Risk Management - Insurances, Employers Liability Insurance

When operating a limited company it is vital to consider whether your company and the individuals operating through the company need to take out any insurance. The need to take out insurance may be due to a legal obligation, a contractual requirement or indeed simply due a personal need.

Employers Liability Insurance

Employers are legally obliged to hold this insurance under the Employers’ Liability (Compulsory Insurance) Act 1969 which gives protection against any actions brought by an employee for disease or injury which has occurred as a result of the employment.

An example would be a situation whereby you, as an employer, did not provide any safety equipment to an employee undertaking welding duties. The employee then brings an action after suffering burns to the face as a result of performing his or her duties.

In many Personal Service Companies (PSC's), the only employee is also the owner of the company and, in theory, an individual cannot take legal action against oneself. This led to many arguments for the abolition of the legal requirement of such insurance for ‘one man companies’ and as of 28/02/05 the Department of Work and Pensions introduced new rules to remove the requirement. However, any companies with more than one employee will still have a legal obligation to implement such cover.

Despite the removal of the legal requirement it is usual for an agency or client to require cover to be in place. The contract will usually stipulate a minimum level of cover required - in the majority of cases this amount is £5 million. Often the end client will request proof of such a policy before allowing an individual on site.

Risk Management - Insurances, Employers Liability Insurance

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