Employers Liability – Compulsory Insurance
When does Employers Liability Insurance become compulsory for a motor trade business ?
The Employers’ Liability (Compulsory Insurance) Act 1969 was introduced to ensure that you have at least a minimum level of insurance cover. The legal minimum you should be insured for is £5,000,000 although all motor trade insurers give £10,000,000 limit of indemnity as standard.
Do I employ someone?
Lets take the obvious one, they work for you on a full time basis and you pay them accordingly, PAYE, NI etc. But what about the one’s that, in your opinion don’t work for and you think that Employers Liability isn’t required?
Saturday Boy – You pay him cash in hand. Employers Liability required.
Training Scheme – You make no payments at all. Employers Liability required
Elderly Neighbor – Purely voluntary, they will sweep up do a bit of general tiidying for you, you don’t pay them at all. Employers Liability required
Self Employed – They work on your premises, do work for you and you pay them without deduction of Tax or National Insurance. Employers Liability required.
Your Brother – Works for you as a mechanic full time in the business you pay his Tax and National Insurance Employers Liability NOT required. Why is this?
Examples of where Employers Liability Insurance is NOT required.
Examples of companies that are exempt from the act include (For a full listing, please refer to the updated Act 1998) :-
Sole Traders or Partnerships were there are no employee’s other than the working principals/partners are involved in the business.
Most public organisation such as government, local authorities etc.
Health organisations such as NHS etc.
Family businesses, ie if all of your employees are closely related to you (as husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister). However, this exemption does not apply to family businesses which are incorporated as limited companies.
Those business’ incorporated as limited companies must have compulsory Employers Liability insurance unless that company only employs their owner & that employee also owns 50% or more of the share capital in the company.
But should you have employers liability anyway?
In our opinion yes, just because the law states that there is no requirement for Employers Liability Insurance for motor traders, or indeed any other business for the excluded workers, in the event of injury to a relative one would expect there to be some route to compensation.
Do I need to display my Employers Liability Certificate?
Until recent amended regulations taking effect from 1st October 2008, companies have been required to display the issued Employers Liability certificate where employee’s have access & can visibly see this document.
They have also been required to retain expired certificates on file for 40 years. The HSE have now relaxed the laws & companies are no longer legally obliged to retain documentation for this length of time, nor do they have to display them. They however, do recommend that you retain your expired certificates & it is now a minimum requirement that the certificate can be easily accessed by employee’s electronically at any time.
Employers Liability Tracing Office – ELTO
You will have been asked to provide your unique tax reference to your insurance company. For may years there has been some difficulty tracing responsible employers and their insurers when a claim has arisen such as industrial deafness for instance. All the employers have to be traced and of course this can prove quite difficult. ELTO came into effect in April 2012, when asked you should provide this information, your insurer may choose not to provide terms should this information not be forthcoming.
A little help with Employment Law when things don’t go so well.
Employers Liability is an essential cover, cover that in most cases compulsory. Employing people does come with its risks, as and as much as you may value your employees there is always time when you need advice on how to deal with certain situations.
Your insurance company won’t provide any advice but your insurance policy may provide an amount of cover for employment issues (not injury) in the form of commercial legal expenses insurance, this provides not only help and advice but also indemnifies you in the event that you may get involved in a dispute. Take a look at how Commercial Legal Expenses works.
Looking for Employers Liability Insurance?
Let us look at your requirements for this type of cover, being specialist brokers to the sector we have instant access to all the motor trade insurance markets, we provide fast and competitive quotes tailored to your needs.
You may also be interested in: Road Risk Insurance