EMPLOYERS’ LIABILTY – A Legal requirement

This is a question that often come up, and the law is quite specific on this cover.

You are only required by law to have employers’ liability insurance for people who you employ under a contract of service or apprenticeship.

Whether or not you need employers’ liability insurance for someone who works for you depends on the terms of your contract with them. This contract can be spoken, written or implied.

It does not matter whether you usually call someone an employee or self-employed or what their tax status is.

Whether you choose to call your contract a contract of employment or a contract for services is also largely irrelevant.

What matters is the real nature of your relationship with the people who work for you and the nature and degree of control that you have over the work they do.


■ 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 their work 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;

■ you require that person only to deliver the service and they cannot employ a substitute if they are unable to do the work; or

■ they are treated in the same way as other employees, for example, they do the same work under the same conditions as someone else you employ.


■ 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 their own 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. Health and Safety Executive Employers’ Liability (Compulsary Insurance) Act 1969 Page 5 of 6 In some cases you will not need additional employers’ liability insurance for volunteers or for:
■ students who work for you unpaid;
■ people who are not employed, but taking part in a youth or adult training programme; or
■ a school student on a work experience programme.* 

Insurers will usually cover the above under an existing employers’ liability policy, and there is generally no need to inform your insurer if you take on any of the above.

However, you should talk to your insurer if you take on the above either for long periods, or if they are doing work that is not your company’s usual business, and you should bear in mind the level of risk they may be exposed to during the time they are working for you.

The advice is general and should not read as legal advice. For all legal matters, please consult a legally accredited and qualified professional.

The full advice leaflet from the HSE can be found here

Employers’ Liability (Compulsory Insurance) Act 1969: A brief guide for workers HSE39

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