Employers' liability insurance

Conditions

• Employers' liability insurance is compulsory for any business with one or more employees. GOV.UK's guidance states: 'You must get Employers' Liability (EL) insurance as soon as you become an employer.' Cover must be for at least £5 million from an authorised insurer (verified from GOV.UK employers-liability-insurance guidance, June 2026 — re-verify if the statutory minimum changes).
• The penalty for operating without the required EL insurance is a fine of £2,500 for each day on which the business has employees but lacks the required cover. A separate fine of £1,000 applies for failure to display the EL certificate where employees can see it — for example on the company website, intranet, or physically at the workplace — or for failure to produce the certificate to an inspector on request. Both figures are confirmed in GOV.UK's employers' liability insurance guidance.
• EL insurance is not required if you employ only close family members — specifically a spouse, civil partner, parent, grandparent, sibling, step-relation, or child. Workers based entirely outside England, Scotland, and Wales are also excluded. A sole director who is the only person working in the company and is not required to have EL insurance in that capacity, but should obtain cover as soon as anyone else is employed.
• Where EL insurance is required, the premium is an allowable business cost — the cover is wholly for the purpose of the trade (meeting a legal obligation as an employer and protecting against claims from employees injured or made ill through their work).
• The EL certificate must be retained for at least 40 years. Certain occupational illness claims — such as those arising from asbestos exposure or other long-latency industrial diseases — can emerge decades after the employment, and the historical certificate may be needed to demonstrate that valid cover was in place.
• Employees cannot claim EL insurance premiums as a personal tax deduction — the obligation and cost belong to the employer.

Common mistakes

• Assuming EL insurance is the same as public liability insurance — they cover different parties. EL covers claims from employees who are injured or become ill because of their work; public liability covers claims from members of the public or third parties.
• Not obtaining EL insurance as soon as you take on a first employee, even a part-time or temporary one — the obligation arises immediately.
• Failing to display or make the EL certificate accessible to employees, which carries a separate £1,000 fine even where a valid policy is in place.
• Discarding old EL certificates — they should be kept for at least 40 years in case of long-latency claims.

What to keep

• Employers' liability insurance certificate — retain for at least 40 years.
• Premium invoices or payment records.
• Evidence of employee headcount, in case of a query about whether the requirement applied.

Real-world example

A sole trader takes on two employees in April 2026. She immediately obtains EL insurance at a cost of £650 per year, providing £5 million cover as required by law. The premium is an allowable business expense. She makes the certificate accessible to staff via a link on the team's shared intranet. In prior years, when she was the only person in the business, no EL cover was required.

Frequently asked

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