2017-08-25

Usually, if you have a business that has employees, you're required to take out an employer's liability policy by law. However, does this ruling apply if staff work for you?

Understanding the Complexities of Employers' Liability Insurance

Employers' liability insurance covers all permanent employees, as well as staff that are on contract, sub-contracted, seasonal or casual, and the cost of compensating them should they become injured or ill through work.

Do You Need Employers' Liability Insurance?

If you're a business owner and your only staff are members of your family, then you technically don't need cover. The Employers' Liability (Compulsory Insurance) Act 1969, states that employers are exempt if they own:

'family businesses, i.e. if all of your employees are closely related to you (as husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister).'

Please note: this exemption does not apply if a family business is incorporated as a limited company.

However, if you employ both relations and non-relations, cover will be required by law and this will cover all staff members, including family. This applies to both permanent staff, as well as apprentices, temporary staff, volunteers and interns.

In 2012, a study by the Health and Safety Executive (HSE) found that around 5% of employers who were required to have insurance, did not. It also revealed that organisations with less than five employees and had been in business less than two years were most likely to offend.

What are the repercussions?

If you do not have the appropriate cover and are unable to (or refuse to) present a valid insurance certificate when asked by inspectors, you could be fined £1,000, as well as be charged a fee of up to £2,500 for every day that you were exposed.

Why You Should Get Covered Anyway

It may not be enforced by law, but you may still choose to take out employers' liability insurance. Why? Well, accidents and injuries can happen to anyone at any time.

Although it is unlikely that a family member will take you to court if something happens, taking out cover will ensure you're protected if relations turn sour and they decide to make a claim. It will also be useful should you feel obliged to cover medical costs or fees for repairs.

Get Covered with Business Compare's Help

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