Do I need employers’ liability insurance for freelancers?

Everyone needs a little extra help from time to time. Which brings us to a question we get asked a lot: do I need employers' liability (EL) insurance for freelancers? 

Good question, but let’s get some context first. Because where employers' liability insurance is concerned, one size doesn't always fit all.

What is employers' liability insurance?

If a member of staff is injured or ill, and they say it's because of the work they do for you, they can make a claim against you. 

Employers’ liability insurance covers your legal costs for dealing with the claim. And pays any compensation you might owe, if you’re at fault. 

And there's more. Because if you have employees, EL isn't just a nice to have but a legal requirement. As soon as you become an employer, you need to have cover in place for at least £5 million. Oh, and it needs to be from an authorised insurer – you can find this out by looking the Financial Conduct Authority’s (FCA) register. 

The Health and Safety Executive (HSE) can hand out a £2,500 fine for each day you're without cover. That's on top of the £1,000 fine for not displaying a valid certificate where your employees can see it. Like at your workplace or on your website. Ouch.

But what about employers' liability for freelancers?

This is where it gets tricky. 

A genuine freelancer usually won’t count as your employee, so won’t need EL cover. But the freelancer label isn’t what decides it. What matters is how they work for you. 

This is broken down by the Association of British Insurers (ABI). They list what makes someone an employee, regardless of their label. 

The key thing for freelancers is who has control over where they work from, the hours they work, and the conditions they work in. 

Genuine freelancers decide where they work from and the hours they’ll be working. They also use their own equipment. That means you probably don’t need EL for them. 

If you require the freelancer works from a specific location, only works during certain hours, or uses your equipment, they probably count as an employee in the eyes of the law.  

That means you’d need EL cover for them. 

If you’re unsure, it’s worth speaking to your broker or insurer. They can walk you through it and let you know whether you need it. 

The last thing you want is to be caught out and end up having to pay a hefty fine. 

Any other caveats?

The rules we’ve talked about only apply for freelancers you employ who are based in England, Scotland, and Wales. 

Northern Ireland has very similar rules. If you work with freelancers there, have a read of the Health and Safety Executive for Northern Ireland’s (HSENI) guidance. 

If you work with a freelancer who’s based outside the UK, you don’t need to worry about them when it comes to meeting your legal obligations. 

Even then, it’s still worth thinking about whether you need cover for them. 

We also mentioned that the legal minimum amount of cover you need is £5 million. While this is true, most insurers offer a minimum of £10 million.  

This is due to how expensive EL claims can be. Insurers want to make sure you aren’t underinsured in the event of a particularly tricky claim. 

So, don’t be worried if you notice every insurer providing quotes with £10 million of cover. 

A little extra help 

If you're still not sure you need employers' liability for freelancers, try this straight-from-the-horse's-mouth guidance. 

Our own employers' liability insurer uses the following definition of 'employee': 

Any person working for you in connection with your business who is: 

• employed by you by a contract of service or apprenticeship
• hired or borrowed by you 
• self-employed and working on a labour-only basis under your control or supervision 
• engaged by labour-only subcontractors 
• a labour master or person supplied by them 
• engaged under a work experience or training scheme 
• a voluntary helper.

If any of these sound familiar, you should consider getting employers' liability insurance. 

Looking for more information on EL? The Health & Safety Executive’s guide should answer any lingering questions you have. Otherwise, give us a ring on 0345 222 5391. We’re happy to help. 

Image used under license from Shutterstock.