Employers’ liability insurance
As a general rule if you dictate where, when and what hours someone works and deduct National insurance and income tax from their wage then you employ them. And if you employ anyone then you need employers’ liability insurance by law. You don’t have to have a mini empire for this insurance to apply to you – hiring just one person even on a casual basis means you’ll need it.
Employers’ liability insurance compensates employees if they’ve suffered injury or illness through work; your policy should cover the cost of any claims as well any legal fees. You need to be insured for at least £5 million but most insurers will provide cover for up to £10 million (just in case).
If your business uses volunteers or unpaid students such as anyone on work experience or adults on a work placement, then you shouldn’t need any extra insurance – it should all be covered under your existing employers’ liability (but always read the small print).
If you don’t have employers’ liability insurance when you should, you can be fined up to £2,500 for every day you go without it. The only exemptions to employers’ liability are if you don’t employ anyone (obviously) or if your business is family owned and employs only close family. Some public organisations are also exempt.