Mrs V R M - Forest Row
Don't get caught without Employer's Liability insurance
Did you know that you can be fined up to £2,500 for every day you are without suitable employer's liability insurance cover?
Do you deduct income tax and NICs from the money you pay your employee? Do you decide where and when they work as well as how they do it? Do you require that it is your employee only who performs the duties, in other words they cannot employ a substitute if they are unable to work?
If you have answered yes to these questions then you are an employer and you are considered to have a contractual agreement with your employee, even if there is no written contract in place. Once a contractual relationship exists between the employer and the employee it is vital both parties are aware of their responsibilities and their liabilities.
As the employer you owe your employee a duty of care, and you need to ensure the duties they perform are reasonable and that they have the necessary tools or equipment to perform their job role. It is your responsibility to provide these.
As the employer you are also required by law to insure against liability for injury or disease (Employer’s Liability Insurance). The fact that you are a domestic employer does not change this. You can have more than one policy for Employers’ Liability Insurance. However, the total value of the cover provided by the policies must be at least £5 million. You should also bear in mind that the £5 million minimum level of cover includes costs, so you may wish to purchase cover of more than this. Failure to take out Employer’s Liability Insurance leaves you in a vulnerable position, not only from a regulatory perspective, but also with regards to your personal wealth. You can be fined up to £2,500 for each and every day that you are without suitable insurance.
The technical definition of Employer’s Liability Insurance is to ‘indemnify the Insured in respect of their legal liability for claims by their employees for death or bodily injury, including disease, suffered in the course of their employment’. An example could be as simple as the employer leaving the child’s toys everywhere, expecting the nanny to clear them up when they come to work. The nanny could slip and fall down the stairs resulting in an injury and the parent may be held accountable if they are found to have failed in providing a safe place to work and, depending on the injury, the damages and legal costs involved could be substantial – not only for the injury itself but also potential future loss of earnings.
Although Employer’s Liability Insurance is compulsory, it appears to be available only when attached to another policy, and so finding a policy on its own can become a time-consuming and sometimes fruitless task.
Historically, household insurance policies could be extended to include this cover; however not all products provide this extension. Employers should check with their insurer to see whether their policy provides this cover. If their insurer cannot provide this, it could be a consideration to change household insurer. If you experience difficulties, please ask to speak to a more senior member of staff, as domestic employment is relatively unusual in the insurance industry and some call centre operators may not be aware that they in fact do provide this cover.
Exemptions from the employers' liability act:
- Most public organisations including Government departments and agencies, local authorities, police authorities and nationalised industries;
- Health service bodies, including National Health Service trusts, health authorities, primary care trusts and Scottish health boards;
- Some other organisations which are financed through public funds, such as passenger transport executives and magistrates’ courts committees;
- Family businesses, i.e. if all of your employees are closely related to you. However, this exemption does not apply to family businesses which are incorporated as limited companies;
- Companies employing only their owner where that employee also owns 50% or more of the issued share capital in the company.
Please note that this article is for information purposes only and is not a legal interpretation of the Employers’ Liability (Compulsory Insurance) Act.