Do employers need employers' liability insurance?
Yes. In Great Britain, most employers must have employers' liability insurance as soon as they become an employer, with cover of at least £5 million from an authorised insurer. It helps pay compensation if an employee is injured or becomes ill because of their work. Some employers are exempt, and Northern Ireland has its own legislation.
Who needs it
The Employers' Liability (Compulsory Insurance) Act 1969 requires every employer carrying on business in Great Britain to insure against liability for bodily injury or disease sustained by employees arising out of and in the course of their employment in Great Britain. HSE says the duty covers people employed under a contract of service or apprenticeship. What matters is the real nature of the relationship, not whether someone is called self-employed or how they are taxed.
- Exempt: employers whose only employees are close family members, such as a spouse, civil partner, parent, child or sibling; HSE says this does not apply to family businesses incorporated as limited companies
- Exempt: employers who only employ someone based outside England, Scotland and Wales, although HSE says cover is needed if they spend more than 14 days continuously in Great Britain
- Exempt: most public bodies, including government departments, local authorities and NHS bodies
- Exempt: companies whose only employee is an owner holding 50% or more of the issued share capital
Minimum cover and the certificate
The 1998 Regulations set the minimum at £5 million for claims arising from any one occurrence, including costs and expenses. A company and its subsidiaries count as a single employer for that minimum. HSE notes that because the minimum includes costs, employers may want more.
The insurer issues a certificate. GOV.UK says it must be displayed where employees can access it, for example at the workplace, on a website or intranet, and shown to inspectors when they ask.
Penalties
HSE enforces the law. An employer can be fined up to £2,500 for each day it is not properly insured, and up to £1,000 for not displaying the certificate or not showing it to inspectors. Directors and managers can also be liable where the failure happened with their consent or through their neglect.
Northern Ireland
The 1969 Act does not extend to Northern Ireland. There, the Employer's Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972 requires every employer carrying on business in Northern Ireland to insure against liability for personal injury suffered by employees. HSE says one certificate can cover staff in both places, but employers should check it meets local requirements.
The law
“every employer carrying on any business in Great Britain shall insure, and maintain insurance…”
“shall in aggregate be not less than £5 million…”
“This Act shall not extend to Northern Ireland.…”
Sources
- Employers' liability insurance · GOV.UK
- Employers' Liability (Compulsory Insurance) Act 1969: a brief guide for employers · HSE
- Employer's Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972, article 5 · legislation.gov.uk
- The Employers' Liability (Compulsory Insurance) (Amendment) Regulations 2004 · legislation.gov.uk
General information for employers in Great Britain, not legal advice. Check the official sources for your situation.
What employers can do
- Arrange cover before the first employee starts
- Check the insurer is authorised on the Financial Conduct Authority register
- Confirm cover is at least £5 million and consider whether more is needed
- Display the current certificate where every employee can see it, on paper or online
- Review cover when adding staff, sites, subsidiaries or work outside Great Britain
- Keep records of past policies, as HSE notes some diseases appear decades after exposure
Employment legal protection insurance can cover legal costs and awards in tribunal claims, alongside HR advice: how HR insurance works.
Related answers
- Does employers' liability insurance cover employment tribunal claims? Not as a legal requirement. In Great Britain, the law requires employers' liability insurance to cover liability for employees' bodily injury or disease arising from their work. The law does not mention employment tribunal claims such as unfair dismissal, discrimination or unpaid wages, so employers should treat them as a separate risk. What any particular policy includes depends on its terms.
- How do employers carry out right to work checks? Before someone starts work, employers should carry out one of three prescribed checks: a manual check of original documents, a Home Office online check using a share code, or a check through a registered right to work digital verification service provider. Done correctly, it gives a statutory excuse against a civil penalty of up to £60,000 per illegal worker.