Employers’ liability insurance covers your business if an employee is injured or becomes ill because of their work and makes a claim against you. For most UK businesses with staff, it’s not optional — it’s a legal requirement. Here’s what it covers, who needs it, and what the consequences are of not having it in place.
Public liability insurance
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The legal requirement
Under the Employers’ Liability (Compulsory Insurance) Act 1969, most businesses that employ staff in the UK must have a minimum of £5 million of employers’ liability cover in place. Many insurers offer higher limits than this as standard.
The Health and Safety Executive enforces this requirement. Businesses found operating without the required cover can be fined up to £2,500 for every day they are uninsured. Failing to display your employer’s liability insurance certificate — or refusing to make it available to an HSE inspector — can result in a separate fine of £1,000.
What does employers liability insurance cover?
The policy covers claims made by employees who believe their injury or illness was caused by their work or working conditions. This includes:
- Workplace injuries — if an employee is injured while doing their job, whether that’s a slip or fall on your premises or an accident while carrying out work tasks, they may be entitled to claim compensation.
- Work-related illness — employees who develop a condition as a result of their working environment can also make a claim. Common examples include respiratory conditions, repetitive strain injuries, and stress-related illness.
- Legal costs — defending a claim is expensive, even if it doesn’t succeed. Employers’ liability insurance covers the legal fees involved, including solicitors, expert witnesses, and court costs.
- Compensation payments — if a claim is successful, the payout can be substantial. The policy covers those costs, protecting your business from a potentially serious financial hit.
Who needs it?
Most businesses that employ staff need employers liability insurance. This includes:
- Limited companies — if you run a limited company and employ anyone, you need this cover. This applies even if your only employees are family members.
- Partnerships and sole traders — if you employ anyone outside your immediate family, you need it. Sole traders with no employees don’t.
- Charities and non-profits — if your organisation employs staff, whether paid or voluntary, the same requirement applies.
There are some limited exceptions — certain family businesses and some public sector bodies — but these are uncommon. If you’re unsure, the safest approach is to assume you need it and check with your insurer.
How is it different from public liability insurance?
These two are often confused, but they cover different things.
Employers’ liability insurance covers claims made by your own employees. Public liability insurance covers claims made by third parties — customers, visitors, members of the public, or anyone else who isn’t employed by you.
Both are important for most businesses, and many policies offer them together. You can read more in our guides on [what does public liability insurance cover] and [how much is public liability insurance].
What happens if you don’t have it?
The risks of operating without employers liability insurance are both legal and financial.
On the legal side, the daily fine of up to £2,500 adds up quickly — a month without cover could cost your business over £75,000 in penalties alone.
On the financial side, if an employee makes a successful claim and you’re uninsured, your business is liable for every pound of compensation and legal fees. For a serious injury claim, that could run into hundreds of thousands of pounds. For a small business, that level of exposure could be enough to close it entirely.
The bottom line
Employers liability insurance is a legal requirement for most UK businesses with staff, and the financial protection it provides is just as important as the compliance benefit. If an employee is ever injured or made ill by their work, the policy covers the costs of defending and settling the claim so your business doesn’t have to absorb them directly.
Get an employers liability insurance quote from insurd today and make sure your business is properly covered.
