Employers Liability Insurance is a statutory requirement and failure to have this cover is liable to a fine, up to £2,500 per day. As an employer, you are liable for injuries to your staff where there is a breach of duty at common law or under statute. You are also required to display your certificate in a prominent position and they must also be retained for future reference.
You must take reasonable care to ensure the safety of your employees. You must also have:
- Safe premises and place of work
- Adequate plant and machinery
- Safe system of work
- Competent fellow employees.
Liability Under Statute
There are regulations, which you have a duty to comply with and we have listed a number of key ones below. The list is not exhaustive and may or may not apply to your business. If you are not familiar with, or implementing those that apply, you are trading in breach of your statutory obligations which may be endangering your employees and leaving you exposed to fines, damages and claims.
Health & Safety at Work Regulations, 1974; The Factories Act 1961; The Control of Substances Hazardous to Health Regulations 1999; The Control of Asbestos at Work Regulations 2002; Electricity at Work Regulations 1989; Noise at Work Regulations; 1989; Management of Health & Safety at Work; Regulations 1999; Workplace (Health, Safety and Welfare) Regulations 1992; The Personal Protective Equipment at Work Regulations 1992; The Manual Handling Regulations 1992; The Health & Safety (Display Screen Equipment) Regulations 1992; Lifting Operations and Lifting Equipment Regulations 1998; Confined Spaces Regulations 1997; The Gas Safety (Installation and Use) Regulations 1998 and The Work at Height Regulations 2005; Corporate Manslaughter and Corporate Homicide Act 2007.
The basic policy indemnifies the employer in respect of his legal liability to pay damages to persons under a contract of employment or apprenticeship with the insured, who have suffered injury or disease caused during the period of insurance and arising out of or in connection with the business within the territorial limits. The term ‘caused during the period of insurance’ is particularly important in the context of ‘long tail’ claims. In such a claim, the claim arises years after the employee has been negligently exposed to a damaging process or substance. Asbestos exposure, for example, can cause diseases such as mesothelioma, a lung cancer and asbestosis.
THE TERRITORIAL LIMITS
Injury or disease must occur within Great Britain, Northern Ireland, the Channel Islands, the Isle of Man and offshore installations in territorial waters around Great Britain and its continental shelf. The restriction is overridden in respect of employees temporarily overseas on business but insurers may insist on any legal action being brought within these territories.
LIMIT OF LIABILITY CLAUSE
The insurer’s liability is limited to £10 million (£5 million for acts of terrorism) in respect of any one claim or series of claims arising out of one cause. This is inclusive of both the claimants’ costs and your own costs incurred with your Insurers’ consent. Higher limits of indemnity can be arranged if necessary. It may be that depending on your structure and nature of the activities carried out, £10 million is not sufficient. When obtaining increased limits of indemnity it is important that the wording follows that of the primary policy to facilitate smooth claims handling.
MAIN POLICY EXTENSIONS
Health & Safety at Work Regulations Act 1974 – legal defence costs; Unsatisfied Court Judgements; Retrospective Cover; Indemnity to Other Parties; Injuries to Working Partners; Court Attendance Costs.
MAIN POLICY EXCLUSIONS
Liability does not apply in those circumstances where the Road Traffic Act insurance requirements apply. Liability does not apply in respect of manual work on offshore installations or whilst in transit to or from the installation.
The policy does not provide cover for liability in respect of liquidated damages, penalty clauses, fines, aggravated, punitive, or exemplary damages.
Apart from the customary conditions (Claims notification, observance of conditions etc) the following should also be noted:
- Right of Recovery
- Reasonable Precautions
- Cancellation Condition Alterations in Risk
- Inspection of Premises
- Premium Adjustment (wages declaration)
The policy applies only to the business described in the schedule but is stated to include:
- canteens, sports and welfare organisations for the benefit of the insured’s employees and fire, security, first aid and ambulance services.
- private work carried out by an employee for any director, partner or senior employee of the insured (subject to the insured’s consent)
- the ownership, maintenance and repair of premises used in connection with the Business.
The basic indemnity applies in respect of liability to ‘persons employed under a contract of employment or apprenticeship with the Insured’. It does not apply to persons such as an independent contractor, engaged under a ‘contract of service’.
That said, what constitutes an Employee is ever widening and in all circumstances has as much to do with who controls the employee rather than who is paying for their work. The tax status of the individual is irrelevant.