ELCI Act 1969: HSE Employers' Liability Insurance Rules

Regulatory citation: Employers' Liability (Compulsory Insurance) Act 1969 (c. 57) and Employers' Liability (Compulsory Insurance) Regulations 1998 (SI 1998/2573)

What Is Employers' Liability Compulsory Insurance?

The Employers' Liability (Compulsory Insurance) Act 1969 requires most employers carrying on business in Great Britain to hold insurance against their liability for bodily injury or disease that employees sustain in the course of their employment. The insurance must be under an approved policy with an authorised insurer. The 1998 Regulations set the minimum amount of cover, ban certain policy conditions and require certificates to be issued and displayed.

The law protects employees. If a worker is injured or made ill at work and the employer is found liable, the insurance means compensation can be paid even if the employer cannot pay it themselves.

Why Employers' Liability Insurance Matters

Many occupational diseases appear years after exposure. Without valid cover, an employer faces a criminal offence for every day it is uninsured, and injured workers may struggle to recover compensation. HSE inspectors can ask to see the certificate during visits.

Core Requirements

1. Hold Approved Insurance (Act, Section 1)

Every employer carrying on business in Great Britain must insure, and keep insured, against liability for bodily injury or disease sustained by employees arising out of and in the course of their employment in Great Britain. The policy must be with an authorised insurer and must not contain conditions banned by the Regulations.

2. Cover the Right People (Act, Section 2)

Cover is needed for people employed under a contract of service or apprenticeship, whether written or oral, manual or clerical. HSE guidance says the real nature of the working relationship decides this, not the label in the contract, so some people treated as subcontractors may need to be covered. Employers do not need to insure close relatives such as a spouse, civil partner, parent or child, but HSE notes this exemption does not apply to family businesses incorporated as limited companies.

3. Insure for At Least £5 Million (Regulation 3)

The amount of cover must be at least £5 million in respect of claims relating to any one or more employees arising from any one occurrence, including costs. A company and its subsidiaries can be treated as a single employer under a group policy, but the group cover must still be at least £5 million. HSE notes that insurers usually offer at least £10 million.

4. Accept No Prohibited Policy Conditions (Regulation 2)

A policy must not let the insurer avoid paying a claim because the employer failed to take reasonable care to protect employees, failed to keep specified records or failed to comply with legal requirements on employee protection. The policy may, however, require the employer to repay the insurer some or all of a sum paid out.

5. Display the Certificate (Regulations 4–5)

The insurer must issue a certificate of insurance no later than 30 days after the insurance starts or is renewed. The employer must display a copy at each place of business where relevant employees work, where they can easily see and read it, and protect it from damage. Since 1 October 2008 the certificate may be displayed electronically, as long as employees know where to find it and have reasonable access to it.

6. Produce Certificates and Policies to Inspectors (Regulations 6–7)

If an inspector serves a written notice, the employer must produce or send the certificate within the time stated. During the period of insurance the employer must also let an inspector see the policy, or a copy of it, at a reasonable time and place.

7. Check Whether an Exemption Applies (Act, Section 3; Regulation 9)

Section 3 exempts many public bodies, including NHS bodies, local authorities and policing bodies. HSE says most government departments are also exempt. Schedule 2 to the Regulations lists further exempt employers. HSE guidance says a company is exempt if its only employee is its owner and that person holds 50% or more of the issued share capital.

Common Compliance Approaches

Review the Workforce at Renewal

Check whether new workers, visiting overseas staff or labour-only subcontractors need cover before the policy renews.

Use Electronic Display Carefully

If the certificate is on an intranet, tell staff where it is and make sure staff without computer access can still see it.

Keep Old Certificates

There has been no legal duty to keep expired certificates since 1 October 2008, but HSE strongly advises keeping as complete a record as possible because disease claims can be made decades later.

Example: Employers' Liability Insurance in Practice

A small building firm with eight workers renews its employers' liability policy each spring. Its office manager checks the certificate shows at least £5 million of cover and lists the company correctly, then posts copies in the office and the site cabin and adds a link on the staff app. When the firm starts using two labour-only bricklayers who work only for it, under its direction and with its tools, it asks the insurer to confirm they are covered. Old certificates are scanned and kept in a permanent archive.

Related regulations: HSWA Section 2 general duties, RIDDOR incident reporting, MHSWR risk assessments.

Note: This summary reflects the law as it applies in Great Britain, where HSE enforces it. The 1969 Act does not extend to Northern Ireland, which has its own separate requirements. Always check the current legislation and HSE guidance.

Frequently Asked Questions

What happens if an employer has no employers' liability insurance?

Under section 5 of the Act, an employer that is not insured as required commits an offence on each day it lacks cover, punishable by a fine up to level 4 on the standard scale. HSE guidance puts this at up to £2,500 for each day without suitable insurance. Failing to display the certificate or produce it to an inspector is a separate offence, which HSE puts at up to £1,000.

Do I need employers' liability insurance for family members?

Not if all your employees are close relatives such as a spouse, civil partner, parent, child or sibling. HSE notes this exemption does not apply if the family business is incorporated as a limited company.

Can I show the certificate online instead of on a notice board?

Yes. Since 1 October 2008 employers can display the certificate electronically, provided employees know how to find it and can reasonably access it.