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Employers Liability Insurance

A frequent question is do I need Employers Liability insurance if I only employ family members?

The Health and Safety Executive has some practical guidance on this area

 

Sole traders and Partnerships

Sole traders and Partners are not employees in their own right, so working by themselves don’t need Employers Liability cover.

However if others are employed, including some sub contractors (typically labour only) then Employers Liability is needed.

What about family members?  The guidance confirms an exemption for family businesses:

ie if all of your employees are closely related to you (as husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister). However, this exemption does not apply to family businesses which are incorporated as limited companies;

 

Limited Companies

Another exemption applies here:

companies employing only their owner where that employee also owns 50% or more of the issued share capital in the company

This would exempt a situation where

(i) a controlling director (50% shares or more of shares) is the only employee; and

(ii) where two people work for the company and have 50% of the shares each.

Not exempted is a family situation where: all the shares belong to one person, but their spouse / family member works for the business either without shares or with less than 50%.  This means Employers Liability cover is required in many situations where one partner runs a business full time, and another assists in it part time.

 

Company Secretaries and Directors

There is no specific exemption in the HSE guidance for Company Secretaries and Directors – however someone who is paid a fee as Director / Secretary would probably not qualify as a “worker” for the purposes of Employers Liability, and to that end a fee paid to a non executive Company Secretary or Director would probably not, by itself create an obligation to insure, even if its necessary to apply PAYE to this sum.