The definition of an "employee" can sometimes be confusing so you may
believe that you do not need this cover when, in fact, you do!
If you are a limited company with 2 or more working directors then you MUST by law have this cover even if you are a husband and wife team under the Employers Liability ( Compulsory Insurance ) Act 1969.
It is also usual for Employers Liability to be required if you have work experience students or volunteers assisting you even if there is no payment.
You are responsible for the health and safety of your employees while they are at work. Your employees may be injured at work, or they or your former employees may become ill as a result of their work while in your employment. They might try to claim compensation from you if they believe you are responsible. The Employers' Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any such claims.
In general, you may need employers' liability insurance for someone who works for you if:
- You deduct national insurance and income tax from the money you pay them;
- You have the right to control where and when they work and how they do it;
- You supply most materials and equipment;
- You have a right to any profit your workers make although you may choose to share this with them through commission, performance pay or shares in the company. Similarly, you will be responsible for any losses;
- You require that person only to deliver the service and they cannot employ a substitute if they are unable to do the work;
- They are treated in the same way as other employees, for example, if they do the same work under the same conditions as someone you employ.
In general, you may not need employers' liability insurance for people who work with you if:
- They do not work exclusively for you (for example, if they operate as an independent contractor);
- They supply most of the equipment and materials they need to do the job;
- They are clearly in business for personal benefit;
- They can employ a substitute when they are unable to do the work themselves;
- You do not deduct income tax or national insurance. However, even if someone is self-employed for tax purposes they may be classed as an employee for other reasons and you may still need employers' liability insurance to cover them.
Further information can be obtained from the Health and Safety Executive and you are advised to check your own requirements by going to www.hse.co.uk or, for a quick guide to: https://www.hse.gov.uk/pubns/hse40.pdf
Call us on 020 3633 2280 for more advice or if you have a specific question.