Definition
Compulsory insurance that covers employers against claims from employees who are injured or become ill as a result of their work. Almost all employers in the UK are legally required to hold employers' liability insurance with a minimum cover of 5 million pounds.
UK Context
The Employers' Liability (Compulsory Insurance) Act 1969 requires most employers to hold at least 5 million pounds of cover (most policies provide 10 million). The certificate must be displayed at the workplace or made easily accessible. Failure to hold insurance can result in a fine of 2,500 pounds per day. Some employers are exempt, such as family businesses employing only close family members.
Best Practices
- Display the current employers' liability insurance certificate prominently in the workplace or on the intranet
- Review your insurance cover annually and when your workforce or risk profile changes significantly
- Keep previous years' certificates for at least 40 years as claims can be made long after the period of employment
Frequently Asked Questions
Who is exempt from employers' liability insurance?
Exemptions apply to certain employers including those who only employ close family members, some public organisations, and companies with no employees. Limited companies with only one director who owns 50% or more of the share capital may also be exempt.
What does employers' liability insurance cover?
It covers compensation and legal costs for claims from employees who are injured, contract an illness, or die as a result of their work. It does not cover public liability (claims from non-employees) or professional indemnity.