Do I Need Employers Liability Insurance as a Tradesperson?

If you ever take on help – a labourer for a big job, a mate who helps out occasionally, an apprentice – employers liability insurance is something you need to know about. If you employ anyone in the UK, employers liability insurance isn’t optional. It’s a legal requirement. And the penalties for not having it are significant.

What Is Employers Liability Insurance?

Employers liability insurance protects you if an employee suffers an injury or illness as a result of working for you and makes a compensation claim. For example:

• An apprentice cuts their hand badly using equipment on your job site and claims compensation
• A labourer you’ve taken on for a week develops a back injury from lifting heavy materials and sues for damages
• A member of your team is involved in an accident on site and is unable to work – they claim loss of earnings against you

Without employers liability insurance, you’d be personally responsible for any compensation awarded. Claims can run into hundreds of thousands of pounds for serious injuries, and for the most severe cases into the millions.

Is Employers Liability Insurance a Legal Requirement?

Yes – for most businesses that employ staff, employers liability insurance is a legal requirement under the Employers’ Liability (Compulsory Insurance) Act 1969. You must have a minimum of £5 million of cover, though most policies provide £10 million as standard. You must also display your employers liability certificate – either physically or electronically where employees can access it.

The penalties for not having it are serious:

• A fine of £2,500 for every day you’re trading without valid employers liability insurance
• A further £1,000 for not displaying your certificate when required
• Personal liability for any compensation awarded if an employee is injured while you’re uninsured

Who Counts as an Employee?

This is where many tradespeople get caught out. The definition of “employee” for insurance purposes is broader than you might think.

You likely need employers liability insurance if you have:

• Full-time or part-time employees on your payroll
• Apprentices or trainees
• Casual or seasonal workers – even occasional labourers
• Labour-only subcontractors who work under your direction and use your tools and equipment
• Volunteers working under your supervision on a regular basis

You may not need it if:

• You’re a genuine sole trader with no staff whatsoever
• You use fully independent subcontractors who have their own insurance, use their own tools, set their own hours, and work for multiple clients

The key question is whether the person works under your direction and control. If they do, they’re likely classed as an employee for insurance purposes – regardless of how you pay them or what you call them. If you’re unsure, the safest approach is to get employers liability cover. The cost is modest compared to the risk of getting it wrong.

Are There Any Exemptions?

There are a small number of legally exempt situations:

• Businesses where the sole employee owns more than 50% of the share capital – i.e., owner-managed limited companies with no other staff
• Family businesses where all employees are close family members – though this doesn’t apply if the business is incorporated as a limited company

For most sole traders taking on any kind of help, these exemptions don’t apply. If in doubt, get covered.

What Does Employers Liability Insurance Cover?

Employers liability insurance covers compensation claims from employees who suffer:

• Physical injuries at work – accidents, falls, cuts, crush injuries
• Industrial diseases or illnesses caused by working conditions – hearing loss from noise exposure, respiratory conditions from dust or fumes
• Psychological injuries – stress-related illness caused by working conditions

It covers both the compensation awarded to the employee and your legal costs in defending the claim.

What It Doesn’t Cover

• Injuries to members of the public – that’s covered by public liability insurance
• Damage to customer property – also covered by public liability
• Your own injuries as the business owner – you’d need personal accident or income protection insurance for that
• Claims arising from work done before the policy started – always check your retroactive cover dates

How Much Does It Cost?

For a sole trader taking on one or two casual labourers, employers liability insurance typically costs from around £60–£150 per year when added to an existing public liability policy. The cost depends on the number of people you employ, the nature of the work (higher-risk trades cost more), your claims history, and the level of cover. Buying it as part of a combined tradesman insurance package – public liability, employers liability, and tools cover together – is usually the most cost-effective approach.

How to Get It

The simplest approach is to use a comparison platform like Simply Business, which lets you compare quotes from multiple insurers and add employers liability to your existing cover – or take out a combined package from scratch. What to have ready when getting a quote: your trade and the nature of the work you do; your annual turnover or estimated turnover; the number of people you employ or expect to employ; and details of any previous claims.

Employers Liability vs Public Liability – What’s the Difference?

Public liability insurance covers claims from members of the public – customers, bystanders, neighbours – who are injured or suffer property damage as a result of your work. Employers liability insurance covers claims from your employees – the people who work for you – who are injured or become ill as a result of working for your business. You need both if you employ staff. They cover completely different risks and one doesn’t substitute for the other.

Do Subcontractors Need Their Own Insurance?

Genuine independent subcontractors – who set their own hours, use their own tools, work for multiple clients, and carry their own insurance – are responsible for their own cover. Always ask to see proof of their public liability insurance before they start work. Labour-only subcontractors – who work under your direction, use your tools, and work exclusively for you – are likely to be treated as employees for insurance purposes. Check with your insurer if you’re unsure how your team members are classified.

The Bottom Line

If you employ anyone – even occasionally, even informally – employers liability insurance is a legal requirement. The fine for operating without it is £2,500 per day and the financial exposure from an uninsured claim is potentially far greater. The cost of cover is modest. Getting a quote takes minutes. Buying it as part of a combined tradesman insurance package alongside your public liability cover is the most straightforward and cost-effective approach.

Frequently Asked Questions

This guide provides general information and is not legal or insurance advice. Always check GOV.UK or speak to an authorised insurance broker for advice specific to your business. Some links on this page are affiliate links; if you sign up through them we may earn a commission at no extra cost to you.