Employers Liability Insurance

As a contractor looking for employer’s liability insurance, your need for it depends on whether you hire bona-fide or labour-only subcontractors. A bona-fide subcontractor works independently of the company by setting their own hours and using their own equipment. They are also paid by invoice rather than salary.

Labour-only subcontractors, however, are treated like employees and work under a company’s supervision, using its equipment. Therefore, if you employ labour-only workers, you must take out employer’s liability insurance as they will count as members of staff.

You won’t need to do the same for bona-fide subcontractors, but you should ensure they have their own insurance in place, such as public liability and employer’s liability coverage for their own workforce.

Employer’s liability cover is a legal requirement for the majority of British businesses with a minimum of one employee. An employee can be defined as someone who has income tax and National Insurance contributions deducted from their wages, and uses company tools and equipment to do their job. Without this cover, you could face a daily fine of £2,500 until you purchase a policy.

To check whether you’re legally obliged to hold employer’s liability insurance, check out the requirements of the legislation on the Goverment website.

Here at Tradesman Saver, our employer’s liability coverage provides you with an indemnity limit of up to £10 million for a single claim. There’s also an option for you to extend this insurance to include working partners and temporary staff. This means if anybody in your team was injured, or fell ill at work, we’d pay up to £10 million of compensation and legal fees.

By law, UK employers need at least £5 million worth of cover. This is outlined in the Employer’s Liability (Compulsory Insurance) Act 1969. However, it’s important to consider how likely it is an employee could make a claim against you at some point in the future. For instance, if your nature of work is particularly high risk, the likelihood of potential injuries or illnesses may be more severe, and £5 million may not be enough to cover this risk. This is why we provide our customers with a £10 million indemnity limit in our employer’s liability insurance policies. Our helpful guide can help you gauge how much employer’s liability cover is most appropriate for you.

As soon as you are on risk for your policy with Tradesman Saver, a certificate of employer’s liability will be sent to our secure document portal with your other policy documents for you to access 24/7.

You’re required to display this where your employees can see it, and have it readily available to show health and safety inspectors. You’ll be liable for a fine if you don’t do this.

You should always keep your paperwork to protect you against any health problems that arise in the future. For example, an employee of yours could be exposed to something that causes an illness, but the condition may not develop for many years. In situations like these, you’d need your insurance details for the period the exposure occurred.

Employees who become injured or ill as a result of employer negligence can make an employer’s liability insurance claim against the business, even if it goes into liquidation.

For anybody running a business and employing staff or using labour-only sub-contractors, this cover is legally required. There are, however, a few exceptions to employer’s liability insurance which are worth noting.

If your business is a limited company, with only one employee owning 50% or more of the issued share capital, you aren’t obliged to take out employer’s liability insurance. If your business isn’t a limited company, but either you’re the only employee or you only employ close family members, then this coverage is also not compulsory.

However, even though employer’s liability insurance isn’t a legal requirement in these circumstances, it may still be wise to purchase this optional policy to provide a safety net against unforeseen accidents at work.