Employers’ liability insurance and the Law

11 Jan 2010

But first of all, what does the cover do?

As an employer, you have a responsibility for the health and safety of your employees while they are at work. If one of them is injured in the workplace or as a direct result of carrying out their job; or they fall sick due to their work, then they may be able to make a claim against you for compensation. Employers' liability insurance ensures that you have some financial protection against such claims, which, if they were successful, could literally bring your business to its knees. It will also typically cover any associated legal costs too.

So, what are your legal liabilities?

• Interpreting the law - in most cases, if you have employees, then you will need employers' liability cover up to £5m. However, there can be exceptions...

• Keeping it in the family - many businesses are owned and run as family affairs. Although the hours are put in, money paid out for those hours worked and perhaps even a division of the business profits between family members, the employers' liability law typically grants an exemption from the need to hold employers' liability insurance, if all such "employees" are close family members.
  

Laws being laws, of course, there is a carefully defined list of just who can qualify as a "close family member" - and this includes a spouse, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, stepson, stepdaughter, brother, sister, half-brother or half-sister. Even here, though, there is a further complicating factor and that is that if the family business is run as an incorporated, or limited liability company then the exemption does not apply and you are likely to need employers' liability cover;

• The owner employee - in many businesses, of course, the person employed by the business or company and the individual who owns a majority share in it are one and the same person. If the company employs just one person, therefore, who is also a majority shareholder of the business, then the law typically grants an exemption from the requirement to hold employers' liability insurance.

The good news is that if you do need employers' liability insurance, then we can help. We can offer competitively priced insurance policies that include Employers' Liability that, depending on your business, may also include temporary employee cover. This may be particularly useful for companies not taking on staff due to the current economic crisis and using temporary employees or contractors.

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