Employers' Liability Insurance

Almost every employer in the UK must hold employers' liability insurance from an authorised insurer. Limited exemptions include companies with no employees other than the owner (where the owner holds at least 50% of the issued share capital), family businesses employing only close family members, and certain public bodies. The minimum insured limit is £5 million per occurrence, but industry standard is £10 million. Employers must display the certificate of insurance (physically or digitally) where employees can read it. The Health and Safety Executive (HSE) enforces compliance and can fine employers £2,500 for each day they are not covered. Policies must also cover former employees who develop diseases with a long latency period, such as asbestosis or mesothelioma, where the exposure occurred during the insured period.

In practice, the duty bites the moment you take on your first member of staff, and it extends further than most small employers expect. Casual workers, temporary staff, apprentices and volunteers who work under your direction usually need to be covered, even though they are not on the payroll in the ordinary sense. Genuinely self-employed contractors carrying their own insurance normally do not — but if you control how and when they work, an insurer or the HSE may take a different view, so the safest course is to describe the arrangement honestly to your broker rather than guess.

Worked example: a two-person joinery firm takes on a summer apprentice. The owner assumes the existing public liability policy is enough. It is not — public liability covers injury to members of the public, not to your own workers. Six weeks in, the apprentice injures a hand on a saw. Without employers' liability cover the firm faces the compensation claim personally, plus enforcement action for the uninsured period. Had the certificate been in place and displayed, the insurer would have handled the claim, subject to the firm being able to produce risk assessments, training records and machine maintenance logs.

The pitfalls are mostly about records and continuity. You must keep certificates for past years, because industrial disease claims can surface decades after the exposure and the claimant needs to identify who insured you at the time. Notify your insurer of any incident promptly — late notification is a common reason cover is disputed. And never treat a policy as a substitute for prevention: the insurer will indemnify the claim, but the Health and Safety Executive prosecutes the breach separately, and a poor safety record raises the premium at renewal.

Employers' liability insurance sits alongside your health and safety duties, your PAYE and National Insurance obligations, and workplace pension auto-enrolment. If you are hiring, read our guides to employers' liability insurance and health and safety duties before the first day of work, not after.