Employers’ Liability Insurance UK
Employers’ Liability Insurance in the UK
Employers liability insurance UK. When running a business in the United Kingdom that has employees, one of the most important legal, financial and moral obligations you face is ensuring that your workforce is protected from work-related harm. Employers’ Liability Insurance (often abbreviated “EL insurance”) is central to this. This article explains what it is, why it matters, what it covers, how much it costs, legal requirements, exemptions, and best practices for businesses.
What is Employers’ Liability Insurance?
Employers’ Liability Insurance is a form of insurance that protects employers against the financial consequences of claims by employees who suffer illness, injury, or disease as a result of their employment. These claims might arise from accidents at work, long-term exposure to harmful substances (occupational disease), repetitive strain injuries, or other work-related health issues. The insurance covers legal costs and compensation payments.
In the UK, this insurance is compulsory under the Employers’ Liability (Compulsory Insurance) Act 1969.
Why It Is Legally Required
Statutory Obligation
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Under the Employers’ Liability (Compulsory Insurance) Act 1969, every employer carrying on business in Great Britain must insure against liability for bodily injury or disease sustained by their employees arising out of or in the course of their employment.
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The insurance must be with an authorized insurer. Employers liability insurance UK.
Minimum Cover
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Employers must hold at least £5 million of cover. Many policies provide higher limits — £10 million is common. Employers liability insurance UK.
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The £5 million must include both compensation and legal costs. Employers liability insurance UK.
Penalties for Non-Compliance
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Failing to hold valid employers’ liability insurance can lead to fines of up to £2,500 per day.
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Employers must also display their EL certificate where employees can see it (e.g. in the workplace or via intranet or website) and show it to inspectors on request. Not doing so can result in separate fines (e.g. up to £1,000).
What It Covers
Employers’ Liability Insurance covers a range of situations in which an employee or former employee brings a claim against the employer for:
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Physical injury caused by accidents at work — for instance, slips, trips, machinery accidents.
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Occupational disease or illness arising from work activities — for example, respiratory disease due to inhalation of dangerous substances, hearing loss due to prolonged exposure to noise.
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Legal costs (defending the claim) and compensation awarded to the employee.
Some policies may provide additional features, depending on insurer and level of cover, such as:
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Cover for health and safety law defence costs if a prosecution is brought against the employer under health and safety legislation. Employers liability insurance UK.
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Automatic cover for temporary or casual employees or apprentices.
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Court attendance costs compensation (for directors/partners/employees required to attend court). Employers liability insurance UK.
Who Is Covered
Employers’ Liability covers a broad class of people working for the business, not just “full-time” employees: Employers liability insurance UK.
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Permanent, part-time, temporary, seasonal employees.
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Apprentices, trainees, students on work placements.
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Sometimes volunteers, depending on how they are engaged and whether the business treats them similarly to employees.
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Labor-only subcontractors (i.e. people who are doing work under your direction & control).
It is important to examine the exact terms of your policy to check which categories are explicitly included or excluded. Some contractors may not be covered if they are genuinely independent, use their own equipment, etc.
Exemptions
Not all employers are obliged to insure under the EL Act. Some of the exemptions include: Employers liability insurance UK.
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Employers who employ only close family members — family relationships such as spouses, parents, children, grandparents, siblings, etc. However, this exemption may not apply if the business is a limited company.
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Companies where the only employee is also the owner and owns 50% or more of the share capital. In some cases such companies are exempt. Employers liability insurance UK.
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Situations where employees are based outside Great Britain (England, Scotland, Wales) may also be excluded.
Even if exempt, businesses may still choose to take this insurance to protect themselves and their workers. It is often good practice, even if not legally compulsory.
Costs and Risk Factors
The cost of Employers’ Liability Insurance (i.e. the premium) depends on a number of factors: Employers liability insurance UK.
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Nature of business / industry risk: Work that is more physically hazardous (construction, manufacturing, heavy machinery, chemical handling) carries a much higher risk, hence higher insurance costs. Office-based, low-risk work tends to have lower premiums. Employers liability insurance UK.
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Number of employees: More people = more potential for claims. The more employees you have, the more you will pay.
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Claims history: If the business has a history of claims, insurers may consider it higher risk and charge more.
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Level of cover required: Higher limits (e.g. £10m vs minimum £5m) cost more. Also, optional extras (legal defence, court attendance, etc.) add to cost.
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Location: Geographic location can affect rates — e.g. areas with more litigation or higher general cost of legal or medical services.
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Type of workers: If workers are doing dangerous tasks, working at heights, handling machinery, or exposed to hazardous substances, that increases risk. Employers liability insurance UK.
As for actual cost ranges, one study suggests that many businesses might pay somewhere between £50 and £200 per employee annually for employers’ liability, depending on their risk level. Some examples show policies starting from around £51 depending on business type and cover.
How to Get Covered: Steps to Buying Employers’ Liability Insurance
Here are best practice steps for businesses to ensure proper coverage: Employers liability insurance UK.
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Assess your risk
Identify which employees might be at risk, what hazards exist in your operations, what past incidents or claims there have been, etc. -
Decide on the required cover level
At minimum, £5 million. But consider if your business risks justify higher limits (e.g. £10 million or more). Include legal costs and defence costs when choosing. Employers liability insurance UK. -
Choose a reliable insurer
It must be an authorized insurer. You can check via the Financial Conduct Authority (FCA) register. -
Compare quotes
Get several quotes, compare what is included and excluded — especially look at what kind of employees are covered (temporary, volunteers, contractors), what extra legal/defence costs are covered, how the insurer deals with long-tail claims (claims arising after an employee has left). Employers liability insurance UK. -
Ensure compliance
Once you have the policy:-
Display the EL certificate where employees can see it.
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Keep the certificate up to date.
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Be ready to show it to inspectors.
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Review periodically
As your business changes — more employees, different types of work, new hazards — your insurance needs may change. Renew or adjust your policy as needed. Employers liability insurance UK.
Common Issues and Challenges
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Long latency claims: Some occupational diseases (e.g. asbestos-related illness) take many years to manifest. Even after someone has left your employment, you may still be liable. So you need to ensure your past policies or run-off cover handles this. Employers liability insurance UK.
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Contractors and subcontractors: Sometimes, the nature of engagement blurs the line between “contractor” and “employee.” If contractors are under your control, use your tools, follow your hours, etc., insurers may treat them as employees. Clarify this in your policy.
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Mis-classification of employees: Improperly classifying a worker as self-employed when they are not can expose you to large claims. EL insurance payout depends on legal definition of employment status.
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Policy exclusions: Many policies will exclude certain risks or have conditions (e.g. injuries due to deliberate breach of safety rules, or damage/injuries outside of Great Britain if not specifically covered). Always read the fine print.
Benefits of Having Employers’ Liability Insurance
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Financial protection: Without it, a successful claim could bankrupt a business — compensation and legal defence costs can be very high. EL insurance mitigates that risk. Employers liability insurance UK.
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Legal compliance: Avoids fines and legal consequences for non-compliance.
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Employee morale & trust: Knowing that the employer is insured against workplace risk tends to increase employee confidence.
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Risk management discipline: Taking out an insurance policy encourages businesses to think about hazards, safety procedures, training, which in turn can reduce accidents. Employers liability insurance UK.
Case Examples
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Accident on site: A construction worker injures themselves due to poorly maintained scaffolding. Without EL insurance, the business must pay compensation and legal fees. With EL, the insurer covers these.
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Illness caused by exposure: A factory worker develops respiratory disease after prolonged exposure to fumes. Even if they left employment years ago, if their illness can be traced to work done for the business while the insurance was in force, EL may respond. Employers liability insurance UK.
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Slip in the workplace: An office employee slips on a wet floor that was not properly signed, injures themselves, and claims compensation. EL covers compensation + legal costs.
Practical Tips for Employers
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Conduct health & safety audits regularly; prevent risks rather than relying wholly on insurance.
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Keep detailed records of training, safety checks, equipment maintenance. These are crucial if a claim arises.
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Review job roles and contracts to clarify employment status of every worker. MI’s-classification can lead to gaps in coverage.
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Make sure that temporary or casual workers are included in EL policy if they are under your direction.
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When buying, check for policy features such as legal defence costs, court attendance, and coverage for past employees.
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Store your EL certificate somewhere accessible and make sure it is displayed in workplace.
Conclusion
Employers’ Liability Insurance is not just another optional policy; for most UK businesses that have employees, it is a legal requirement, and one that carries serious implications if not fulfilled. It provides protection against claims by employees for injury or illness arising from their work, covering compensation payments and legal costs. Although there are some exemptions, these are limited and often depend on corporate structure or family status. Employers liability insurance UK.
For business owners, the key things to do are:
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Understand whether you need EL insurance (almost certainly yes if you employ people);
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Choose adequate cover (minimum legal level, maybe more depending on risk);
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Ensure that all categories of your workforce are included;
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Keep documentation and certificates in order;
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Practice safety and risk mitigation so claims are less likely.
By doing so, you protect not only your business’s financial health, but also the wellbeing and rights of your employees — which is not only good ethics, but good business also. Employers liability insurance UK
