SMEs failing to cover themselves with Employers Liability insurance

Bad news: small businesses here in the UK are breaking the law by unwittingly ignoring the Employers Liability insurance (EL). A specialist warns that almost fifty percent of Britain’s small businesses are accepting employees without the mandatory EL.

Small businesses such as firms, enterprises etc. are required by the law to have EL if they are employing one or more people (unless family members) into their businesses. About 47 percent of the respondents were not aware that it is illegal not to have the insurance at all.

To further understand what exactly is Employers’ Liability here is a small definition:

Employers’ Liability Act 1969 is an act that safeguards a business and the owner of the business from liability claims of their employees in case of incidents of accidents, injuries or illness caused by their work.

EL is a legal requirement which will cover any expenses made by compensating an employee’s injury and illness in any form whilst in his or her workplace, regardless of whether they have followed company instructions or not. The scary thing about not having this type of business insurance is when you get caught, you will be susceptible to penalties such as £2,500 per day it has traded without the insurance and can also lead to imprisonment (maximum of 14 long years).

Exemption is given to firms that employ family members or close relatives and is not a limited company or those who are the sole employees are also the owners that at least owns half of the company’s issued share capital. In the year 2011, two years ago, insurers in Britain paid out £1 billion in expenses and claims in the Employer’s Liability Insurance. It sparks a big concern to specialists that many employers are still unaware of their legal obligations.

The EL is part of the basic laws in establishing a business so the statistics of employers not having this is baffling. Any employer who is taking in employees may it be in full or part-time staffs, college students looking for work experience and volunteers should have this mandatory cover as it is also part of their rights as employees. Without the EL, the financial consequences are severe even before the time comes when an employee meets an accident in the workplace.