It’s a legal requirement for employers in England, Scotland and Wales (including those who run off-shore installations) to have insurance in place against liability for injury or disease to their employees as a result of their employment. This is known as employers liability insurance.
Employers have a legal responsibility for the health and safety of employees who work for them. The definition of ‘working for an employer’ depends on the nature of the employer/employee relationship, including the degree and nature of control that an employer has over work.
For example, if tax and national insurance are deducted by the employer from an employee’s earnings, or if the employer provides the tools and work equipment for the employee, this means they’re included in the cover.
Independent contractors who work for different companies aren’t covered by the employer’s liability insurance of those companies.
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Employers Liability Insurance
Most businesses need employers liability insurance. The exceptions are:
– government organisations,
– health service bodies
– organisations financed by public funds,
– family businesses, where employees are closely related (excluding Ltd companies),
– companies who only employ 1 owner who owns 50% or more of the company
Employers don’t need liability insurance to cover employees based abroad, but it’s good practice to check the laws in the relevant country in to see if any employers liability insurance to protect employees is required.
Unpaid staff, e.g. those on work experience or a training program, aren’t covered. However, employers should talk to their insurers about these situations and specific risk assessments must be written under law to cover all eventualities, including young person’s risk assessments.
Employees could be injured during the course of their work. People being sick or injured at work accounts for an estimated £14.3 billion cost to businesses every year.
It is, therefore, important for employers to think carefully about where they buy their employers’ liability insurance. Coverage must be at least £5 million and a copy of the insurance certificate must be available for viewing.
Some companies, such as AXA, offer up to £10 million as part of their policies. This can be by electronic means. Failure to make the certificate of insurance available to staff and inspectors can result in a fine of up to £1000.
There’s a 3 year cut off point for making a claim and The Employers Liability (Compulsory Insurance) Act 1969 requires all employers to have the minimum cover in place to cover such claims made by staff both on and off site whilst at work.
Motor accidents resulting in injury are usually covered by the company motor insurance policy. But another factor to consider is that former employees might subsequently become unwell as a result of past activities relating to their employment (e.g. exposure to asbestos) and could seek compensation if they think it’s the employer’s fault.
Insurers authorized under the Financial Services Authority must be used for obtaining cover. Insurers should pay out compensation regardless of who’s deemed to be at fault for the injury or illness.
For example, an insurer cannot refuse to pay compensation if the employer hasn’t provided sufficient protection to their staff, or done something their insurer told them not to do. The specific insurance policy for each employer should cover the specific activities relating to each business.
The law relating to liability insurance is enforced by the Health and Safety Executive and inspectors have the authority to check that sufficient cover’s in place with an authorized insurer and that the certificate to prove this is available to view. Fines for a breach of the Employers’ Liability (Compulsory Insurance) Act can reach £2500 per day if suitable insurance cover isn’t in place, so it’s not worth the risk to flout the law.