Employers Liability

Q I’ve just decided to get some help on my stall, I will be taking the person on as self-employed, does this mean I don’t need to buy Employers Liability?

A In a nutshell, Employers Liability (EL) is a statutory requirement for Limited Companies with more than one employee or companies and sole traders who employ any non-family members. This also can apply if you are a UK based company but have employees abroad.

The following information has been taken directly from The Department of Work and Pensions (DWP) guidelines (though simplified a little and some less common instances removed. The full copy is available to download from various websites, I have included a link at the end of the article.)

Employers are exempt from requiring Employers Liability but may still choose to purchase it:

A company with only one employee, and that owns 50% or more of the share capital in the company. So this could be a sole trader or Limited company with only one person.

A family business that only employs close relatives, but if the business is a limited company, then EL is required.

Government or public bodies. This is because the state will cover any incidents.

You will almost certainly require Employers Liability cover if you have staff whether paid or unpaid if any of the following are likely to be true:
• You deduct National insurance and Income Tax from their salary.
• You control when and where they work and how they do it.
• You supply their work equipment and/or materials.
• You have a right to any profit the workers make, although you may choose to share it with them (pay bonuses etc).
• You require that specific person to carry out that duty and they cannot employ another to carry out that duty (not a sub-contractor).
• You treat that person in the same way as other employees.

These points suggest that a self-employed hired hand is most likely to require the purchase of Employers Liability. Several of the scenarios above are highly likely to be met, even if the hired hand is self-employed, they will be selling your stock, at your licensed stand or unit, at hours you require of them. The same also goes for volunteers, apprentices and work experience students.

So, as stated above, please do not forget EL cover is a statutory requirement for any business, whether limited company or sole trader, if you are not exempt and you have any employees, volunteers or other people fitting the above criteria. Failure to have cover in force can lead to fines of up to £2,500 per day!

Full details can be downloaded from the Health and Safety Executive (HSE) here: www.hse.gov.uk/pubns/hse40.pdf