Confused about whether you need Employer’s Liability Insurance? Most people who employ staff in the UK need it, but some people are exempt. There are strict penalties if you need cover and don’t have it, so it really pays to know where you stand.
Join Rhino as we break down this important type of insurance and reveal everything you need to know.
With the passing of the Employers Liability Act in 1969, it became the law in the UK for all employers to be covered by at least £ 5 million in Employer’s Liability Insurance. It’s what’s known as compulsory insurance.
Employer’s Liability Insurance is a type of policy which offers employers protection against workplace claims. It’s also known as ‘Worker’s Compensation’. The policy will shield an employer from the costs of compensation claims made by their employees. These claims could arise from injury, illness or property damage caused by the work carried out or the working environment. For example, hand and arm vibration (HAV) injuries can be caused by using certain power tools while on the job – and the employer is liable.
Claims from employees against their employers are relatively common, especially in the trades. From plumbing to electrics, construction to bricklaying, trade work comes with a huge number of risks. From broken bones to accidental death – the harsh reality is that these things happen in trade work more than most other industries. And if something happens to an employee while they’re working it’s generally the employer who must compensate them financially for the harm done.
If an employer is covered by Employer’s Liability Insurance, then the costs of claims from employees are borne by the insurer. This means the employer won’t have to pay the cost themselves – which is handy as costs for paying legal bills and compensating injured employees can be huge.
All businesses and individuals in the UK who employ anyone must be covered by Employer’s Liability Insurance of at least £ 5 million. You could be a sole trader, limited company director or part of a partnership – you still need this cover if you have employees.
‘Employees’ includes:
With this being said, there are exceptions to the rule and some employers are exempt from needing this insurance. You won’t usually need Employer’s Liability Insurance if:
As we mentioned, it’s a legal requirement for most businesses to have Employer’s Liability Insurance in the UK. There are financial repercussions and potential penalties should you skip it.
You can be fined for non-compliance, and it’s no small sum either. For every day you’re without proper Employer’s Liability Insurance cover, HMRC can fine you £2,500. You will even get a fine of £1,000 if you aren’t correctly displaying your certificate or can’t find it if an inspector or employee asks to see it. A digital copy is fine, but it needs to be stored somewhere your staff can easily locate and view it.
As we mentioned, the trades industries include some of the most dangerous jobs in the UK. The scope for things to go wrong for your employees is almost endless, with the following being common reasons for an employee to claim against their employer:
Having no insurance isn’t really an option for business owners, as going uninsured can have a huge negative financial impact.
Regardless of their insurance status, the owners of small to medium sized trades businesses are likely to find themselves the subject of legal disputes and compensation claims throughout their careers. This includes claims made by customers, members of the public, and their own employees. Claims from third parties should be covered by a robust Public Liability Insurance policy, and claims from employees are protected under Employer’s Liability Insurance.
Going without these key types of insurance leaves a business liable to pay the (sometimes massive) costs associated with defending against and settling claims out of their own pockets. The minimum amount of Employer’s Liability Insurance a UK employer should have as stipulated by law is £5million. Could you find that spare if you needed to settle a claim?
It’s no surprise that being unconfident of your insurance status brings a huge amount of stress. Constantly fretting about what would happen if you were inspected, or worse – an employee is hurt and makes a claim – can really take an emotional toll. No busy trades business owner needs this type of hassle when it can be easily sorted – and at a low cost – by giving Rhino a call.
How many customers do you think would be happy to work with a firm that didn’t carry the compulsory insurance required by law? The answer is, not many! Your reputation is everything in the competitive trades industry, and going without a mandated form of insurance cover like Employer’s Liability Insurance is a sure-fire way to burn bridges with potential customers and sink business growth.
If you’re already an employer, you may have accidentally allowed a previous Employer’s Liability Insurance policy to lapse. If you’re not sure whether you’re currently protected by Employer’s Liability Insurance, the first thing you should do is dig out your previous policy documents to make sure they’re up to date. Don’t delay, as every day you go unprotected as an employer can see you fined £2,500.
If you’re not an employer yet and are planning on hiring staff soon, you should also act fast. You should have it in place when you onboard your first employee (remember, this includes apprentices and temp staff), otherwise you risk a fine.
Luckily, you’re in the right place to sort your Employer’s Liability Insurance in just a few steps with Rhino. We are the UK’s trade insurance experts, and our dedicated team of guys and girls will get you up and running with your new Employer’s Liability Policy in next to no time.
With Rhino, you can purchase our outstanding Employer’s Liability Insurance cover as an add-on to our hugely popular Public Liability Insurance – another absolutely essential policy for tradespeople.
We love to talk – give us a call today on 0116 243 7904.
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