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The Independent Automotive Aftermarket Federation

Employers Liability - Compulsory Insurance


Date: 03-Oct-2017

Lawgistics have offered the following advice to business in respect of Employer's Liability - Compulsory Insurance.

Most employers are required by law to insure against liability for injury or industrial disease to their employees arising from their employment.

Employers are responsible for the health and safety of their employees while they are at work. 

If employees are injured at work then they may claim compensation if the business is considered to be responsible.

The Employers' Liability (Compulsory Insurance) Act 1969 ensures that a business the minimum level of insurance cover against possible claims.

Any injuries relating to motor accidents that occur whilst employees are working for the business may be covered separately under relevant motor insurance policies that apply.

Public liability insurance (PLI) is different and covers any claims made against the business by members of the public or other businesses.

PLI is generally voluntary but highly recommended, whereas employers liability insurance (ELI) is compulsory and a business can be fined if it does not hold suitable insurance cover, which complies with the law.

A business must have ELI for at least £5 million but in practice most insurers offer cover of at least £10 million.

The business must display a copy of its certificate of insurance where employees can easily read it.

From October 2008 the certificate may be displayed electronically.
   
A business may be exempt from the need to have ELI under certain circumstances (see section 3(1)(a) and section 3(1)(b) of the 1969 Act, and Schedule 2 to the 1998 Regulations).

This might include family businesses if all the employees are closely related but this does not include limited companies.

Companies employing only their owner where that employee also owns 50% or more of the issued share capital in the company are also exempt.

The business must have ELI for people employed under a contract of service or apprenticeship. This contract can be spoken, written or implied.

If a business has any doubts as to its obligations under the 1969 Act and or the relevant 1998 Regulations, then legal advice should be sought.

It is strongly advised that all businesses keep a full and comprehensive record of ELI cover, year on year, for the duration of the business and beyond. This is because some diseases can appear decades after exposure to their cause.

Employers that fail to hold suitable insurance cover/details risk having to meet such claims directly.

The Health and Safety Executive (HSE) enforces the law on ELI. 

HSE inspectors can and do check that a business has ELI with an approved insurer for the minimum cover.

A business can be fined up to £2500 for each day without suitable insurance.

If the business fails to display the certificate of insurance or refuses to make it available to HSE inspectors when asked, then the business can be fined up to £1000.

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