Employers’ liability insurance is a legal requirement for most UK businesses that employ staff. Under the Employers’ Liability (Compulsory Insurance) Act 1969 you must hold at least £5 million of cover, and you can be fined up to £2,500 for each day you are without it. The insurance pays compensation if an employee is injured or made ill by their work and the business is liable.
What the law requires
The 1969 Act says most employers “are required by the law to insure against liability for injury or disease to their employees arising out of their employment”. The minimum cover is £5 million, though most insurers provide £10 million as standard. You must also display the certificate of insurance, or make it available electronically, where employees can read it.
Who has to have employers’ liability insurance?
Almost every business with employees. The main exemptions are family businesses where all employees are closely related to you (this exemption does not apply to limited companies), and businesses whose only employees are based abroad. If you are unsure whether someone counts as an employee, that is a question worth asking rather than assuming, because the penalties fall on the business.
What are the penalties?
You can be fined up to £2,500 for any day you are without suitable cover. Separately, you can be fined up to £1,000 for failing to display the certificate or to produce it to an HSE inspector when asked. These are per-breach figures, not one-off caps.
How much cover do I actually need?
£5 million is the legal floor, not a considered figure for your risk. Serious workplace injury claims, particularly long-term disability or disease, can run well beyond that, which is why £10 million is the market standard and higher limits are common for larger payrolls or higher-hazard trades. Setting the limit is exactly the kind of judgement a broker helps with.
Is it the same as public liability?
No. Employers’ liability covers your employees; public liability covers members of the public and clients. Most businesses need both, and they are usually arranged together. Our guide to professional indemnity vs public liability explains where each fits.
Arranging cover through a broker
Solar Insurance Services is an insurance broker and can arrange employers’ liability alongside the rest of a commercial programme, which matters most where the trade is non-standard or the payroll is large. Get in touch to talk it through.