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Do you need employers liability insurance?

Written by Nick Green of PolicyBee on 08 May 2013

Workers’ wrongs

Even the most dedicated freelance web designer can use an extra pair of hands now and then. Looming deadlines tend to throw a different light on your will to do everything yourself.

So you might be surprised to hear that, far from making your life easier, taking on extra help can land you in trouble. Expensive trouble at that.

Like it or not, as soon as you start paying someone else to help you, your responsibilities change.

That’s because the Health and Safety Executive (HSE) like to make sure that people working for other people are properly looked after.

So they’ve made every employer’s moral obligation to their staff’s welfare a legal one. To conform, every UK business with one employee or more has to have employers’ liability insurance. It’s either that or a hefty fine.

People power

If that sounds like just another onerous regulatory burden on small businesses, it isn’t really. In fact, it could help.

Employers’ liability insurance exists to protect both you and your staff. If an employee of yours suffers an injury or becomes ill at work, and they think it’s your fault, they can sue you for damages and/or loss of earnings.

The good news is that your employers’ liability insurance picks up the tab. If you need to defend yourself, it pays for your legal costs and compensates your aggrieved worker too. You don’t have to do anything, apart from give your insurer the info they need.

Know your enemy

Even so, we know what you’re thinking:

“I don’t need it. I’m not actually employing anyone. I’m just borrowing them for a bit.”

That might well be the case, but you still need to know where you stand. The HSE have a very broad definition of ‘employee’ and you might be surprised to find out where your responsibilities lie.

Aside from the usual, permanent full and part-time people, all these are termed ‘employees’ too:

  • Volunteers
  • Trainees
  • Labour only subcontractors
  • Work experience placements
  • Summer holiday workers
  • Interns
  • Temps
  • Secondees
  • Apprentices
  • Staff borrowed from other businesses

Bona fide, self-employed subcontractors using their own equipment and working without your direct supervision are not employees. So you don’t have to worry about them.

Am I in trouble?

If you’re the owner and sole employee of your business, you don’t need employers’ liability. After all, you can’t sue yourself (although, bafflingly, some people do try).

Unincorporated family businesses where all employees are closely related are exempt too. Insurers, perhaps naively, don’t expect family members to sue each other for their injuries.

You might find a client asks you to have employers’ liability as part of a contract, but ultimately it doesn’t have any bearing on them or the work you do for them. If you’re not legally required to have it, try negotiating it out.

What is worth knowing is what happens if you don’t have it. Those hefty fines we mentioned earlier aren’t to be sniffed at: £2,500 for each day you’re without cover and £1,000 for not displaying a valid certificate.

So don’t take the risk – in any sense. Especially when £10m cover (the standard amount) costs so little. Shop around and you should find it for less than £50 a year.

For more information about being an employer, read this HSE guide.

 

The UKWDA has partnered with PolicyBee to offer members 10% off professional indemnity insurance. Get a quote today.

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