What is employer's liability insurance?

The moment a business takes on its first employee in the UK, a specific legal insurance obligation is triggered. Many founders are unaware of this requirement until they hire someone, and some remain unaware of it entirely until they face a compliance issue. Understanding what employer's liability insurance is and when it becomes compulsory is essential knowledge for any founder planning to grow their team.

Employer's liability insurance covers a business against claims from employees who suffer injury, illness, or death as a result of their work. It is a legal requirement in the UK for almost all businesses that have employees, including part-time and temporary workers. The law requires businesses to hold a minimum level of cover and to display the certificate of insurance. Failing to hold the required cover can result in significant daily fines from the Health and Safety Executive.

There are limited exemptions to the requirement — including businesses with no employees other than close family members — but these are narrow, and any doubt about whether the requirement applies should be resolved before taking on staff. Our guide to employer's liability insurance explains who is required to hold it, what it covers, and how to ensure your business is compliant from the first day of employment.