The Federation of Small Businesses (FSB) has recently updated its guidance on Employers’ Liability insurance - a useful reminder of the rules and risks around a business insurance that is legally required in the UK.
The guidance explains that if you employ anyone - including part-time, temporary, or even volunteer staff - you are likely required by law to have this cover in place. It’s there to protect businesses should an employee become ill or injured because of their work and the employer is found legally responsible.
What the FSB Highlights
The updated guidance gives practical examples of when this insurance might apply, such as:
· A worker being injured while using machinery
· An office employee developing repetitive strain injury
· A fall on a construction site leading to time off work
The costs of such claims can be significant. As the FSB notes, legal fees and compensation payments can run into tens of thousands of pounds, potentially enough to put a small business under real pressure.
The guidance also clarifies:
· The legal minimum cover is £5 million (though most insurers offer £10 million as standard)
· Fines can reach £2,500 per day if a business is found not to have the required cover
· The insurance certificate must be displayed or made accessible to staff – failure to do so can result in a £1,000 fine
Exemptions and Edge Cases
The FSB outlines a few cases where the cover may not be required: for example, some family businesses or sole traders without staff. But these are quite limited and the guidance suggests most businesses with paid staff will need the insurance.
Worth Reviewing
The FSB guidance could serve as a useful prompt for you to review your insurance arrangements, particularly if your staffing or business structure has changed recently.
You can find the full guidance on the FSB website.
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