Of everything a United Kingdom business is sold, employers' liability is the only cover that a statute obliges most employers to hold. That makes it different in kind from public liability and everything else on the schedule: the requirement comes from the law rather than from a client, a landlord or a contract, and it is enforced by an inspector rather than by a procurement department.
What the cover does
Employers' liability answers for your legal liability to your own employees for injury or illness caused by their work, together with the cost of defending the claim. It is the counterpart to public liability, which answers for everybody who is not an employee. The distinction is not cosmetic: a claim brought by a member of staff falls outside a public liability policy entirely, so a business with employees and only public liability cover has a gap exactly where the law says it must not.
Who counts as an employee
This is the part businesses get wrong, and it is broader than a payroll list. Part time, casual, temporary and seasonal workers count. So, generally, do apprentices, students on placement and volunteers working under your direction. Labour only subcontractors, who use your materials and work under your control, are usually treated as employees for this purpose even though they invoice you. The test leans on control and direction rather than on what the paperwork calls the relationship, which is why the safe question is who you direct rather than who you employ.
The exemptions, and how narrow they are
Not every employer is caught. The familiar exemptions cover businesses with no employees at all, and certain companies where the only employee also owns the majority of the share capital, which is how a great many single director limited companies fall outside the requirement. Family businesses employing only close relatives have historically had an exemption too, though it does not extend to incorporated companies in the same way. The exemptions are narrower than they sound and the consequences of relying on one wrongly are not insurance consequences, so it is worth checking against the guidance rather than against a memory of it.
The certificate, and why it has to be available
Holding the policy is not the whole obligation. The certificate of insurance has to be made available to employees, which today ordinarily means displaying it or making it accessible electronically where staff can reasonably read it. Inspectors can ask to see it, and there is a separate penalty attached to not producing it from the one attached to not having cover at all. Businesses also need to keep old certificates rather than discard them at renewal, because industrial disease claims can be brought many years after the exposure and the question of who was on risk in a given year becomes a records question.
Questions people ask about employer liability
Is employers' liability insurance compulsory in the UK?
For most employers, yes. It is required by statute rather than by contract, which makes it different from public liability. A small number of exemptions exist, including for companies whose only employee owns most of the shares, but they are narrow.
Do I need it for a single part time member of staff?
Yes. The requirement is not scaled to hours or headcount. Part time, casual and seasonal workers all count, and so in most cases do apprentices and people on work placements.
Is employer liability the same as public liability?
No, and they do not overlap. Employers' liability answers for your own staff; public liability answers for everybody who is not your staff. A claim from an employee is not covered by a public liability policy.
Does it cover self employed subcontractors?
It depends on the relationship rather than the label. Labour only subcontractors working under your direction with your materials are generally treated as employees for this purpose. Genuinely independent subcontractors running their own businesses are expected to carry their own cover.
How long should I keep old certificates?
As long as practicable, and certainly not just until the next renewal. Disease claims can surface decades after the exposure, and the old certificate is the evidence of which insurer was on risk at the time.