If you employ people, you almost certainly need Employers' Liability (EL) insurance, and it is one of the few types of business insurance the law actually requires you to have. It protects you against claims from staff who are injured or made ill because of their work. Here is what the law expects in England and Wales.
EL insurance is compulsory
Under the Employers' Liability (Compulsory Insurance) Act 1969, most employers must hold EL insurance covering their employees. The minimum level of cover required by law is £5 million, though most insurers provide £10 million as standard. The policy must be with an authorised insurer.
The purpose is simple: if an employee is injured or becomes ill because of their work and successfully claims against you, the insurance ensures there are funds to pay compensation, protecting both the employee and your business.
Who counts as an "employee"?
The duty generally covers people you employ under a contract of service or apprenticeship. Whether someone is an "employee" for these purposes depends on the reality of the relationship, not just the label, some genuinely self-employed contractors may fall outside, but be cautious, because misclassifying staff can leave you uninsured. If in doubt, take advice or insure to be safe.
Limited exemptions
Some employers are exempt, including certain family businesses (where all employees are closely related to the employer) and some public bodies. These exemptions are narrow, so check carefully before assuming one applies to you.
You must display the certificate
You must have your EL insurance certificate available to employees (displaying it, or making it available electronically). Inspectors from the Health and Safety Executive (HSE) can check that you are insured.
Penalties for not insuring
Failing to hold the required EL insurance is a criminal matter. Employers can be fined (up to £2,500 for every day they are without suitable cover) and there are separate penalties for not displaying the certificate. Beyond fines, going uninsured exposes the business (and potentially its directors) to the full cost of any successful claim.
Health and safety go hand in hand
EL insurance does not replace your duty to keep people safe. You still must meet your obligations under the Health and Safety at Work etc Act 1974, carry out risk assessments, and report certain incidents under RIDDOR (the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations). Good safety management reduces claims, and your premiums.
Key takeaways
- EL insurance is compulsory for most employers (Employers' Liability (Compulsory Insurance) Act 1969), with a £5 million minimum.
- It covers employees; status depends on the reality of the relationship, don't rely on labels.
- Limited exemptions exist (some family businesses and public bodies), check carefully.
- Display the certificate; failure to insure can cost up to £2,500 per day. Keep up your health and safety duties (and RIDDOR reporting).
Sources
- Employers' Liability (Compulsory Insurance) Act 1969 and its Regulations (£5 million minimum; certificate display)
- Health and Safety at Work etc Act 1974; RIDDOR reporting requirements
- Health and Safety Executive (HSE) enforcement and penalties
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor or insurance professional.