Lines open: 8am - 8pm Mon - Fri
9am - 5pm Sat and 10am - 4pm Sun

Tradesman Insurance: Tradesmen 'Need to Know': Employers' Liability Insurance

Carpenter, gardener, bricklayer, plumber... whatever your trade, if you employ staff or your business is set up as a limited company then you MUST take out Employers' Liability insurance and be insured for a minimum of £5 million. If you don't have it then you'll be breaking the law.

Employers' liability insurance: what's the point?

As a tradesman you may at times feel as though you're caught up in a world of red tape, rules and regulations, and that the list of things you should and shouldn't be doing is endless. Having to take out Employers' Liability insurance may feel like a bit of a hassle and yet another thing to add to your 'to do' list. But, the good news is that Employers' Liability insurance protects your business if any of your employees are injured or become ill at work and it's your business's fault. If the injured employee then decides that they're going to bring a compensation claim against you the insurance will cover the costs of the legal fees and damages. Without the insurance, not only are you breaking the law but you could also be in for an expensive time. Can you really afford not to have it?

When is Employers' Liability insurance not needed?

Sometimes tradesmen do not have to take out Employers' Liability insurance. Especially if your business is not a limited company, and you are the only employee or you only employ close family members.

Who is an employee?

You might be working on a project with all sorts of people. Some of these may be your employees, others may be contractors. So, how do you know who is an employee? Generally, someone is considered to be an employee if the following things happen.

The individual has an employment contract with you (also known as a 'contract of service').
You deduct National Insurance contributions and income tax from the individual's wages.
You're the boss: you control when, where and how the individual works.
The individual can't get someone else to do their work for them if they can't work.
You supply the individual's work materials and equipment.
You have a right to any profit the individual makes although you may choose to share this with them through commission, performance pay or shares in the company.
The individual is treated in the same way as other employees.

Employers' liability insurance certificate

Once you've obtained your Employers' Liability insurance your responsibilities don't end there. You have to display the insurance certificate where your employees can read it (either electronically or in paper format). For policies in force since 1998, it's recommended, for your own protection, that you keep copies of insurance certificates for at least 40 years. This is because some diseases only appear decades after the disease was caused.

Can't be bothered: what happens if you don't have Employers' Liability insurance?

If you don't have Employers' Liability insurance then you could be fined by the Health and Safety Executive. The fine is hefty: £2,500 for EACH DAY that you do not have it. If you don't display an Employers' Liability insurance certificate and don't make it available to the Health and Safety Executive inspectors you could be fined up to £1,000.

Employers' liability insurance protects your business from claims by employees for work-related illnesses and injuries. If you don't take out Employers' Liability insurance and/or cut corners by failing to display the certificate then you'll be making a really expensive business mistake.