47% of UK small firms employing staff without Employers Liability insurance

28th March 2013

Nearly half of the nation’s small and medium-sized enterprises could be employing new staff without having the mandatory Employers Liability (EL) insurance, warns insurance specialists, YOUR Insurance.
Businesses employing one or more members of staff are duty bound by law to have Employers Liability insurance. However, 47 per cent of respondents to a recent survey by YOUR Insurance are unaware that it is illegal to employ staff – unless they are family members – without such protection.
The minimum level of EL insurance cover required for any business is £5 million, which protects firms and tradespeople against compensation claims from existing and previous employees who are injured or become ill as a consequence of their work.
Businesses exempt from requiring EL insurance include those employing close relatives, sole traders who own at least 50 per cent of the company’s issued share capital and those that are not currently a Limited Company.
In 2011 alone, insurers paid out £1 billion in Employers Liability claims and additional expenses.
Annie Plaskett, marketing manager for YOUR Insurance, said: "It’s concerning to see how many people appear unaware of their legal obligations.
"Anyone employing full or part-time staff, sub-contractors, work experience students or volunteers should have this compulsory cover in place. Without it, the financial consequences could be severe."
Without taking the right precautions it could clearly be very costly for small firms and might even put their financial stability  in jeopardy.
The Health & Safety Executive (HSE) reported in March that it fined a self-employed maintenance worker £1,250, followed by a further £1,000 in costs, after breaching the Working at Height Regulations.
A friend helping him broke his elbow after falling three metres through a roof in a disused factory in the Forest of Dean.

Image: Cramo Communications

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