Is Income Protection Insurance worth it?
Income Protection Insurance pays out a regular tax-free monthly sum if you're unable to work, helping you cover your essential outgoings.
When isn’t Employers’ Liability Insurance a legal requirement?
Did you know? Employers’ Liability Insurance isn’t a legal requirement if a business is not a limited company and only employs close family members, such as a husband, wife or child.
It's also worth knowing:
In most cases, Employers' Liability Insurance is a legal requirement if a business employs staff. Without it, when you're required to have it, you can be fined up to £2,500 for every day you're uncovered.
The exemption only applies to sole traders (without employees) and partnerships. It doesn't extend to limited companies, even if every employee is a relative.
If you’re thinking of taking on staff, you’d be right to assume that you probably need Employers’ Liability Insurance. It's one of the few types of cover that's often required by law, however there are exceptions.
When is Employers' Liability Insurance a legal requirement?
Firstly, under the Employers' Liability (Compulsory Insurance) Act 1969, any business that employs someone, whether full time, part time, casual or for a single day, needs Employers' Liability Insurance in place. It protects your business if a worker makes a claim against you for an injury or illness they say happened because of working for you. Miss this requirement and the Health and Safety Executive can fine you up to £2,500 for every day you're without cover, plus up to £1,000 if you can't produce your certificate of insurance when asked. To take a deeper dive into Employers Liability Insurance, take a look at our Ultimate Guide to Employers' Liability Insurance.
What's the family exemption, and who counts as family?
If your business is classed as a 50/50 partnership and you have no other employees, or you’re a sole trader, and everyone you employ is a close family member, the law doesn't require you to have Employers' Liability Insurance. According to Government guidance, a family member for this purpose means a husband, wife, civil partner, father, mother, grandfather, grandmother, step-father, step-mother, son, daughter, grandson, granddaughter, step-son, step-daughter, brother, sister, half-brother or half-sister.
The catch is that every single person you employ must fit that list. Take on even one worker who doesn't, such as an apprentice or a labourer brought in for a single job, say, and you need Employers' Liability Insurance for your whole team, family members included.
It's also worth knowing this exemption is limited to sole traders and partnerships. If you trade as a limited company, the exemption doesn't apply, even if every employee is a relative.
Why most trade businesses take out cover anyway
Regardless of the exemption, often business will take out Employers Liability Insurance to protect the business from the potential costs of a claim arising. A claim from a family member is still a claim, and without cover, your business would be meeting any compensation and legal costs itself. However, with the cover in place, your business would be protected.
To see what an Employers' Liability Insurance claim actually looks like in practice, our Employers' Liability Insurance Claims Examples page walks through two real scenarios.
If you're not sure whether the family exemption applies to your business, give us a call on 0116 243 7904 or drop us a message on chat, we're happy to talk it through.
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