Employers’ liability insurance is the one cover most UK businesses are legally required to hold, and the trigger is simple: the moment someone works for you under your control, you almost certainly need it. Not when you reach a certain size, not when payroll passes a threshold. Day one. You need at least £5 million of cover from an authorised insurer, and the penalty for going without is up to £2,500 for every day you are uninsured (GOV.UK).
The reason it is compulsory is the claim it exists to meet. In 2024/25 an estimated 680,000 workers were injured at work and 1.9 million suffered a work-related illness (HSE). If one of them is yours and the harm traces back to the work, employers’ liability is what pays the compensation and the legal costs. So the real question is not “should I have it” but “does anyone on my books count”. Here is who does, who is genuinely exempt, and where small firms get it wrong.
Who triggers the cover
The test is control, not job title. If you decide when, where and how someone works, and they use your tools and take your instructions, they are almost certainly your responsibility for cover, whatever the contract calls them.
| Who is working for you | Do you need employers’ liability cover? |
|---|---|
| Employees, full or part-time | Yes |
| Temporary, casual or seasonal staff | Yes |
| Apprentices | Yes |
| Labour-only subcontractors | Usually - they work under your control |
| Volunteers and regular helpers | Usually; the ABI says policies should cover them |
| A genuinely independent contractor with their own insurance | Usually not |
| You alone, a sole trader with nobody working for you | No |
The grey area is subcontractors and freelancers, and it is where firms get caught. A labour-only subbie who turns up to work your job, with your materials, to your instructions is in practice working under your control and usually needs covering. A bona fide subcontractor who runs their own business, carries their own insurance and is free to send someone else usually does not. Calling someone a freelancer in the contract does not settle it; the working relationship does. HMRC’s Check Employment Status for Tax tool is a reasonable starting point, and the Association of British Insurers confirms a policy should also cover volunteers, advisers, referees and marshals.
The exemptions that catch people out
Three situations are genuinely exempt, and two of them trip people up (HSE).
- You employ only close family, and you are not a limited company. If every employee is a close relative (spouse, civil partner, parent, child, sibling and the rest of the defined list), you are exempt, but only while the business is unincorporated. The day you incorporate as a limited company that exemption disappears, even though nothing about the people changed.
- A one-person company where you own at least half. A company whose only employee is its owner is exempt where that owner holds 50% or more of the issued share capital. Note “50% or more”: exactly half counts. Add a second director, or any employee who is not you, and you are back in.
- Staff based entirely outside England, Scotland and Wales. You do not need Great Britain cover for someone based abroad. Northern Ireland runs its own compulsory scheme, also a £5 million minimum (HSENI).
Even when you are exempt, a client, landlord or contract may still require you to hold cover, which is why many one-person companies buy it anyway.
What it costs
Employers’ liability is cheap relative to the risk it carries. For a low-risk business, quotes start around £9 a month: Simply Business reports 10% of customers paying £111.47 a year or less for £10 million of cover plus some public liability (Simply Business), and MoneySuperMarket an average of about £17 a month (MoneySuperMarket). Both are broker figures and both move. Higher-risk trades pay more: NimbleFins puts the 2026 range at roughly £60 to £250 per employee, rising further for hazardous manual work (NimbleFins).
The legal minimum is £5 million, but most policies come with £10 million as standard, so the decision is rarely about the limit and almost always about covering the right people for the right work. Describe a roofing crew as office admin to shave the premium and you may find the one claim you make is the one that is not covered.
Display it, or risk a second fine
Once you are insured, you must display the certificate where staff can find it. A wall, the intranet or a shared folder all count, and electronic display has been allowed since 2008. Fail to show it to an HSE inspector who asks and that is a separate penalty of up to £1,000, on top of the up-to-£2,500-a-day fine for being uninsured.
This is enforced. In April 2026 a Widnes scrap-metal firm was fined after pleading guilty to trading without valid cover; the HSE inspector called employers’ liability “not a trivial optional extra” but “a compulsory requirement” (HSE).
The rule of thumb
If nobody works for you, you probably do not need it. The moment anyone does, whether an employee, an apprentice, a casual hand, a labour-only subbie or a regular volunteer, assume you do and check before they start, not after. It is the first insurance a growing business is forced to buy, and the cheapest way to keep one bad afternoon from becoming the end of the business. If you are weighing up that first hire, the cover is one line in a bigger sum: see the true cost of your first employee.
