As an employer, under UK employment law, there are a few circumstances where you are required by law to have Employers Liability Insurance. These include:
- You are a limited company with any employees.
- You are a non-limited company with employees who are not a part of your immediate family.
If you don’t have coverage when you should, you can be fined £2,500 every day you are inadequately insured. You can also be fined £1,000 if you fail to show your certificates when asked by an inspector.
However, there might be some areas you’re not entirely clear on. For instance, what happens if your employee is injured at work, but it is down to a third party?
WHAT COVER DO YOU NEED AS AN EMPLOYER? – Find out more here.
What is the difference between Employers’ Liability and Public Liability Insurance?
Employers’ and Public Liability insurance cover similar risks; however, they are not interchangeable regarding who they cover.
Public Liability covers you against the financial risk of claims of injury, illness, property damages and even accidental death following the actions of you or one of your employees in connection with your business from a third party, such as a member of the public or a customer/client.
Employer’s Liability also protects your business against claims from injury or illness, but this time it covers your employees as a result of their employment with your firm.
For example, an employee drills through a water pipe and causes damage to a ceiling below – this is Public Liability. Your employee slips scaffolding and breaks both legs – this is the employer’s liability.
Why is Employers’ Liability Insurance so critical?
While there are many situations where a business or organisation might be asked to provide proof of their Public Liability certificates, no national laws force businesses to take out this cover.
However, since the Employers’ Liability (Compulsory Insurance) Act 1969, all UK employers that meet the requirements mentioned above have been required by law to hold valid and adequate Employers’ Liability insurance to face fines.
Employers’ Liability insurance means that any employee, regardless of who they work for, will get the compensation they deserve in the event they are injured at work.
Employers’ liability is compulsory as the Government recognises that many firms would be unable to pay the significant compensation due in the event of a significant workplace injury.
This is also helpful if you are a small business as a large compensation claim could financially ruin your business or put you into debt you don’t need. Employers’ Liability cover levels the playing field regarding employee compensation.
Can an Employer be liable for the actions of a third-party?
As an employer, you are responsible for ensuring your employees have a safe working environment.
Therefore, should your employee be injured by the actions of a third party as part of them carrying out their work for you, you can still be held financially liable for these injuries by vicarious liability.
What about third-party-over-action?
What about third-party-over-action?
Third-party-over-action refers to a situation in which an employee is injured and, after collecting compensation from you, the employer, then makes a claim against a third party for their part in the injury.
For example, third-party contractors are carrying out works on your premises when one of your employees trips on some wires that were camouflaged into the carpet. The employee falls down the stairs and breaks their collarbone.
While they claim against you as their employer, after collecting their compensation, they then file a claim against the contractor who owned the equipment they fell over.
This is something they may or may not win, but that’s not what makes this third-party-over-action.
Due to a contractual agreement with the contractor that makes your business liable for all employee injuries, you are, in fact, still liable for that second claim and not the contractor. This is where the case becomes an “over-action” case.
Depending on the particulars of each situation, the claimant may get their case to court, which results in a whole new round of legal fees and potential compensation payouts should they be successful.
While these cases are usually unsuccessful, there are some cases where the employee is awarded more compensation, in which case your Employer’s Liability cover will respond to that alongside the legal costs.
What if another employee or third party assaults an employee?
Often if one employee assaults another, yes, you would be liable for any injuries, whether physical or mental.
Fortunately, compensation for this, should your employee seek it, is covered under your Employers’ Liability insurance policy. However, protection for injuries sustained in an assault by a third party is limited.
While to many, it might seem like an unlikely scenario, in 2019/2020, it is thought that 688,000 assaults happened in the workplace, with 38% of those resulting in injuries. For more information on workplace violence, check out HSE’s website.
Who’s at risk of workplace violence?
Naturally, not all careers come with the same amount of risk as others. Coming in as number one most at risk are people in protective service occupations such as police officers.
It was found that those in a protective service occupation had a risk of assaults and threats six times higher than the national average.
Meanwhile, health and social care professionals also have a higher than average risk of assaults and threats than the national average.
Is third-party harassment covered?
In most cases, an employer is not liable for third-party harassment in the workplace unless you fail to protect your employee from third-party harassment out of your own discrimination of a protected characteristic.
Protected characteristics include:
- gender reassignment
- being married or in a civil partnership
- being pregnant or on maternity leave
- race including colour, nationality, ethnic or national origin
- religion or belief
- sexual orientation
Please visit the government website here to learn more about your responsibilities around harassment and what this means.
However, be aware if your employee is experiencing harassment from a third party, such as customers, to do with a protected characteristic, and you fail to do anything, this can be seen as condoning the harassment.
For example, you run a pub, and a group of regulars continue to harass a member of staff with racial slurs. While you’re aware of the situation, you fail to implement a zero-tolerance policy on harassment and allow them to carry on.
Your employee eventually files a complaint of distress which has led to mental illness.
To ensure your business is fully protected against employee disputes, we recommend you consider Management Liability Insurance and Employers Liability protection, as this will assist you in a much more comprehensive range of employment issues, even where injury or illness may not be involved.
For example, sexual harassment or a contract dispute following redundancy or termination.
How can Insync Help?
As a specialist business insurance broker, Insync can set you on the right path for Employers’ Liability insurance.
Our team will work to understand your business’s specific risks to help you decide on the right level of Employers’ liability cover that will guarantee that you meet the legal requirement of employers’ liability but ensure you also have the proper indemnity limits for your business.