- Shaun Burke, Partner at Close Thornton Solicitors, examines the key issues.

It may come as a surprise to learn that many small businesses do not take out Employers' Liability Insurance (EL Insurance). There is a misconception that a small business is exempt from the legal requirements to have EL Insurance. Under the Employers' Liability (Compulsory Insurance) Act 1969 all businesses which employ people must carry EL Insurance. There are a very limited number of exceptions but the Golden Rule is that if you employ anyone who is not a very close family member, you need to have EL Insurance. Even if you have someone working for you who you regard as self employed, in some circumstances that person is still regarded as your employee for the purpose of requiring EL Insurance under the 1969 Act.

The importance of having EL Insurance and the consequences of not having it or allowing an existing Policy to lapse and not renew it, is illustrated by several cases recently handled by Shaun Burke Partner and Head of the Personal Injury Department at Close Thornton. In one instance a husband and wife team ran a small tea room. They employed two girls on a part time basis to do the waitressing. They did not think they needed EL Insurance as the girls were part time only. One Saturday morning, one of the girls slipped and fell badly hurting her knee. She brought a claim for more than £10,000. The business did not have that sort of capital and the husband and wife were unable to raise it with the result that the tea room has had to close.

In another case, an Electrician client of Close Thornton who works on his own began to employ a labourer to help out as and when needed. The labourer did not work exclusively for the client and did work for other people on a self employed basis. Unfortunately, the labourer sustained injury to his fingers when they were trapped in the door of the van. He brought a claim and again the Electrician client has had to pay all the damages himself because he did not take out EL Insurance to cover the labourer. He thought that it was not necessary as he only employed the labourer on an ad hoc basis and the labourer had said he was self employed. Damages ran to nearly £15,000.

It is therefore essential that if you employ anyone you check to make sure you have in place EL Insurance. Next time it might not be a claim for only £10,000 or £15,000 which is brought.

For further information contact Shaun Burke at shaun.burke@close-thornton.co.uk or call him on 01325 466461

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