Employers liability when you take on staff

Aug 29
3 min read

Updated: 3 days ago

Introduction

A business takes on its first employee in March. Payroll is arranged, a contract is issued, and everything appears to be in order. Nobody mentions insurance, and the existing policy covers public liability only.

In many jurisdictions the business is now trading unlawfully, with penalties that can accrue for every day the cover is absent. This is among the most common compliance failures small employers make, precisely because it is not part of the recruitment conversation and nothing in the process prompts it. Payroll providers arrange payroll and nobody arranges the insurance.

1. Employers liability when you take on staff is a legal requirement in most places

Check the position before anybody starts.

Where it applies, the obligation generally begins on the first day of employment rather than when convenient. Requirements vary by jurisdiction and some have exemptions, so confirm what applies to you rather than assuming.

2. Understand what it covers

Injury and illness caused by work.

It responds when an employee is injured or made ill as a result of their work and the business is liable. That is a different situation from a member of the public being hurt, which public liability addresses.

3. Know who counts as an employee for this purpose

Broader than the payroll.

Casual staff, temporary workers, apprentices, volunteers and sometimes labour-only subcontractors may all fall within it depending on where you operate. The insurance definition does not always match the tax one, so check both. Volunteers in particular are frequently assumed to be outside it and frequently are not.

4. Display or provide the certificate as required

An administrative duty with penalties.

Several jurisdictions require the certificate to be displayed at the workplace or made available electronically to employees. It is a small obligation and it is checked during inspections.

5. Keep old certificates

Longer than seems necessary.

Work-related illness can emerge many years after exposure, and a claim will relate to the period of employment rather than to now. Retaining historic certificates is what allows an old claim to be directed to the right insurer.

6. Make sure the limit meets the requirement

Usually specified.

Many jurisdictions set a minimum indemnity limit, and standard policies typically meet or exceed it. Confirm rather than assume, particularly with a policy assembled from several sections.

7. Tell the insurer what your staff actually do

Where cover is undermined.

Premiums and terms depend on the work being performed, and staff who have taken on different duties, started working at height, or begun driving for the business change the risk. Undisclosed changes can affect a claim.

8. Do not rely on subcontractor status without checking

A frequent misunderstanding.

Describing somebody as self-employed does not necessarily remove them from the scope of this cover, and the insurance test may differ from the employment one. Where somebody works under your direction, assume it may apply and confirm.

9. Combine it with genuine risk management

Insurance is the last line, not the first.

Risk assessments, training, equipment maintenance and recording incidents reduce both the likelihood of a claim and its cost. Insurers increasingly ask what is in place, and it affects both premium and defence.

Review it whenever the business changes shape. Taking on the first driver, the first person working at height, or the first apprentice all alter the risk, and the moment you would most want the cover to be correct is the moment nobody is thinking about it.

Conclusion

Confirm the requirement before your first employee starts, because in many places it applies from day one.

Understand that it covers work-related injury and illness to your own people, check who counts as an employee for insurance purposes including casual and volunteer staff, display or provide the certificate as required, retain historic certificates for long-tail claims, verify the indemnity limit meets any statutory minimum, tell the insurer what staff actually do, do not assume subcontractor status removes the obligation, and pair the cover with genuine risk management.