The Federation of Small Businesses (FSB) has recently published updated guidance on Employers’ Liability insurance. We’ve outlined the rules and risks surrounding this legally required cover.
If your business employs anyone, whether full-time, part-time, temporary or even volunteers, you are likely required by law to have Employers’ Liability insurance in place.
This cover is designed to protect your business if an employee becomes ill or is injured as a result of their work, and you are found legally responsible. Without it, the financial consequences can be severe.
What the FSB highlights
The updated guidance includes clear examples of scenarios where Employers’ Liability insurance may be needed, such as:
- A worker sustaining an injury while operating machinery
- An office employee developing repetitive strain injury
- A fall on a construction site resulting in time off work
Legal fees, compensation claims and related costs in these cases can quickly add up. As the FSB points out, settlements can run into tens of thousands of pounds, potentially putting significant strain on a small business.
Key rules to be aware of
The guidance also clarifies several important details about the law:
- The legal minimum cover is £5 million (though most insurers provide £10 million as standard).
- If you don’t have the required cover in place, you can be fined £2,500 per day.
- Your insurance certificate must be clearly displayed or made accessible to your employees – failure to do so could lead to a £1,000 fine.
While most businesses employing staff will need this insurance, there are a few exceptions. For example:
- Sole traders with no employees
- Certain family businesses
However, these exemptions are quite limited, so it is important to check your specific circumstances carefully.
Take the time to review the guidelines
This updated guidance serves as a useful prompt to review your own insurance arrangements, particularly if you have:
- Changed your staffing structure
- Changed your business structure
Ensuring you have adequate cover in place not only keeps you compliant with the law but also protects your business should the unexpected happen.
You can find the full guidance on the FSB website.
