Feature articles

07 December 2017

Employers’ liability insurance – what is it and do you need it?


...that all employers are responsible for the health, safety and wellbeing of their employees and if an employee is injured whilst at work they can look to their employer for compensation? The Employers’ Liability (Compulsory Insurance) Act 1969 was created to give employees protection and access to compensation should an incident involving occur at work and a claim for compensation arise.

Employers’ Liability insurance is compulsory for ANY employer

Employers’ Liability insurance is compulsory for ANY employer, whether they are a multi-national pest management company or a smaller local business and all employers must display a valid Employers’ Liability Certificate where their employees can see it.

The minimum legal limit of indemnity for Employers’ Liability cover is £5 million; however most insurers offer at least £10 million.

You must have Employers’ Liability insurance if you have a contract of employment/service with someone and it does not matter whether this contract is formally written down, spoken or even implied. It is not essential that the contract is actually referred to as a contract and the person may, in fact, be an unpaid voluntary helper.

So whether your friend helps you out when you are busy, covers for you whilst you are on holiday, or even whilst you are ill and unable to work, in each of these scenarios you MUST have Employers’ Liability cover in place.

Many people wrongly assume that because their employee is self-employed and pays their own tax Employers’ Liability cover is not required. This is not the case. What is important is the nature of the relationship and degree of control between the parties. ie a master/servant relationship exists.

Employers can be fined up to £2,500 for each day without adequate insurance

The Health and Safety Executive enforce the law regarding Employers’ Liability, and employers can be fined up to £2,500 for each day without adequate insurance. They can also be fined up to £1,000 for not displaying a valid Employers’ Liability certificate or failing to supply it to an HSE inspector when requested to do so.

Although an employer may be exempt from the requirement to hold Employers’ Liability insurance if they only employ close family members, it is worth considering though that even though they may not want to, a family member working for you may be forced into suing you if they suffer a life-changing injury at work and require expensive long-term care. In this situation, the benefit of having Employers’ Liability cover will prove invaluable.

In a survey carried out for the HSE in 2012 around 5% of employers required to hold Employers’ Liability insurance were found not to have any. Amongst those in breach of the law, employers with less than 5 employees or those that had been in business for less than 2 years were most likely not to hold the correct cover.

This article was produced with BPCA Associate Member, Cliverton, a specialist insurance company that offers specialist cover for animal-related industries – including pest management.

Source: Online