Employers' Liability
As a business you are responsible for the health and safety of your employees. Should an employee be injured whilst in the course of their work, either on or offsite, or should they or a former employee fall ill as a result of working for you, employers’ liability will protect you in the event of a claim by the current or former employee against your business by enabling you to meet the cost of the compensation.
A mandatory minimum level of employers’ liability insurance cover is enforced by The Employers’ Liability (Compulsory Insurance) Act 1969, and your employers’ liability insurance certificate must be prominently displayed on your premises.
Whether you are required by law to have employers’ liability insurance will depend on the terms of your contract with the people who undertake work for your business. This can seem somewhat of a grey area in some cases: whether the individual is classed as employed or self-employed, or whether you hold a contract of employment or a contract for services, is often irrelevant. However, as rough guide at this stage, you may require employers’ liability insurance if one or more of the following apply:
- you deduct National Insurance and Income Tax from their earnings
- you supply most of the equipment and materials they need to do the job
- you determine where and when they work and how they undertake the work
- you have a right to profits made by your workers, regardless of whether you share this with them in the form of commission payments, performance pay or shares in the company
- you require the individual to deliver a service and they cannot employ a substitute if they are unable to deliver the service themselves
- they are treated in the same way as other employees (ie. they do the same work under the same conditions as someone who is employed)
In general, you may not require employers’ liability insurance if one or more of the following apply:
- the individual does not work exclusively for you (ie. they are an independent contractor)
- they supply most of the equipment and materials they need to do the job
- they are clearly in business for personal benefit
- they can employ a substitute when they are unable to do the work themselves
In the case of:
- students who work for you unpaid
- people who are not employed, but taking part in a youth or adult training programme
- a school student on a work experience programme, or
- a volunteer
although employers’ liability may not be required, it is advisable to inform your insurance company should you take on persons such as these as a separate risk assessment may be required.
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