Duty to Maintain Workplace Insurance Requirements 

Employers in England and Wales have legal duties to maintain certain workplace insurance protections, most notably Employers' Liability Insurance (ELI). This requirement is a cornerstone of employment law designed to protect workers who suffer injury or illness because of their work, by ensuring employers have financial cover in place to meet compensation claims and legal costs. Failure to maintain the required insurance can lead to daily fines, civil liability and claims by injured workers in courts or, where relevant, tribunal proceedings. This article explains the statutory insurance duties, when they apply, what compliance looks like in practice, how enforcement works, and what risks employers and workers should be aware of. It also answers common questions about exemptions, certificate display and employer responsibilities.

What Workplace Insurance Is Legally Required?

Employers' Liability Insurance (ELI)

Under the Employers' Liability (Compulsory Insurance) Act 1969, most employers must have employers' liability insurance that covers liability for injury or disease suffered by employees in the course of their employment. Employers must take out and maintain an approved policy with an insurer authorised in the UK or under relevant law. The requirement applies from the moment an employer hires someone to work for them.

ELI is not optional; it is a statutory duty that applies even if no accident has occurred. The insurance helps cover compensation and legal costs if an employee successfully brings a claim for personal injury, illness or a related disease attributable to their work.

Who Must Maintain Employers' Liability Insurance?

Scope of the Duty

Most organisations carrying on a trade or profession with employees in England and Wales must hold ELI. It applies to:

• Full‑time, part‑time and temporary staff
• Apprentices, trainees and some volunteers
• Workers engaged under contracts of service, not just written contracts

Even where a worker is paid casually or works irregular hours, if the legal relationship is one of employment, ELI is required.

Exemptions

There are limited statutory exemptions where ELI is not legally required, including:

• Employers who do not have any employees
• Certain family businesses employing only close family members (for example, a sole trader employing their spouse or children)
• Situations where workers are based entirely abroad – subject to specific criteria about time spent in the UK

Exemptions are narrow and fact‑specific; employers should not assume they apply without confirming the legal position, as misclassification can expose them to penalties and liabilities.

Minimum Coverage and Policy Standards

Minimum Level of Cover

The law requires at least £5 million of cover. This is the minimum indemnity the policy must provide, though many insurers offer £10 million or more to reflect the potential cost of claims and legal expenses. Policies must come from an insurer authorised by the Financial Conduct Authority (FCA) or, in the case of certain authorised bodies, recognised under UK law.

Approved Policies and Insurers

An approved policy means one that meets statutory criteria. Employers must ensure their policy does not contain prohibited exceptions that would limit its effectiveness. If a policy is with an unauthorised insurer, it will not satisfy the legal requirement.

Displaying and Producing Insurance Certificates

Workplace Display

Employers must display the employers' liability insurance certificate in a place where employees can easily read it. Acceptable formats include:

• A physical notice board or staff common area
• An electronic version accessible via intranet or shared drive where all employees can view it

Failing to display the certificate where employees can access it can result in a fine separate from penalties for lack of insurance itself.

Inspectors and Requests

Employers must produce the certificate upon request by a Health and Safety Executive (HSE) or local authority inspector. Refusal or inability to produce the certificate can attract additional fines.

Certificates should be retained even after a policy expires, because claims for occupational diseases or cumulative injuries (such as those caused by asbestos exposure) may arise many years later. Many businesses retain certificates for decades to ensure historic coverage can be proven if required.

Enforcement and Penalties

Fines for Non‑Compliance

Failing to maintain employers' liability insurance when required is a criminal offence. Employers who do not hold valid ELI can be fined up to £2,500 per day they remain uninsured. Separate penalties apply for failure to display or produce the certificate when requested, typically up to £1,000 per breach.

Civil and Compensation Risks

Without the required insurance, employers remain vicariously liable for any claims brought by workers for workplace injury or illness. This can expose the employer directly to compensation payments, legal costs and potential insolvency risks if significant liabilities arise. Insurance protects against these costs; absence of insurance means the employer may be personally or corporately responsible.

In addition, injured workers may pursue claims through the courts for damages, medical costs and loss of earnings if workplace negligence or breach of duty is established.

Practical Compliance Steps for Employers

Before Hiring Staff

Employers should:

1. Determine whether the relationship with a worker is truly employment for insurance purposes.
2. Obtain an approved ELI policy from an authorised insurer with at least £5 million cover.
3. Ensure policy wording is appropriate for the nature and scale of the business.

During Employment

• Display insurance certificates at each workplace or make them accessible electronically.
• Retain copies of current and historical certificates for many years.
• Review policies annually to ensure they remain valid, cover all relevant workers, and meet minimum limits.

Record‑Keeping

Maintain documentation demonstrating coverage, including:

• Insurance schedules
• Policy wording and endorsements
• Certificate displays or electronic access arrangements

Good records assist compliance reviews and inspections.

Common Questions About Workplace Insurance

Does Employers' Liability Insurance cover all risks?
No. It typically covers claims for injury or illness caused by employment duties. It does not replace other insurance such as public liability, professional indemnity, or employment practices liability insurance for discrimination or wrongful dismissal claims. Employers should assess broader insurance needs based on business operations.

Are volunteers covered?
Volunteers may be covered under ELI if the terms of their engagement meet the statutory definition of employment. Whether this is the case depends on the specific circumstances and degree of control exercised by the organisation.

Can directors avoid ELI if they are the only employee?
Certain narrow exemptions may apply where a company employs only a director who also owns a majority of the company's share capital. However, this is a technical matter and employers should confirm their position with HMRC or legal advisers before assuming exemption.

Key Takeaways

Employers in England and Wales are legally obliged to maintain employers' liability insurance under the Employers' Liability (Compulsory Insurance) Act 1969 if they have employees. The policy must provide at least £5 million cover, be taken out with an authorised insurer, and be supported by proper display and record‑keeping practices. Exemptions are limited; failure to maintain compliant insurance exposes employers to daily fines, enforcement action by inspectors and direct liability for compensation claims. A proactive approach - securing the correct policy before hiring, displaying certificates, and retaining records - safeguards both employers and workers and promotes workplace safety and legal compliance.