What is Employers' Liability Insurance?

Employers' liability insurance is a legal requirement in the UK for almost all businesses that employ one or more people, including part-time and casual staff. The Employers' Liability (Compulsory Insurance) Act 1969 requires you to hold a minimum of five million pounds in cover, though most policies provide ten million. Failure to hold valid employers' liability insurance can result in fines of up to two thousand five hundred pounds per day.

This insurance covers claims from employees who are injured, become ill, or suffer as a result of their work for you. In a children's activity business, this might include a coach who injures themselves demonstrating a skill, a receptionist who develops a repetitive strain injury, or a swimming teacher who suffers a slip by the poolside. It covers both the compensation and the legal costs associated with defending the claim.

A common question for activity businesses is whether self-employed coaches and freelance instructors need to be covered by your employers' liability insurance. HMRC's employment status rules — not the label you give the relationship — determine this. If you control when, where, and how someone works, they may be considered an employee or worker for insurance purposes regardless of their contract status. You must display your employers' liability certificate at each workplace or make it available electronically.