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May 22, 2023
If you employ any members of staff – or you’re starting a business where you will be – then employers’ liability insurance is one of the most important things you need to secure. Not only is it required by law, but it gives you vital protection if somebody who works for you gets hurt or ill while on the job. It’s one of a number of insurance protections that, in the event of a big claim being made against you, can make the difference between whether your business survives afterwards or not.
This guide tells you all the key facts you need to know about employers’ liability insurance, including what’s covered, whether or not you might be exempt, and how much you can expect to pay.
Yes. If you employ at least one person other than yourself, then you must have a valid employers’ liability policy in place, as stated by the Employers’ Liability Act 1969. This also includes any self-employed contractors that you use the services of, any temporary staff, as well as apprentices, volunteers, trainees and those on work experience.
The penalty for non-compliance is extremely severe: for each day that you aren’t covered, you will be fined £2500 per employee.
Beyond this, you may also find that proof of cover will also be inspected by many partner businesses, organisations and clients you want to work with – similar to the requirement to have public liability insurance.
Employers’ liability insurance covers the cost of any compensation claims by employees, as a result of them getting injured or ill as a result of their work. If they suffer any financial loss as a result of their working activities – including if they are working from home – then they have the right to be compensated by you as their employer. If you have employer’s liability insurance in place, then your insurer will take care of all the bills generated (minus any excess you are required to pay, as set out in your policy).
This type of insurance can also cover injuries caused by employees to third parties like customers. For example, if an employee drops a heavy item onto a customer and causes an injury, then your business could be subject to a claim. This doesn’t even necessarily have to be a customer: it also applies to any member of the public, such as a pedestrian who trips over a sandwich board outside the front door of your premises.
Apart from the fact that it’s required by law, employers’ liability insurance is important because of the sheer scale of how much a compensation claim can cost you.
If an employee is forced out of work because of illness or injury that you’re responsible for – especially if the layoff is lengthy or even permanent – then the bill can run into many thousands of pounds. This is not only due to lost income from time off work, but also any medical bills incurred by the injured party, as well as the legal expenses of defending the claim.
Many larger businesses with high-value turnovers are often able to absorb this cost without resorting to employers’ liability insurance. But smaller operations will find it much more difficult to do so, and the ongoing viability of the business can be thrown into doubt by just one large claim. For sole traders and partnerships that don’t have the protection of limited liability, it could even put homes at risk because of the debt involved.
Naturally, there is some variation on how much a policy will cost, depending on the number of employees you have. If you’re a small operation with only one or two employees, you will face a much smaller bill than a bigger company with a much larger workforce. The amount of time that your business has been operating, the nature of your business, and the level of risk that your employees are exposed to will also influence your quotes, too.
The cheapest premiums can come in at less than £50 a year (around £4 a month if paying through a flexible payment plan), but this can run into the hundreds for riskier types of work where the chance of a claim is higher.
Obviously, if you are self-employed and work entirely on your own, then you don’t need employers’ liability insurance – you don’t have any employees to protect, and your own protection would come from personal accident insurance instead. This also applies if your business is a partnership, and there are no employees other than you and your partner(s).
If your company only employs people who are directly related to you, then you are also exempt from the legal requirement to have employers’ liability insurance. However, we recommend taking a policy out anyway, as you will still be vulnerable for a compensation claim, just as you would be from anyone else that you employ.
Whether you’re running a large enterprise like a gym with dozens of staff, or a small nail salon with just one other employee, taking out employer’s liability insurance is essential. But whatever your business, Protectivity has the right cover for you.
We have years of experience in providing comprehensive policies for sports, leisure and beauty businesses, encompassing employer’s liability cover. Combined with other types of insurance, including public liability, personal accident, equipment cover, professional indemnity and more, you can grow your business in the confidence that you won’t end up out of pocket if the unforeseen happens.
Our flexible payment plans and affordable rates mean many of our policies cost just a few pounds a month. Find the right policy option for your enterprise by exploring our full range here.