Do I need employers’ liability insurance?

The duty bites before the first day of employment, and "employee" is defined broadly — short-term and zero-hours staff, agency temps, apprentices and trainees are all included, and volunteers who work for you regularly may be too. The minimum cover under the Act is £5 million, though most policies provide £10 million as standard, and it must come from an insurer authorised by the FCA. You cannot self-insure.

Who is exempt, and what the penalties are

The exemptions are narrow: most public bodies, family businesses where every employee is a close relative of the sole owner, and companies whose only employee is a single director owning 50% or more of the shares. If you are unsure whether one applies, take the policy — for most small businesses the premium is a few hundred pounds a year.

• £2,500 a day for each day without valid cover, enforced by the HSE.
• £1,000 for failing to display the certificate or produce it to an inspector.
• Unlimited exposure to the claim itself. A serious injury award can run to hundreds of thousands of pounds, payable entirely from your own funds if you were uninsured.

Displaying and keeping certificates

The certificate must be somewhere employees can easily read it; since 2008 an intranet posting counts, provided everyone has reasonable access. Old certificates must be kept for 40 years, because occupational disease claims — asbestos-related illness, industrial deafness — surface decades after exposure and it is the policy in force at the time of the exposure that responds. The Employers' Liability Tracing Office database exists for exactly this purpose, and you must supply your policy details to it each policy year.

If an employee is injured or reports a work-related illness, notify your insurer immediately rather than waiting for a letter of claim. Prompt notification is usually a condition of cover, and late notice can let the insurer decline or limit liability. Pass on all correspondence, do not admit liability, and cooperate with the solicitors the insurer appoints — accident records, risk assessments, training records and witness statements are what win or lose the case.

Employers' liability is not the same as public liability, which covers customers and visitors and is not legally compulsory but is strongly advised. Certain injuries must separately be reported to the HSE under RIDDOR, and failing to do so is its own criminal offence.