Do you employ anyone?

If you have at least one employee, you probably need employers’ liability insurance. The minimum legal requirement is to have cover of £5 million. If you are not insured, you can be fined up to £2,500 a day for every day you don’t have it.

You need employers’ liability insurance for all types of employees. This includes part-time employees, volunteers, people on work experience and trainees. Close family members may be excluded from this requirement. Whether you need employers’ liability insurance to cover them can depend on how your business is set up, i.e. whether you are a limited company. If you are in any doubt, speak to your insurance provider. Alternatively, approach another professional such as a solicitor or accountant for help. The only other exception that may apply is whether you employ someone based overseas. Again, you should check with your insurance provider as to whether you qualify for an exemption.

Do you operate as a limited company?

If you operate as a limited company and employ one (or more) people, you will need employers’ liability insurance. This includes a situation where you have more than one director. It’s important to check how your company or business is set up. Don’t hesitate to take professional advice, if necessary.

What about sub-contractors?

Whether you need employers’ liability insurance will depend on whether the sub-contractor is legally considered to be ‘an employee’. This depends on the extent to which they work independently from you, or use your tools and materials. If they also work for other organisations, this can be a sign that they are wholly independent. If they are, you will not need employers’ liability insurance. If they work solely under you direction, you will probably need to get insured. This can be quite a complex area of law. You should take professional advice to help determine the status of any contractors you use.

What if you don’t employ anyone?

If you are self-employed and work entirely on your own, you won’t need employers’ liability insurance. However, it is important to remember that you may need other types of insurance cover, such as public liability, product liability or professional indemnity insurance.

Do I need employers' liability insurance if I am self employed?

As a self-employed person, am I considered an employer?
Who exactly do I need to include as an employee for employers' liability insurance?
Are there any exceptions?

What if I operate as a limited company? Does that change things?
I sometimes use sub-contractors. Do I need employers' liability insurance for them?
What if I am self-employed and work entirely on my own, with no employees or sub-contractors considered employees?

If you're self-employed, navigating the world of business insurance can feel complex. One key question is whether you need employers' liability insurance.

This guide clarifies when self-employed individuals need this crucial cover, particularly when it comes to employing staff or using sub-contractors.

As a self-employed person, am I considered an employer?

If you engage other individuals to work for your business, even if you are self-employed yourself, you are likely considered an employer in the eyes of the law and for insurance purposes.

If you have at least one employee, you almost certainly need employers’ liability insurance.

The minimum legal requirement is to have employers’ liability cover of £5 million. Operating without this legally required insurance can result in significant penalties, including fines of up to £2,500 a day for every day you are uninsured.

Who exactly do I need to include as an employee for employers' liability insurance?

Employers’ liability insurance is not just for full-time staff. You need to consider a wide range of workers as employees for insurance purposes. This includes:

Part-time employees
Volunteers
People on work experience placements
Trainees
Temporary staff

The law is designed to protect a broad spectrum of individuals who work under your direction, regardless of their specific employment contract or working arrangement.

Are there any exceptions?

There are very limited exceptions to the requirement for employers' liability insurance.

Close family members

In some specific circumstances, you may not need employers' liability insurance to cover close family members. However, this exception is highly dependent on how your business is legally structured.

If you operate as a limited company, this family member exemption generally does not apply. It's essential to verify your specific situation with an insurance provider or professional advisor to determine if this exception is relevant to you.

Employees based overseas

If you employ someone who is based entirely overseas and does not work in the UK, you might be exempt from UK employers' liability insurance. However, you must confirm this with your insurance provider and also investigate any legal insurance requirements in the country where your employee is based.

Do not assume you are exempt without specific confirmation.

What if I operate as a limited company? Does that change things?

Your business structure is a key factor. If you operate your self-employed business as a limited company and employ even one person (or more), you will need employers’ liability insurance.

This requirement applies even in situations where you have multiple directors within the limited company – if directors are considered employees (which is often the case), they are included under the employers' liability requirement.

It is crucial to accurately assess how your business is legally set up. If you are unsure about your business structure or its implications for employers' liability insurance, always seek professional advice from an insurance broker, solicitor, or accountant.

I sometimes use sub-contractors. Do I need employers' liability insurance for them?

This is a common and often complex question for self-employed individuals. Whether you need employers' liability insurance for sub-contractors depends entirely on whether they are legally considered to be ‘employees’ or genuinely self-employed sub-contractors.

The key factor is the level of independence the sub-contractor has in their work for you. To understand the distinction, it’s helpful to consider two categories of sub-contractors:

'Labour-only' sub-contractors

These types of sub-contractors, despite being called ‘sub-contractors’, are often legally considered to be employees for insurance purposes.

‘Labour-only’ sub-contractors typically:

Work under your direct supervision and control.
Follow your detailed instructions on *how* the work should be done.
Use your tools and equipment to carry out the work.

Because you are directing their work and providing the resources for them to do it, ‘labour-only’ sub-contractors are generally treated as employees.

If you use labour-only sub-contractors, you will likely need to include them under your employers’ liability insurance.

'Bona fide' sub-contractors

These are genuinely independent contractors who operate their own businesses.

‘Bona fide’ sub-contractors typically:

Work independently, under their own direction, deciding how to perform the work.
Provide their own tools, equipment, and materials.
Often work on fixed-price contracts, where they are paid a set fee for a project, regardless of time taken or materials used.
May work for multiple clients and organisations simultaneously.
Often set their own working hours and determine when and where the work is carried out (within agreed project parameters).

Because 'bona fide' sub-contractors operate with a high degree of autonomy and run their own businesses, they are not legally considered your employees.

You generally do not need employers’ liability insurance to cover bona fide sub-contractors. However, it is still prudent to ensure that any bona fide sub-contractors you engage have their own adequate public liability insurance to cover their work.

Determining the precise status of a sub-contractor can be legally intricate. If you are unsure whether a sub-contractor you use would be classified as ‘labour-only’ (and therefore an employee for insurance) or ‘bona fide’ (genuinely self-employed), it is essential to seek professional advice.

Consult with an insurance broker, a solicitor specialising in employment law, or an accountant to get clarity on your specific situation and ensure you have the correct insurance in place.

What if I am self-employed and work entirely on my own, with no employees or sub-contractors considered employees?

If you are genuinely self-employed and operate your business entirely on your own, without employing anyone and without using sub-contractors who could be classified as ‘labour-only’ employees, then you will not need employers’ liability insurance.

Employers' liability insurance is specifically designed to protect you from claims made by employees.

However, even if you don’t need employers' liability insurance, remember that as a self-employed individual, you may still need other essential types of business insurance to protect yourself from other risks. These can include:

Public liability insurance: To protect you if a member of the public is injured or their property is damaged as a result of your business activities.
Product liability insurance: If you design, manufacture, or sell products, to protect you from claims if those products cause harm.
Professional indemnity insurance: If you provide professional advice or services, to protect you from claims if your advice or services cause a financial loss for a client.