Employers' Liability Insurance

Employers’ Liability insurance (EL) could protect your business from a claim made by an employee or former employee who has been injured whilst carrying out their work for you. or is suffering from a work-related illness. If they think the business is responsible for the injury or illness, they can make a claim. It covers legal and compensation costs.

It is a legal requirement for most businesses with more than one employee to have EL insurance cover of a minimum of £5 million. All employers are liable for the health and safety of their employees either in the workplace or in remote working environments. If a business is found to have insufficient cover, they can be fined up to £2,500 per day so it is vital to have the right amount of cover in place. This policy could cover you for the cost of any compensation awarded.

This policy covers most different types of employment, here is a checklist of types of employment covered:

  • Full-time 
  • Part-time
  • Self-Employed
  • Temporary
  • Apprentices
  • Volunteers
  • Work experience


What does Employers’ Liability insurance cover?

This policy covers the business against a financial claim from a current or former employee. It also protects the business against prosecution by the Health and Safety Executive.

I have a small family business; do I need this cover?

It depends on the structure of your business. Most businesses do need EL insurance if they have more than one employee. As some claims can be made by ex-employees years after leaving the company, protection against a claim could be vital to ensure the business can defend their actions. If you are not a limited company and everyone working in the company is a relative, then you may not need to have it.

Do my employees need to know I have this policy?

Once you have EL insurance a certificate is issued for display in the workplace where it can clearly be seen by employees. The certificate clearly states the minimum cover. Since October 2008 employers have been able to post the certificate online for employees. In this case all employees need to know how and where to access the page.

I employ different types of workers; how do I know which ones are covered by this policy?

It can be difficult to understand who is covered by this insurance as there are a lot of different ways to employ people.
To help we have a list of the types of employment covered and those that do not need cover below:

You may need Employers’ Liability insurance for the following categories of worker:

  • You deduct National Insurance and income tax from the money you pay them You have the right to control where and when they work and how they do it
  • You supply their work materials and equipment
  • You have a right to any profit your workers make although you may choose to share this with them through commission, performance pay or shares in the company
  • You require that person only to deliver the service and they cannot employ a substitute if they are unable to do the work
  • They are treated in the same way as other employees, for example, they do the same work under the same conditions as someone else you employ

You may not need Employers’ Liability Insurance for the following categories:

  • They do not work exclusively for you (for example, if they operate as an independent contractor)
  • They supply most of the equipment and materials they need to do the job
  • They are clearly in business for their own personal benefit
  • They can employ a substitute when they are unable to do the work themselves; you do not deduct income tax or National Insurance. However, even if someone is self-employed for tax purposes they may be classed as an employee for other reasons and you may still need employers’ liability insurance to cover them

Source: Employers’ Liability (Compulsory Insurance) Act 1969