Employers' Liability Insurance

Although employers' liability insurance is compulsory there are a few exceptions, including:  

• Businesses that only employ immediate family members (unless your family business is incorporated as a limited company, in which case the insurance is compulsory).   
• Sole traders - if you are the only person working for the business and providing you aren't incorporated into a limited company.  
• If you employ staff and none of the above exceptions apply to you then it's safe to say you'll need to take out this type of insurance. 
• A limited company where the owner is the sole employee and owns more than 50% of the share capital and has no employees. 
• Employees normally based abroad, unless they spend more than 14 consecutive days in the UK 
• Most public organisations, including government departments and agencies 

If you only work with freelancers who provide their own tools and services then they will be responsible for their own insurance, and you won’t need employers’ liability insurance.  

But if you employ anyone and they work for you on a regular basis, they could be classified as a worker. Speak to a broker if you are unsure if you need employers’ liability. 

If HMRC would classify someone as an employee for tax purposes — based on how they work, not just what their contract says — you may need EL insurance for them. If in doubt, check with HMRC's employment status tool or speak to a broker. 

Yes, if you have temporary workers or seasonal staff, then employers’ liability insurance is a legal requirement. If you only employ extra staff for Christmas or busy periods, you can amend your policy to cover them for a limited amount of time. Speak to a broker to arrange this.

As a sole trader in the UK, generally you don’t need employer's liability (EL) insurance if you work alone, but you must legally have it if you hire staff, subcontractors, or volunteers. If you employ anyone (even temporary staff), you risk fines of £2,500 per day if you don’t have it.

You may need employers' liability insurance for contractors or subcontractors you hire specifically if these are labour-only subcontractors (LOSC) — those who work only with materials you supply and especially if you are managing their work. The exception is bona fide subcontractors – who use their owns tools, set their own hours and work for multiple people. You usually do not need employers' liability to cover them, but you should check they have their own insurance in place.

No, employers’ liability insurance covers claims made by employees, while public liability insurance covers claims made by third parties, such as customers or members of the public, for injuries or damage caused by your business activities.

An employers’ liability policy should cover staff wherever they’re working, including in their own homes. Most insurers will include home-working cover, but you should always check the policy wording to make sure. Always make your broker aware you have staff working from home when discussing your policy needs.

This can vary between insurers, but it’s important that your policy covers all of your employees in all working environments. This includes at your business premises, on other sites, at home, and any other places they carry out work duties.

Operating without employers' liability insurance when required by law could result in fines of up to £2,500 for each day you’re not properly insured. You could also be fined £1,000 if you do not display your EL certificate or refuse to make it available to inspectors when they ask.  

Once you take out employers' liability insurance, your insurer will issue you with an Employers' Liability (EL) Certificate. But since 2008, you have been allowed to display your EL certificate electronically, so you don't need a physical copy pinned to a noticeboard — as long as staff know where to find it. This could be in your workplace, on your website, or on your company intranet – if you don’t provide access to it when asked, you could be fined up to £1,000. You need to keep it for at least 40 years from the date the insurance starts or is renewed and make it available to HSE inspectors on request or within 10 working days if asked by an employee. 

In most cases, yes. If your limited company has any employees — including other directors — you'll need EL insurance. The only exception is if you are the sole director and sole employee of your own limited company and you own more than 50% of the share capital. Even then, many business owners do choose to take out cover for peace of mind, especially if they take on freelancers or helpers on an occasional basis.

Yes, most policies include coverage for claims from past employees, even if they file a claim after they’ve left your employment, as long as the injury or illness occurred while they were working for you.

Yes — having previous claims doesn't automatically stop you getting cover. However, a claims history is one of the factors insurers use when calculating your premium, so you may find your costs are higher. Being upfront about previous claims when you apply is important: non-disclosure can invalidate a policy. Speak to a broker who can find the right insurer for your specific situation. 

Yes, most policies cover work-related mental health conditions — such as stress, anxiety, or depression — if an employee claims their illness was caused by their work. This is a growing area of workplace claims in the UK. Make sure your policy wording includes psychological injury as well as physical injury when reviewing your cover.

Workers' compensation is a US term. In the UK, the equivalent is employers' liability insurance. Under UK law, employers must hold EL insurance -if they employ anyone - so that injured or ill employees can claim compensation without needing to sue their employer personally. The minimum legal cover is £5 million per claim, though most UK policies provide £10 million as standard.