[31-10-2003] EMPLOYER'S LIABILITY (DEFECTIVE EQUIPMENT AND COMPULSORY INSURANCE)

(NORTHERN IRELAND) ORDER 1972 A GUIDE FOR EMPLOYERS

Most employers are required by the law to insure against liability for injury or disease to their employees arising out of their employment. This guide is intended to help you to understand what is required. It is not a legal interpretation of the Employer's Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order and it has no legal status. You should be aware that only the courts can authoritatively interpret the law.

What is employer's liability insurance?

You are responsible for the health and safety of your employees while they are at work. Your employees may be injured at work, or they or your former employees may become ill as a result of their work while in your employment. They may try to claim compensation from you if they believe you are responsible. The Employer's Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972 ensures that you have at least a minimum level of insurance cover against any such claims.

Employer's liability insurance will enable you to meet the cost of compensation for your employees' injuries or illnesses whether they are caused on or off site. However, any injuries or illnesses relating to motor accidents which occur while your employees are working for your, may be covered separately by your motor insurance.

Public liability insurance is different. It covers you for claims made against you by members of the public or other businesses, but not for claims made by employees. While public liability insurance is generally voluntary, employer's liability insurance is compulsory. You can be fined if you do not hold a current employer's liability insurance policy which complies with the law.

Do I need employer's liability insurance if my employees work abroad or my company is based abroad?

If any of your employees are normally based in Northern Ireland (including offshore installations or associated structures) you must have employer's liability insurance.

You do not need employer's liability insurance under Northern Ireland law to cover any of your employees who are based abroad (eg if they are on secondment). However, you should check whether the law in the country where they are based requires you to take out insurance or take any other measures to protect your employees.

If any of your employees are normally based abroad but spend more than 14 days continuously in Northern Ireland, or more than seven days on an offshore installation, you will need employer's liability insurance under Northern Ireland law.


Which insurance companies can sell me employer's liability insurance?

You must use an authorised insurer. If you do not, you may be breaking the law. You should check that your insurer is authorised before you take out employer's liability insurance.

Authorised insurers are individuals or companies working under the terms of the Insurance Companies Act 1982. You can find a list of authorised insurers in the Insurance Annual Report which you can get from a library or from your local branch of The Stationery Office or from any good bookshop. You can check whether a company is authorised by telephoning the Insurance Directorate, HM Treasury, on (020) 7215 0136.

Can my insurance policy contain conditions?

If you take our employer's liability insurance, you will have an agreement with your insurer about the circumstances in which they will pay compensation. For example, the policy will cover the specific activities which relate to your business.

There are certain conditions, which could restrict the amount of money your insurer might have to pay, which you cannot agree and your insurer cannot impose. You should make sure that your contract with your insurer does not contain any of these conditions.

Your insurer cannot refuse to pay compensation purely because:

n you have not provided reasonable protection for your employees against injury or disease;

n you cannot provide certain information to the insurer;

n you have done something they told you not to do (for example, said it was your fault);

n you have not done something they told you to do (for example, report the incident);

n you have not met any legal requirement connected with protection of your employees.

However, this does not mean that you can forget about your legal responsibilities to protect the health and safety of your employees. For example, you must carry out a risk assessment, take practical measures to protect your employees and report incidents. If your insurer believes that you have failed to meet your legal responsibilities for the health and safety of your employees and that this has led to the claim, the policy may enable the insurer to sue you to reclaim the cost of the compensation.

Can the insurer make me pay part of any claim for compensation?

Your insurer must pay the full amount of any compensation agreed with your employee or former employee or awarded to then by a court. Your insurer cannot impose conditions which make you, your employee or your former employee pay part of any claim. However, you can agree with your insurer that you will pay back to them part of any compensation which they have paid to your employee or former employee.

How must cover do I need?

You must be insured for at least £5m. However, you should look carefully at your risks and liabilities and consider whether you need insurance cover of more than £5m. In practice, most insurers offer cover of at least £10m.

If your business is part of a group, a policy for employer's liability insurance can be taken out for the group as a whole. In this case, the group as a whole, includi9ng subsidiary companies, must have cover of at least £5m.

You can have more than one policy for employer's liability insurance. However, the total value of the cover provided by the policies must be at least £5m. You should bear in mind that the £5m minimum level of cover includes costs, so you may well wish to purchase cover of more than this.

Do I need to tell my employees that I have employer's liability insurance?

When you take out or renew a policy, your insurer will give you a Certificate of Employer's Liability Insurance. This must state clearly the minimum level of cover provided and the companies covered by the policy. *You must display a copy of the Certificate of Insurance where your employees can easily read it.

If you have employees working in England, Scotland, Wales, the Isle of Man, Jersey or Guernsey as well as in Northern Ireland you can use the same certificate in all locations. However, you must check that this complies with any local requirements as well as with Northern Ireland law.

If your employees work on offshore installations or associated structures, you do not need to keep a copy of the certificate on every installation. However, if one of your employees asks to see a copy of the certificate, you must provide one as soon as possible and certainly within 10 working days of their request. You can provide a copy by fax if this is easier for you.

Does the law apply to me?

You need employer's liability insurance unless you are exempt from the Employer's Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order. The following employers are exempt:

n most public organisations including government departments and agencies, district councils, the Police Authority for Northern Ireland and nationalised industries;

n health service bodies, including Health and Social Services Trusts and Health and Social Services Boards;

n some other organisations which are financed through public funds, such as Education an Library Boards;

n family businesses, ie if your employees are closely related to you (as husband, wife, 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.

Many of the employers who are exempt from the need to have employer's liability insurance are listed in Schedule 2 to the Employer's Liability (Compulsory Insurance) Regulations (Northern Ireland) 1999; however, some public sector employers are exempted by other statutory provisions. If you are in any doubt about whether your organisation is exempt, contact the Health and Safety Executive for Northern Ireland - see "Where can I go for further information?" at the end of this booklet.

Do I need employer's liability insurance for all the people who work for me?

You are only required by law to have employer's liability insurance for people who you employ. However, people who you normally think of as self-employed may be considered as your employees for the purposes of employer's liability insurance.

Whether or not you need employer's liability insurance for someone who works for you depends on the terms of your contract with them. This contract can be spoken, written or implied. It does not matter whether you usually call someone an employee or self-employed or what their tax status is. Whether you choose to call your contract a contract of employment or a contract for services is largely irrelevant. What matters is the real nature of your relationship with the people who work for you and the degree of control you have over the work they do.

There are no hard and fast rules about who counts as your employee for the purposes of employer's liability insurance. The following paragraphs may help give you some indication. However, if you have any doubts you should seek legal advice.


In general, you may need employer's liability insurance for someone who works for you if:

n you deduct national insurance and income tax from the money you pay them;

n you have the right to control where and when they work and how they do it;

n you supply most materials and equipment;

n you have a right to any profit your workers make although you may choose to share this with them through commission, performance pay or shares in the company. Similarly, you will be responsible for any losses;

n you require that person only to deliver the service and they cannot employ a substitute if they are unable to do the work;

n they are treated in the same way as other employees, for example if they do the same work under the same conditions as someone you employ.

In general, you may not need employer's liability insurance for people who work for you if:

n they do not work exclusively for you (for example, if they operate as an independent contractor);

n they supply most of the equipment and materials they need to do their job;

n they are clearly in business for their personal benefit;

n they can employ a substitute when they are unable to do the work themselves;

n you do not deduct income tax or national insurance. However, even if someone is self-employed for tax purposes they may be classed as an employee for other reasons and you may still need employer's liability insurance to cover them.


In most cases you will not need employer's liability insurance for volunteers. Although in general the law may not require you to have insurance for:

n students who work for you unpaid;

n people who are not employed but are taking part in youth or adult training programmes; or

n schoolchildren on work experience programmes,

in certain cases they might be classed as your employees. In practice, many insurance companies will provide cover for people in these situations. If you have volunteers, students or non-employed trainees working for you, it is advisable to inform your insurance company and to consider carefully whether you should have insurance cover for them. You should also bear in mind that some of these people could be classed as your employees when you think about the amount of cover you need.

One difficult area is domestic help. In general, you will probably not need employer's liability insurance for people such as cleaners or gardeners if they work for more than one person. However, if you employ someone who works only for you, you may be required to take out insurance to protect them.

Do I need to keep copies of certificates of insurance which are out of date?

You must retain for at least 40 years copies of certificates of insurance which have expired. This is because claims for diseases can be made many years after the disease is caused. You can keep copies electronically if this is more convenient than paper copies. You must make these available to health and safety inspectors on request.

These requirements do not apply to policies which expired before 1 January 2000. However, it is still very important to keep full records of your previous insurance policies for your own protection in case any of your employees make claims relating to injuries or illnesses caused in the past.

What happens if I do not have employer's liability insurance?

The Health and Safety Executive for Northern Ireland (HSENI) enforces the law on employer's liability insurance and HSENI inspectors will check that you have employer's insurance with an approved insurer for at least £5m. They will ask to see your certificate of insurance and other insurance details.

You can be fined up to £2,500 for any day which you are without suitable insurance. If you do not display the certificate of insurance or refuse to make it available to HSENI inspectors when they ask, you can be fined up to £1,000.

Where can I go for further information?

If you want further information and advice about anything in this leaflet you should get in touch with the Health and Safety Executive for Northern Ireland, 83 Ladas Drive, Belfast BT6 9FR. Telephone (028) 9024 3249.

If you need legal advice, for example if you are unsure about whether someone is your employee, you can go to a legal centre or a Citizen's Advice Bureau.

You can obtain copies of the Insurance Annual Report, Employer's Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972 (ISBN 0 11 020963 X) and the Employer's Liability (Compulsory Insurance) Regulations (Northern Ireland) 1999, (SR 1999 No. 448) (ISBN 0 3379385 71) from The Stationery Office Bookshop, 16 Arthur Street, Belfast BT1 4GD telephone (028) 9023 8451, fax (028) 9023 5401 or from any good bookshop.