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Compulsory Liability Insurance

01 October 2008

Employers are required by law to have a minimum level of Employers’ Liability Insurance (ELI) to insure against liability for injury or disease to their employees that occurs in the course of their employment in Great Britain. Only very small companies – which employ only their majority shareholder – and sole traders who do not employ anyone else are exempt from the requirement.

The law is enforced by the Health and Safety Executive and employers can be fined up to £2,500 per day for failing to have the necessary insurance cover in place.

Previously, employers have been required to display one or more copies of their ELI certificate at each place of business where relevant employees work. However, from 1 October 2008 the requirement to display the certificate will be satisfied if it is made available in electronic form and each relevant employee to whom it relates has reasonable access to it in that form.

In addition, the Government intends to repeal the regulation that requires companies to retain compulsory ELI policies for 40 years. This proposal has met with criticism from a number of backbench MPs who are seeking to block the move because they believe it will make it harder for victims of asbestos-related diseases to trace the insurers of former employers so that they can claim damages.

The MPs are calling on the Government to set up a central database for the compulsory recording of all ELI policies, before any change in the law takes place, and have tabled a motion to prevent the change being introduced.