Employers' liability insurance is a legal requirement for anyone employing staff and employers can be prosecuted if they do not have appropriate cover in place. Here's a brief summary of what you need to know:
- This insurance provides cover for employers should a member of staff suffer an injury or illness in the workplace or as a result of working for their business and try to claim compensation.
- Each individual employer must be insured for at least £5 million, though you may need higher cover depending on your business.
- You must display your certificate of employers' liability insurance where your employees can access it. This can be electronically, as well as physically, i.e. on a staff intranet.
- Your business is exempt from the law if it is an unincorporated family business (i.e. all of your employees are closely related to you) or the company employs only you the owner, where you own 50% or more of the share capital of the company.
- Penalties for not having employers' liability insurance.
In order to make the process of tracing the relevant employers' liability insurance provider easier for businesses and individuals looking to make a claim for compensation, employers must now provide an employer reference number (ERN) to their insurer, when their policy renews or when they take out new employers' liability insurance.
To make things simpler, your ERN is the same as your Employer PAYE Reference allocated by HM Revenue & Customs, which is used on correspondence from HMRC as well as any P45s or P60s for previous or current employees of which you should have copies.
This will then be stored on the Employers' Liability Database (ELD), which will contain all new and renewed insurance policies, old policies that have new claims made against them and all successful traces.
A tiny minority (less than 3%) of employers do not have an ERN. This is because they pay all their employees below the PAYE threshold (currently £675 as of 6 April 2012). If you fall into this category, contact your insurance provider.