Whatever the size or nature of your business, managing and mitigating risk is big part of any harmonious operation. Businesses of all shapes and sizes do well to prepare for the worst while hoping and planning for the best. Risk management is a broad and multifaceted discipline, incorporating a number of checks and balances. As well as ensuring compliance with relevant legislation (e,g. Health and Safety, Employee Legislation, Workers Rights etc.) and ensuring operational practices to keep themselves compliant, businesses must also invest in appropriate insurance cover to meet their needs. This can provide vital protection against claims against them which could potentially decimate cash flow and grind operations to a halt.
Some small businesses are “solopreneurs” who do not have a workforce. However, if your business employs anyone it has a legal duty to take care of their interests while they are working for you. As well as ensuring a safe and comfortable working environment and providing them with a pension, you also need appropriate insurance cover to protect them while they’re doing their jobs.
That’s where Employers’ Liability Insurance comes in…
What is Employers’ Liability Insurance?
Employers’ Liability Insurance is a policy that protects your workforce in the event of their falling ill or being injured as a result of doing their job. When this happens, the employee is entitled to make a claim against you for compensation, medical expenses and legal fees. Employer’s Liability Insurance helps businesses to do right by their employees when they are responsible for their illness or injury without paying millions of pounds out of their own pockets.
Most policies provide standard cover of up to £10 million. As you can imagine, if an accident occurs where multiple parties are injured, the costs could decimate most SMEs.
Is Employers’ Liability insurance a legal requirement?
Unlike Public Liability Insurance which covers members of the general public who are injured on your premises, Employers’ Liability Insurance is a legal requirement in most cases. That said, there are some exceptions. For example, it is not legally required if;
You are part of a public organisation, nationalised industry or health service organisation
You are the only employee and 50% or more of the company’s share capital
You have a family business which is not set up as a limited company
However, it’s worth noting that even if Employers’ Liability Insurance is not a legal requirement for you, that doesn’t mean that it isn’t pertinent or appropriate.
What happens if you don’t have Employers’ Liability Insurance?
If you are legally required to have Employers’ Liability Insurance and do not, it could result in serious consequences. Even outside of the expense of a compensatory award for injured parties.
The Health and Safety Executive (HSE) enforces the law on Employers’ Liability Insurance and uses inspectors to check that businesses have appropriately cover. If your business is found to be non-compliant it could face a fine of up to £2,500 for each day you do not have suitable cover. Even failing to display a certificate of insurance can land you a fine of up to £1,000.
Make sure your employees and your business’ reputation are protected!