insurance?
Any company you buy this form of insurance from must be working in accordance with the Financial Services and Markets Act 2000. If you’re not sure whether or not your insurer is authorised in this way, make sure you check the register maintained by the FSA (Financial Services Authority).
If you use an invalid insurance provider who is not authorised your insurance will not be recognised and you could be breaking the law.
How Much Cover Do I Need?
The amount of cover required by each individual employer varies depending on your risks and liabilities and the size of your team. The minimum level of insurance is £5million
yet many providers offer £10million as a sensible option. If the risks in your line of business are particularly high you may require more substantial insurance to protect yourself and your staff.
Who Counts as an Employee?
In some cases it can be difficult to know whether or not someone you work with is technically your ’employee’. No matter what title you give someone, if your relationship with them and their role looks very much like that of an employee, you will need to provide insurance. A person may qualify as an employee if:
- You provide equipment and materials for them to work with
- You have control over where, when and how they work
- You take N.I. and income tax from money you pay them
- They are treated in the same way as your other employees
- They are then only person who can perform the role you use them for and cannot emply a substitute
By John Hester