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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 your former employees, may become ill as a result of their work while in your employment. They might try to claim compensation from you if they believe you are responsible. The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any such claims.
Employers’ liability insurance will enable you to meet the cost of compensation for your employees’ injuries or illness whether they are caused on or off site. However, any injuries and illness relating to motor accidents that occur while your employees are working for you may be covered separately by your motor insurance.
Public liability insurance is different. It covers you for claims made against you by members of the public or other businesses, but not for claims by employees. While public liability insurance is generally voluntary, employers’ liability insurance is compulsory. You can be fined if you do not hold a current employers’ liability insurance policy which complies with the law.
If any of your employees are normally based in England, Scotland or Wales (including offshore installations or associated structures) you must have employers’ liability insurance. Under the law in Great Britain you do not need employers’ liability insurance to cover any of your employees who are based abroad (eg if they are on secondment). However, you should check whether the law in the country where they are based requires you to take out insurance or take any other measures to protect your employees. If any of your employees are normally based abroad but spend more than 14 days continuously in Great Britain, or more than seven days on an offshore installation, under the law in Great Britain you will need employers’ liability insurance for them.
You need employers’ liability insurance unless you are exempt from the Employers’ Liability (Compulsory Insurance) Act. The following employers are exempt:*
* Further exemptions from the need to have employers’ liability insurance are listed at section 3(1)(a) and section 3(1)(b) of the Employers’ Liability (Compulsory Insurance) Act 1969, and Schedule 2 to the 1998 Regulations.
You are only required by law to have employers’ liability insurance for people who you employ under a contract of service or apprenticeship.
Whether or not you need employers’ liability insurance for someone who works for you depends on the terms of your contract with them. This contract can be spoken, written or implied. It does not matter whether you usually call someone an employee or self-employed or what their tax status is. Whether you choose to call your contract a contract of employment or a contract for services is largely irrelevant. What matters is the real nature of your relationship with the people who work for you and the nature and degree of control that you have over the work they do.
The following paragraphs may help give you some indication of whether or not a person is an employee under the Employers’ Liability (Compulsory Insurance) Act. However, it is for you to satisfy yourself of the status of the persons working for you and if you have any doubts, you should seek legal advice.
You may need employers’ liability insurance for someone who works for you where:
You may not need employers’ liability insurance for people who work for you where:
In some cases you will not need additional employers’ liability insurance for volunteers or for:
Insurers will usually cover the above under an existing employers’ liability policy, and there is generally no need to inform your insurer if you take on any of the above. However, you should talk to your insurer if you take on the above either for long periods, or if they are doing work that is not your company’s usual business, and you should bear in mind the level of risk they may be exposed to during the time they are working for you. If you do not currently have any employers’ liability cover you should talk to your insurer before taking on any of the above.
Graham Sykes Limited is authorised and regulated by the Financial Conduct Authority. Our firms FCA number is 300310
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