Do you need Employers’ Liability Insurance?

If you have one or more staff members, including part-time or temporary workers, you must legally have Employers’ Liability Insurance. This insurance covers staff members who work specific hours and receive pay after tax and National Insurance deductions. Additionally, it is crucial to cover former employees as some health problems or injuries may arise later.
 
However, there are exceptions. If your business is a limited company, a family business, or a sole trader with only one employee running the company, you may not need Employers’ Liability insurance. Employers’ Liability insurance is also not required if you are a sole trader with one employee running your business, and your company is not limited.
 
What does it cover?
As a business owner, it is important to protect yourself against potential legal liabilities that may arise from incidents involving your employees. Employers' Liability insurance provides coverage for claims made by both current and former employees who may have suffered an injury while on the job due to your negligence. This could include anything from a secretary experiencing repetitive strain injury from prolonged computer use, to a worker getting injured while using heavy machinery or falling off a ladder or scaffolding.
 
Paying out compensation for such claims can be expensive and could even lead to the closure of your business if you are unable to cover the costs. Employers' Liability insurance offers complete protection against these costs, ensuring that your business can continue to operate without any financial burden.
 
How much cover do you need?
If your business is legally required to take out Employers’ Liability Insurance, the Employers’ Liability Act stipulates that you must have cover for at least £5 million and it must come from an authorised insurer However, you may need more cover than this when you take into consideration your company’s risks and liabilities. The size of your business, number of people you employ and the nature of your business are all factors to consider when arranging cover. Most insurers offer Employers’ Liability Insurance of at least £10 million, which may be advisable when you consider the costs involved if a member of staff were to take you to court and you had to pay compensation and legal costs.
 
What are the implications without cover?
If you are legally required to have Employers’ Liability cover and you don’t have it, you could face fines of up to £2,500 a day. You should also display your insurance certificate so that your employees can see it clearly or have access to it (for example, on a display board or in digital format on your company intranet). If you don’t, you could face a fine of £1,000.

Talk to TMD
At TMD, we have over 50 years of experience in providing insurance advice to businesses. We can assist in selecting the right level of protection based on the size, nature, and industry-specific risks and liabilities of your business. Our team can offer guidance on the amount of Employers' Liability coverage you need, as well as any other applicable insurance policies for your business.
 
Our business is your protection: to find out more about Employers’ Liability Insurance, please give us a call on 01992 703 000 or insurance@mcdonaghs.co.uk