What is Employers’ Liability Insurance?
Employers’ Liability (EL) Insurance is designed to pay compensation costs and legal fees if an employee or ex-employee sues for illness or injury caused by their work.
Even a minor incident such as a member of staff tripping over a trailing cable could see a compensation claim which could lead to a court ordering an employer to pay compensation for injury, costs and other damages. The compensation amount and any legal fees will be paid by the EL Insurance.
Must I have EL Insurance?
Yes, if your business employs one or more people, it is a legal requirement under The Employers’ Liability (Compulsory Insurance) Act 1969, so most businesses will have to arrange this cover. You must get EL Insurance as soon as you become an employer and your policy must cover you for at least £5 million and come from an authorised insurer. In practice, most insurers offer cover of £10 million.
Note that you can be fined £2,500 for every day you do not have this insurance if you have employees. Even if you employ short-term staff, casual workers or contractors, you will usually be required to have EL Insurance. An exception is that immediate members of your family who work for you don’t count as employees for insurance purposes.
You can also be fined £1,000 if you do not display your Employer’s Liability certificate (this can be in an electronic format) or refuse to make it available to inspectors when they ask.
It is important not to take any risks with this cover so you should seek advice from your insurance broker so that they can advise you on the legal requirements and tailor cover to suit your specific business needs.
What about my legal responsibilities for health and safety?
Having EL Insurance does not mean you can forget about your legal responsibilities to protect the health and safety of your employees. For example, you must carry out a risk assessment that is fit for purpose, and take all reasonably practicable measures to protect your employees; and also report incidents.
It is also the case that if your insurer believes that you have failed to meet your legal responsibilities for the health and safety of your employees and that this has led to the claim, the policy may allow the insurer to sue you to reclaim the cost of the compensation.
About Lansdown
Lansdown Insurance Brokers are specialists in Block of flats insurance, Vineyard insurance and Business insurance. We are able to provide flexible policies to suit individual client needs and provide advice on what cover is needed. For more information call the team on 01242 524498.