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EMPLOYERS’ LIABILITY INSURANCE FOR CONTRACTORS & SMALL BUSINESSES
Why Employers’ Liability for Contractors Matters
Many contractors assume that because they are “just one person” or work via a personal service company, Employers’ Liability (EL) does not apply. In reality, the law and contract wording are more complex. If you hire anyone – even casually, or treat yourself as an employee of your own limited company – you may need EL by law, and clients / agencies often insist on it. Insure24 helps limited company contractors, outside IR35 contractors, small consultancies and businesses using labour-only subcontractors to understand their position and arrange suitable cover.
What Employers’ Liability Insurance Can Cover
Employers’ Liability insurance is designed to protect you if an employee (or someone you treat as an employee) suffers injury or illness arising out of their work for you and brings a claim.
- Compensation claims from employees for work-related injury or illness.
- Legal defence costs in dealing with claims and proceedings.
- Cover for permanent, temporary and casual staff (subject to disclosure).
- Cover for labour-only subcontractors treated as employees.
- Support staff, project coordinators and admin personnel on your payroll.
- Directors and partners if they are counted as employees of your business.
- Indemnity limits typically starting from £10 million as standard in the UK.
- Cover that complements your Public Liability and Professional Indemnity policies.
- Protection that helps you meet statutory obligations where EL is compulsory.
- Documentation suitable for agency frameworks and client onboarding checks.
- Access to specialist claims handlers in the event of serious injury.
- Options to package EL with wider Contractor Insurance for simplicity.
When Do Contractors Need Employers’ Liability?
Whether EL is legally required depends on how you work in practice – not just what you call yourself.
Situations Where EL Is Commonly Required
- You have staff on your payroll who work under your direction and control.
- You use labour-only subcontractors who work as part of your team.
- You are a limited company with more than one director.
- You employ a spouse, partner, family member or assistant in the business.
- Your contracts or agency agreements specify EL as mandatory.
- You provide people on site to deliver services on a client’s premises.
Situations Where EL May Not Be Needed – But Needs Checking
- You are the sole employee and director of your limited company with no other staff.
- You work entirely alone as a genuine self-employed sole trader.
- You only ever use bona fide subcontractors who have their own insurance.
- You contract via an umbrella company that is the legal employer.
- Your work is entirely off-site and you have no on-site helpers or assistants.
- Your contracts explicitly confirm that workers are engaged via another employer.
The rules are not always straightforward. Insure24 can look at how you actually operate day-to-day and advise whether Employers’ Liability for Contractors should be part of your insurance programme.
Why Choose Insure24 for Employers’ Liability as a Contractor?
- Clear, practical explanations of when EL is compulsory and when it is optional.
- Experience dealing with contractors across IT, engineering, consulting, trades and more.
- Access to insurers comfortable with outside IR35 and personal service companies.
- Ability to package EL with Public Liability and Professional Indemnity for one-stop cover.
- Fast documentation to satisfy agency, client or framework onboarding checks.
- Support when you start to scale and take on associates or small teams.
- Helpful guidance on how to classify helpers as employees or subcontractors.
- Claims support that understands both the contractor and client perspective.
- Options for monthly payments to help small businesses manage cashflow.
- A broker who understands the wider contractor insurance market, not just EL in isolation.
How to Arrange Employers’ Liability for Contractors
- 1. Discovery call – we discuss how you work, who helps you and what your contracts say.
- 2. Gather information – staff numbers, use of subcontractors, turnover and activities.
- 3. Risk review – we look at on-site work, safety controls and previous incidents.
- 4. Market approach – we speak to suitable insurers and negotiate terms on your behalf.
- 5. Recommendation – we present clear options, limits and key conditions.
- 6. Documentation – we issue certificates and schedules for clients and agencies.
- 7. Mid-term support – we help update cover if you add staff or change how you work.
- 8. Renewal – we review claims and changes to keep cover aligned with your business.
Employers’ Liability for Different Types of Contractors
Insure24 works with a wide range of contractors and small businesses.
Professional & Knowledge-Based Contractors
- IT and technology contractors who occasionally use associates.
- Project managers and business consultants hiring specialists for phases of work.
- Engineering and design contractors providing teams on site.
- Interim managers using support staff or project coordinators.
- Consultancies evolving from one-person operations into small teams.
Trade, Construction & Field-Based Contractors
- Small trade contractors who bring in labour-only subcontractors.
- Specialist contractors seconded into larger construction teams.
- Maintenance, installation and repair contractors using helpers.
- Field service engineers with junior technicians under their supervision.
- Contractors working under main contractors or facilities management companies.
Small Contractor-Led Businesses
- Former contractors who have grown into director-led SMEs.
- Companies with a mix of PAYE staff and subcontractors.
- Agencies or consultancies providing people into client sites.
- Businesses working on framework agreements and call-off contracts.
- Firms balancing IR35, off-payroll rules and employment obligations.
Contractors Using Umbrella or Hybrid Models
- Contractors switching between PSC and umbrella arrangements.
- Assignments where the umbrella is legal employer, but the contractor runs other work personally.
- Hybrid models combining consulting fees with on-payroll roles.
- Situations where responsibility for EL needs careful mapping.
- Need for joined-up advice across EL, PI, PL and IR35 considerations.
Understanding Risk & Legal Duties Around Employers’ Liability
EL is not just a tick-box for contracts – it sits alongside your health & safety and employment responsibilities.
Health & Safety Exposures
Even small contracting businesses face genuine injury risks:
- Working at client sites with unfamiliar environments and hazards.
- Travel, driving and site access risks for you and any staff.
- Manual handling, tools and equipment in trade and engineering roles.
- Stress, long hours and ergonomics in professional/office-based roles.
- Changing requirements and last-minute requests from clients.
Legal & Regulatory Exposure
Where EL is required and not in place, the consequences can be serious:
- Potential fines for failing to arrange compulsory EL cover.
- Increased legal exposure if an injured worker decides to sue.
- Breach of contract if you cannot evidence EL to a client or agency.
- Problems working on frameworks or public sector assignments.
- Reputational damage if incidents become public or are shared online.
The Real Cost of Not Having Employers’ Liability
For contractors and small businesses, one injury claim can undo years of work.
Direct Financial Costs
- Compensation awards that may run into tens or hundreds of thousands of pounds.
- Legal fees for defending claims, even if you ultimately win.
- Loss of trading income while dealing with claims and investigations.
- Costs of remedial work, new equipment or safety improvements.
- Potential fines and penalties where EL is compulsory but absent.
Wider Business Impact
- Damage to relationships with key clients and agencies.
- Difficulty winning new contracts if your insurance history is poor.
- Increased stress for directors and owners managing a serious claim.
- Loss of talent if associates or staff lose confidence in your business.
- In extreme cases, closure of the business and personal financial strain.
How Insurers Assess Employers’ Liability Risk for Contractors
Presenting your business accurately can help secure fair, sustainable premiums.
Your People & Structure
- Number of employees, labour-only subcontractors and temporary workers.
- Use of bona fide subcontractors with their own insurance.
- Whether you are a sole director with no other staff.
- Use of umbrella or agency models and who is legal employer.
- Health & safety responsibilities and supervision arrangements.
Your Work & Clients
- Type of contracting work and industries you operate in.
- On-site vs remote work and exposure to physical hazards.
- High-risk activities such as working at height or with heavy machinery.
- Size and nature of clients – SMEs, corporates, public sector.
- Past claims and near-miss history.
Employers’ Liability for Contractors – Real Examples
Case Study: Associate Consultant Injury on Site
Situation: A project management contractor engaged an associate to help deliver a change programme at a client site. The associate slipped on stairs and suffered a serious leg injury.
Issue: The associate argued they were effectively an employee of the contractor’s company while on the assignment.
Outcome: Employers’ Liability responded to the claim (subject to policy terms), with legal support helping to clarify responsibilities between contractor, associate and client.
Case Study: Labour-Only Subcontractor Claim
Situation: A small engineering contractor used labour-only subcontractors on a maintenance project. One worker injured his hand using a tool provided and supervised by the contractor.
Issue: Although described as a subcontractor, in practice the worker was treated like an employee.
Outcome: Employers’ Liability responded, while the contractor updated documentation and safety procedures and reviewed how workers were classified in future.
Case Study: Director-Only PSC – No EL Needed
Situation: An IT contractor operated as a single-director limited company with no staff or helpers.
Issue: Agencies requested proof of EL but the contractor was genuinely working alone.
Outcome: After reviewing the structure, Insure24 confirmed EL was not legally required at that time and instead arranged appropriate Professional Indemnity and Public Liability, with a clear explanation letter for agencies.
Case Study: Growing Team Triggers EL Requirement
Situation: A former sole contractor built a small consulting business and started hiring staff.
Issue: Existing insurance did not include EL, despite two employees now working full time.
Outcome: Insure24 redesigned the programme to include Employers’ Liability, updated limits expected by larger clients and helped the business remain compliant and insurable as it grew.
Best Practice for Contractors Who Use Staff or Subcontractors
Good people management and safety practices help reduce claims and support better insurance terms.
People, Contracts & Documentation
- Use written contracts with associates and subcontractors that clarify responsibilities.
- Check and record subcontractors’ own insurance where appropriate.
- Keep clear records of who worked where, when and under whose supervision.
- Make sure anyone representing your company understands safety expectations.
- Review contracts with agencies and clients for EL requirements and indemnities.
Safety, Training & Culture
- Provide basic health & safety briefings, even for short-term helpers.
- Carry out risk assessments for higher-risk sites and tasks.
- Encourage reporting of near misses and unsafe conditions.
- Lead by example on safe behaviour at client sites.
- Act quickly on any concerns raised by workers or clients.
Employers’ Liability for Contractors – Cover Options
We can scale EL cover to suit where you are in your contractor journey.
Sole Director / One-Person Company (With Checks)
Ideal for: Contractors who genuinely work alone with no helpers.
- Review to confirm whether EL is legally required or not.
- Option to arrange EL where contracts insist on a certificate.
- Core focus on Professional Indemnity and Public Liability.
- Clear documentation explaining your status to clients.
- Ability to add EL later if you hire staff or use labour-only subcontractors.
Contractors with Occasional Helpers or Associates
Ideal for: Contractors who sometimes take associates on site or use ad-hoc labour.
- Employers’ Liability with limits aligned to typical contractor needs.
- Ability to declare staff and labour-only subcontractor numbers annually.
- Integration with broader Contractor Insurance programmes.
- Guidance on classifying workers and recording arrangements.
- Suitable for professional and technical contractors as well as trades.
Small Contractor-Led Business or Consultancy
Ideal for: Former contractors now employing a small team.
- Full EL cover integrated into a wider business insurance package.
- Options for higher turnover, multiple employees and mixed roles.
- Management Liability and office cover often added alongside.
- Support for framework agreements and larger client requirements.
- Regular review as the business scales and diversifies.
Optional Add-Ons (Subject to Underwriting)
- Cover for temporary staff and seasonal workers.
- International extensions where staff travel or work overseas.
- Increased limits where required by specific contracts.
- Additional legal expenses for employment disputes.
- Business interruption extensions to support continuity.
“As a contractor who started hiring associates, I wasn’t sure when Employers’ Liability became my responsibility. Insure24 walked me through it in plain English and sorted a policy my clients were happy with.”
Director, Specialist Contracting BusinessPROTECT YOUR PEOPLE, BUSINESS & REPUTATION
- The colleagues and helpers who support your contracts.
- Your limited company, consultancy or small business.
- Your ability to meet legal and contractual requirements.
- Your financial position if a serious injury claim arises.
- Your reputation with key clients, agencies and frameworks.
Compliance, Contracts & Framework Requirements
We help contractors navigate the insurance sections of agency agreements and client contracts.
- Insurance clauses in agency agreements for contractors and consultants.
- Public and private sector framework requirements for EL, PL and PI.
- Client onboarding questionnaires and due diligence checks.
- Requests for specific limits or wordings linked to site access.
- Evidence of cover when bidding for new contracts or extensions.
FREQUENTLY ASKED QUESTIONS
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Do all contractors legally need Employers’ Liability insurance?
Not always. It depends on whether you are legally considered an employer. If you hire staff, use
labour-only subcontractors or have more than one director, you will usually need Employers’ Liability.
Genuine one-person contractors working entirely alone may not, but we recommend checking your position.
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I am a sole director and sole employee of my limited company – do I need EL?
In many cases, a company with only one director and no other staff does not legally require EL. However,
some contracts and agencies still expect to see a certificate. Insure24 can review your circumstances,
advise you on the legal position and arrange cover if needed for contractual reasons.
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What is the difference between labour-only and bona fide subcontractors?
Labour-only subcontractors work under your direction, use your tools and are integrated into your team –
they often need to be treated as employees for EL purposes. Bona fide subcontractors are more independent,
provide their own tools and have their own insurance. We can help you classify your workers correctly.
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My agency says I need EL – is that always correct?
Agencies often use standard wording that assumes you may hire others. In some cases you may not legally
require EL, but they still want a certificate. Insure24 can review the contract, explain your options
and help you satisfy requirements in a pragmatic way.
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What limit of Employers’ Liability do contractors usually carry?
In the UK, £10 million is a common standard limit for Employers’ Liability, including for contractors
and small businesses. Some contracts or sectors may require higher or bespoke arrangements, which we can
discuss with you.
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Is Employers’ Liability the same as Public Liability?
No. Public Liability covers injury or property damage to third parties (such as clients or members of the
public). Employers’ Liability covers injury or illness suffered by your employees or others who work
for you. Many contractors will need both types of cover.
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How does Employers’ Liability interact with IR35 and off-payroll rules?
IR35 and off-payroll rules deal with tax and employment status for tax purposes. Employers’ Liability
focuses on who is legally considered an employer responsible for workers’ health and safety. The two
areas overlap but are not identical. We consider your EL needs in the context of how you actually work
and who you engage.
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What happens if I take on my first employee or associate mid-policy?
You should tell us as soon as possible. We can add Employers’ Liability to an existing policy,
or adjust your EL arrangements, so that your new staff or associates are properly covered from the point
they start working for you.
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How do I prove to clients that I have Employers’ Liability in place?
Your policy will include an Employers’ Liability certificate which we can provide electronically.
You can share this with clients, agencies and framework providers as part of their onboarding or
compliance checks.
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How do I make a claim under Employers’ Liability?
If someone who works for you is injured or becomes ill and suggests your business may be responsible, let
Insure24 know as soon as possible. We will guide you on what information to collect, notify insurers on your
behalf and support you through the process, keeping disruption to your business to a minimum.