Employers Liability Insurance in the UK
As an employer, you are legally responsible for the safety and health of your employees when they are on the job. If they feel that you are responsible for an injury they have suffered at work, or become ill because of dangerous conditions they were exposed to in the workplace, your employees may seek compensation from you. With this in mind, the Employers’ Liability (Compulsory Insurance Act of 1969 requires that you have least Ј5 million of insurance cover against any claims they may file.
The role of the HSE
The Health and Safety Executive (HSE) carries out the laws related to employers’ liability insurance, and their inspectors have the authority to verify that you have this cover with an approved insurer. They may also want to examine your certificate of insurance and other material related to it. You can be fined as much as Ј2500 for every day on which you lack the required insurance, and if you fail to display your certificate of insurance or are unwilling to have it available for the inspectors, you may also face a Ј1000 fine.
While employers’ liability insurance is a viable way to compensate workers whether their job-related illness or injury is caused in or out of the workplace, note that any adverse effects from a motor accident that occurs while they are acting on your behalf may already be covered under your motor insurance.
How to comply with the law
Begin by working with an authorised insurer that conducts business in accordance with the Financial Services and Markets Act of 2000. Since the Financial Services Authority (FSA) maintains a list of authorised insurers, you can verify a company’s status by clicking on www.fsa.gov.uk, or calling 0845 606 1234.
When you look into enrolling in a programme, your contract will list the events in which your insurer agrees to pay compensation, including those activities that are connected to your business, along with certain restrictions limiting the amount your insurer would pay that might seem unsatisfactory to you. You will want to make certain that these drawbacks are eliminated or move on to another insurer on your list for cover.
Doing your part
As an ethical employer, you will need to complete a risk assessment that is both relevant and thorough, take all of the reasonable, practical steps you can to safeguard your workers, and report any incidents that may occur. If the insurer determines that you have not fulfilled your obligations and that a claim was filed by one of your employees as a result, the terms of your contract may permit them to sue your business and reclaim the funds they have already paid out.
Before deciding to take out the minimum amount of cover required, take a good look and your company’s risks and liabilities and decide if that is really sufficient, because insurers generally offer cover of Ј10 million or more. If you are part of a group, you can also enrol in a programme that will insure the entire group and its subsidiaries, and another option is to be covered by more than one policy.
If you purchase coverage or renew your policy, you will receive a certificate indicating that you are covered by employers’ liability insurance, stating the extent of the cover, and listing the companies included under the policy. This certificate of insurance must also be displayed in a location where your employees have easy access to it, and the law now allows employers to do this electronically. This is a viable option, but it can only apply in a situation where every employee uses a computer when they are at work, or if an employee works at an offshore installation and would like to see a copy. In the latter case, this should be provided quickly, and definitely within 10 working days.
If your employees work in Jersey, Northern Ireland, the Isle of Man, Guernsey, England, Wales, or Scotland, the same certificate will apply in each location, but you should verify that it is compliance with both local requirements and the laws of Great Britain. In addition, while the law no longer requires employers to retain copies of insurance certificates that are out-of-date, it is a good idea to do just that, because certain diseases may appear long after your employees were exposed to something harmful, and they may need to file a claim against you for something that happened decades ago. If you no longer have the necessary documentation, you may discover that you will have to pay such claims on your own, without the help of your insurer.
Your covered employees
The law requires you to purchase employers’ liability insurance for those who are employed under a contract of apprenticeship or service, and this contract may be written, verbal, or implied. The key here is the type of relationship you have with those who work for your company and the amount of control you have over their work activities. You should also consult with your insurer if some workers seem to fall into a “gray area,” if the level of risk is heightened for a certain group, or if the work they perform for you varies from your company’s usual type of business.
Your insurer’s obligations
They have to pay the full amount of compensation that was awarded to your employee by the court, or agreed upon by that individual, and they cannot impose any restrictions that would make your company, your employee, or a former employee pay for any part of it. At the same time, you can freely agree to reimburse your insurer for part of the amount they have remitted to your employee because of a liability claim.
If you need additional information regarding issues related to employee liability insurance, contact a solicitor, visit a legal centre in your area, go to a Citizens Advice Bureau, or stop in at an HSE office near you. You can find them listed in your telephone directory under Health and Safety Executive, or visit their official website at http://www.hse.gov.uk.
Remember that every insurance policy is different. ALWAYS read the policy carefully to make sure that it has the right cover for you!
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