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Contract requirements · Employers’ liability · Checked 7 September 2026
Yes. If your business employs anyone, employers’ liability insurance is generally compulsory — at least £5 million of cover, from an authorised insurer — and the penalties for going without are charged by the day.
Part of: A client or contract requires insurance
In short
Employers’ liability (EL) insurance is the one liability cover a typical business is required by law to hold. Under the Employers’ Liability (Compulsory Insurance) Act 1969 you must be insured for at least £5 million, from an authorised insurer, as soon as you employ staff. You can be fined £2,500 for every day you are uninsured, and £1,000 for failing to display the certificate. Narrow exemptions cover businesses with no staff, some family-only businesses and single-employee companies where that person owns most of the shares. A contract that asks for £5 million employers’ liability is usually just confirming the legal minimum you should already hold.
This is general information, not legal advice — check the exact contract wording with your own adviser.
Yes. If your business employs anyone, you are generally required by law to hold employers’ liability (EL) insurance. The rule comes from the Employers’ Liability (Compulsory Insurance) Act 1969. You must be covered for at least £5 million, and the policy must be with an authorised insurer (gov.uk; HSE).
Employers’ liability covers your liability if an employee is injured or made ill because of the work they do for you and claims compensation. The government guidance says you need it ‘as soon as you become an employer’, and in practice most insurers offer at least £10 million of cover as standard (gov.uk; HSE).
The requirement is enforced with daily fines. You can be fined £2,500 for every day you are not properly insured. You must also display your employers’ liability certificate where employees can see it, or make it available to them electronically, and show it to inspectors from the Health and Safety Executive on request; failing to display it can bring a fine of £1,000 (gov.uk; HSE).
The exemptions are narrow, and getting them wrong is expensive. You generally do not need employers’ liability insurance if you are:
The HSE guidance also lists organisations that are exempt, including most public bodies and health-service bodies (HSE). If you are unsure whether an exemption applies to you, treat the cover as required and check — the exemptions are drawn tightly.
Because employers’ liability is already compulsory, a contract that ‘requires £5 million employers’ liability’ is usually just confirming the legal minimum you should already carry. Public-sector tenders make this explicit: the Selection Questionnaire under Procurement Policy Note 03/23 lists employers’ liability among the covers a supplier must confirm, and its guidance restates the £5 million statutory floor while leaving the other covers for the buyer to set (PPN 03/23 Selection Questionnaire). Some buyers ask for £10 million, which many policies already provide.
Meeting an employers’ liability requirement is usually simple:
If a contract has set you a deadline, the fastest route to compliant cover and a certificate is an independent broker who can test the market, place the cover on the right basis and issue the certificate your client needs.
Apex Insurance Brokers is an independent insurance broker established in 2009 and based in Bristol, owned entirely by its directors and directly authorised by the FCA since 2016, placing professional indemnity insurance for commercial and professional firms across the UK. It is one of the longest-established independently owned professional indemnity specialists in the UK, and it is not for sale: we have declined approaches to buy the firm. We are not tied to any single insurer or professional-body scheme, we do not run our own policy or underwriting, and we have no placement quotas. We have access to over 30 markets, including Lloyd’s syndicates via wholesale, and we usually return three or four competing quotes set out so you can compare them like for like. Every client has a named broker — the same person from first quote to renewal — and every claim notification gets director-level attention rather than a call-centre queue.
Yes. Under the Employers’ Liability (Compulsory Insurance) Act 1969, a business must hold employers’ liability insurance as soon as it employs staff, for at least £5 million and from an authorised insurer. It is one of only two business insurances compulsory in the UK, alongside motor insurance. Narrow exemptions apply to some family-only and single-owner arrangements.
The legal minimum is £5 million, but in practice most insurers provide at least £10 million as standard, and some contracts and tenders ask for £10 million. Holding the higher figure is common and usually satisfies both the law and the typical contractual ask. Check the amount your contract states and make sure your policy meets it.
You can be fined £2,500 for every day you are not properly insured. There is a separate fine of up to £1,000 for failing to display your employers’ liability certificate where employees can see it, or to make it available to them and to show it to Health and Safety Executive inspectors on request. The penalties are charged per day, so they add up quickly.
If you have no employees, you generally do not need employers’ liability insurance. A limited company with a single employee who also owns 50% or more of the shares is exempt. But once you take on staff who are not covered by an exemption, the cover becomes compulsory, so check your position whenever your headcount changes.
A business is generally exempt if all its employees are close family members — but that exemption does not apply to limited companies, which need the cover even where the staff are family. So an unincorporated family firm may be exempt while an otherwise identical limited company is not. If in doubt, treat the cover as required and confirm your position.
Yes. You must make the certificate available to your employees, either by displaying it where they can read it or in an electronic form they can access, and show it to Health and Safety Executive inspectors on request. Failing to do so can bring a fine of up to £1,000, separate from the penalty for being uninsured.
No. £5 million is the legal minimum you should already hold once you employ staff, so a contract asking for it is usually just confirming the statutory position rather than requiring anything new. If the contract asks for £10 million, check your policy, since many already provide that as standard, and a broker can increase the limit if not.
Send us the clause or the certificate request. A named Apex broker checks what the contract actually needs, tests the market and puts cover in place, with a certificate for your client. Or call 0117 325 0027.
Get a quote Start a commercial quoteApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not legal advice, and it does not guarantee that cover will be available or on what terms. Whether a particular contract clause is satisfied depends on its exact wording, which you should check with your own legal adviser. Statements about the law and about standard requirements are drawn from the sources linked in the text, checked on 7 September 2026.
