What is employers' liability insurance? The legal requirement explained

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05

If you employ anyone in the UK — full-time, part-time, casual or seasonal — the law almost certainly requires you to carry employers' liability insurance. It is one of the few compulsory business insurances, sitting alongside motor cover, and the penalties for going without are enforced by the Health and Safety Executive (HSE).

This guide explains what EL insurance does, who is legally obliged to hold it, the minimum cover required, the certificate rules and the penalties for non-compliance.

What employers' liability insurance actually covers

EL insurance responds when an employee (or former employee) brings a claim alleging that your business caused them injury or illness during their work. It meets the legal costs of defending the claim and any compensation awarded or agreed.

Typical examples include a warehouse worker injured by faulty equipment, an office employee developing a repetitive strain condition, or a member of staff exposed to a harmful substance who becomes ill years later. Because some workplace illnesses surface long after exposure, EL claims can arrive decades after the event — which is why keeping a record of your certificates matters.

EL is distinct from public liability insurance, which covers injury or damage caused to members of the public or clients. The two are frequently bought together, but only EL is compulsory.

The legal requirement: the 1969 Act

The governing law is the Employers' Liability (Compulsory Insurance) Act 1969. It requires most employers carrying on business in Great Britain to insure against liability for bodily injury or disease sustained by their employees in the course of their employment.

Two conditions matter:

• The policy must be taken out with an insurer authorised to write EL business in the UK.
• The cover must be for at least £5 million. In practice most policies on the market provide £10 million as standard, which is why higher limits are common even for small firms.

The duty is triggered by the existence of an employment relationship, not by job title or how you label the arrangement. If you direct someone's work, provide their tools, deduct tax and National Insurance, or control where and when they work, they are likely to count as an employee for these purposes — even if you call them a contractor.

Who needs it — and who is exempt

Most employers need EL insurance. There are a small number of exemptions where the risk to third-party employees is considered minimal:

The family-member exemption falls away once the business is a limited company, so many incorporated family firms still need cover. If you are unsure whether an exemption applies to you, it is safer to check than to assume — the penalty for guessing wrong sits with you.

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The penalty for not holding EL insurance

Enforcement is carried out by HSE inspectors, who can check that a valid policy is in place. The penalties are set out under the 1969 Act:

• Up to £2,500 for any day on which you are required to hold EL insurance but do not. Because this is a daily penalty, gaps in cover can accumulate quickly.
• Up to £1,000 if you fail to display your certificate of insurance where employees can see it, or refuse to make it available to an HSE inspector who asks.

Beyond the fines, going uninsured exposes the business to the full cost of any successful employee claim — compensation and legal fees that could run well into six or seven figures for a serious injury. That financial exposure, not just the fine, is the real risk of non-compliance.

The certificate and record-keeping rules

When you take out EL cover, your insurer issues a certificate of insurance. You must make this available to your employees — displaying it clearly at each place of business or providing it electronically where staff can readily access it.

Because industrial-disease claims can emerge many years after exposure, keeping historic certificates is good practice. If a former employee brings a claim decades later, being able to identify which insurer was on risk at the relevant time helps the claim to be handled correctly.

How much cover do you need?

The law sets a floor of £5 million, but this is rarely where the market sits. Most EL policies provide £10 million as standard, reflecting the potential scale of a serious injury or long-tail disease claim. For businesses working on larger contracts or higher-hazard sites, principal contractors sometimes require evidence of a specific limit before work can begin.

Choosing a limit is about matching your workforce, industry and contractual obligations to the right level of protection — something a broker can help you weigh up rather than defaulting to the legal minimum.

Common questions

Do I need employers' liability insurance for part-time or casual staff?

Yes. The requirement applies regardless of hours worked or how the role is described. Part-time, temporary, casual and seasonal workers all count, and volunteers or labour-only subcontractors may too, depending on the arrangement.

Is EL insurance the same as public liability insurance?

No. Employers' liability covers claims from your own employees and is compulsory. Public liability covers injury or damage to members of the public or clients and is optional, though widely held. Many businesses buy both, often on the same policy.

What happens if I have a gap in my cover?

Any day you are legally required to hold EL but do not can attract a fine of up to £2,500. You would also be personally exposed to the cost of any employee claim arising during the gap, so continuous cover matters.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.