Employers' Liability Insurance Cover Explained

Employers' are responsible for the health and safety of their employees while they are at work. Your employees may be injured at work or they, or even former employees, may become ill as a result of their work while in your employment, and as a result may try to claim compensation from you. Employers' liability insurance ensures that you at least have a minimum level of insurance cover against any such claims.

An employee is defined as anybody who is assisting you in your work on your premises, under a contract of employment.  A contract need not be in writing - it exists when the employer and the employee have agreed terms and conditions of employment.  It can also be implied from the employee's actions and those of the employer.  A contract will normally set out what you are expected to do.  Employees can be working on a part-time basis, a full-time basis, students on work experience, a self employed sub contractor, a person working on probation or trial basis and even voluntary workers.  These are all technically employed by you, as they are under your instruction and working on your premises.

There are essential tax and National Insurance contribution differences that come with different ways of working.  Employers must recognise the category to which people who work for them fall in to, to ensure that the legal and tax obligations to them are fulfilled.

Public liability insurance is different to employers' liability insurance. Public liability insurance covers you for claims made against you by members of the public or other businesses, but not for claims made by employees.

Whilst public liability insurance is voluntary, employers' liability insurance is compulsory. You can be fined if you do not hold a current employers' liability insurance policy which complies with law.

You may need employers' liability insurance for someone who works for you where:

• 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; or
  
• 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 be exempt from having Employers Liability insurance in the following instances, you should check with one of our business insurance specialists to see if this applies to you:

• All of your business' employees are close relatives and the business itself is not incorporated as a limited company.
• Where the owner is the sole employee, and owns at least 50% of the company's issued share capital.

You must be insured for at least £5,000,000. However, you should look carefully at your risks and liabilities and consider whether you need insurance cover of more than £5,000,000. At Your Insurance Group we offer £10,000,000 as standard cover.

When you take out or renew your policy with Your Insurance Group we will provide you with a certificate of employers' liability insurance. You must display a copy of your certificate where your employees can easily access it. Since the 1^st October 2008 you are allowed to display your certificate electronically. Employers' choosing this method need to ensure their employees know how and where to find the certificate and have reasonable access to it.

Since the 1^st October 2008 there has been no legal requirement for employers to keep copies of out-of-date certificates. However, employers are strongly advised to keep a complete record of their employers' liability insurance, which Your Insurance Group will do for you.

The Health and Safety Executive enforces the law on employers' liability insurance and inspectors can check that you have employers' liability insurance with an approved insurer. They may ask to see your certificate of insurance and other insurance details. You can be fined up to £2,500 for any day which you are without suitable insurance.