Employers’ liability insurance protects employers from financial loss if a worker has a job-related injury or illness not covered by workers’ compensation. As an employer, under UK employment law, there are a few circumstances where you are required by law to have Employers Liability Insurance. These include:
- You are a limited company with any employees.
- You are a non-limited company and have employees who are not a part of your immediate family.
If you don’t have cover when you should, you can be fined £2,500 for every day that you are inadequately insured. You can also be fined £1,000 if you fail to show your certificates when asked by an inspector.
However, there might be some areas you’re not entirely clear on. For instance, what happens if your employee is injured at work but it is down to a third party?
What is the difference between Employers’ Liability and Public Liability Insurance?
Employers’ and Public Liability insurance covers similar risks; however, they are not interchangeable when it comes to who they cover.
Public Liability covers you against the financial risk of claims of injury, illness, property damages and even accidental death following the actions of you, or one of your employees, in connection with your business from a third party, such as a member of the public or a customer/client.
Employer’s Liability also protects your business against claims from injury or illness, but this time it covers your employees as a result of their employment with your firm.
For example, an employee drills through a water pipe and causes damage to a ceiling below – this is Public Liability. Your employee slips scaffolding and breaks both legs – this is employers liability.
Why is Employers’ Liability Insurance so important?
While there are many situations where a business or organisation might be asked to provide proof of their Public Liability certificates, there are no national laws forcing businesses to take out this cover.
However, since the Employers’ Liability (Compulsory Insurance) Act 1969, all UK employers that meet the requirements mentioned above have been required by law to hold valid and adequate Employers’ Liability insurance for face fines.
Employers’ Liability insurance means that any employee, regardless of who they work for. They will get the compensation they deserve in the event they are injured at work.
Employers liability is compulsory as the Government recognises that many firms would be unable to pay the significant compensation. Which can be due in the event of a significant workplace injury.
If you are a small business, this is also helpful as a large compensation claim could financially ruin your business or put you into debt you don’t need. Employers’ Liability cover levels the playing field when it comes to employee compensation.
Can an Employer be liable for the actions of a third-party?
As an employer, you have a responsibility to make sure your employees have a safe working environment.
Therefore, should your employee be injured by the actions of a third-party as part of them carrying out their work for you. You can still be held financially liable for these injuries by way of vicarious liability.
However,
What about third-party-over-action?
Third-party-over-action refers to a situation in which an employee is injured and, after collecting compensation from you the employer. Then makes a claim against a third-party for their part in the injury.
For example, third-party contractors are carrying out works on your premises. When one of your employees trips on some wires that were camouflaged into the carpet. The employee falls down the stairs and breaks their collarbone.
While they make a claim against you as their employer. After collecting their compensation, they then file a claim against the contractor who owned the equipment they fell over.