Employers' Liability Insurance

The Employers' Liability (Compulsory Insurance) Act 1969 requires most UK employers to hold EL insurance before taking on any employee. "Employee" is broadly defined and includes workers on short-term or zero-hours contracts, temporary agency workers, apprentices, and trainees. You should also consider cover for volunteers who work regularly for your organisation, as they may be treated as employees in some circumstances.

Some employers are exempt — notably most public bodies, close family businesses (where all employees are close relatives of the sole owner), and companies with no employees other than a single director who owns 50% or more of the shares. If you are unsure whether an exemption applies, the safest course is to take out a policy.

The minimum required cover under the Act is £5 million, but in practice most policies offer £10 million as standard — do not accept a policy that offers less. The policy must be obtained from an insurer authorised by the Financial Conduct Authority (FCA). You cannot self-insure or use an offshore insurer that is not FCA-authorised.

You must display your EL certificate where employees can easily read it. Since 2008 you can display it digitally (e.g. on your intranet) rather than on paper, provided all employees have reasonable access to it. You must also keep copies of old EL certificates for at least 40 years — this is because disease claims (e.g. asbestos-related illness) can be made decades after exposure.

The Health and Safety Executive (HSE) enforces compliance with the Employers' Liability (Compulsory Insurance) Act. The penalties are significant: a fine of up to £2,500 for each day on which you are without valid insurance, and a fine of up to £1,000 for failing to display your certificate or produce it when requested by an HSE inspector.

Beyond the legal penalty, operating without EL insurance means that any successful compensation claim from an injured employee must be met entirely from your business's own funds. A serious injury claim can run to hundreds of thousands of pounds — far more than the annual premium, which for most small businesses is a few hundred pounds per year.

If an employee is injured at work or develops a work-related illness and intends to claim compensation, you must notify your insurer immediately — do not wait for a formal letter of claim. Most EL policies require prompt notification as a condition of cover; failing to notify in time can give the insurer grounds to decline or limit their liability, leaving you personally exposed. Pass all correspondence relating to the incident to your insurer and do not admit liability without their knowledge.

Under the Employers' Liability Tracing Office (ELTO) system, all UK EL insurers must upload policy details to a central database. This allows injured former employees (and their legal advisers) to trace which insurer was on risk at the time of an incident — even if the employer has since changed insurers or ceased trading. As an employer, you are required to provide your policy details to the ELTO at the start of each policy year.

Your insurer will typically appoint solicitors to handle any claim on your behalf. Your role is to cooperate fully: providing accident records, risk assessments, witness statements, training records, and any other documentation relevant to the circumstances. Maintaining thorough health and safety documentation before any incident occurs is therefore not just a compliance formality — it is critical evidence if a claim arises. The limitation period for most EL injury claims is three years from the date of injury (or from the date the claimant first connected their injury to their work), but disease claims may arise decades later.