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The legal framework
The Employers' Liability (Compulsory Insurance) Act 1969 requires any business that employs one or more people in Great Britain to hold employers' liability insurance at a minimum limit of £5 million, placed with an authorised insurer. In practice, the vast majority of policies are issued at £10 million or higher. Failure to hold the required cover exposes the company to fines of up to £2,500 per day of non-compliance, and the Health and Safety Executive (HSE) has power to inspect and enforce.
Who counts as an employee for EL purposes
The definition is broader than the payroll. Temporary workers provided by agencies, workers on zero-hours contracts, volunteers, and in some circumstances unpaid workers or work-experience placements may all require EL cover. The HSE guidance focuses on whether the business directs and controls the work — not just whether it pays the individual directly. Contractors genuinely in business on their own account (with their own insurance) are typically excluded, but misclassification risk is real and worth reviewing with your insurer.
Certificates and record-keeping
Your EL certificate must be displayed at each place of work or made accessible electronically to all employees. More importantly, you should retain all EL certificates for a minimum of 40 years. Mesothelioma and other occupational diseases can manifest decades after exposure, and without historical certificates it may be impossible to identify which insurer covered the relevant period — leaving the company unable to make a claim for a liability that is legally very difficult to avoid.
EL cover and commercial borrowing
Because EL cover is a legal requirement for any company with employees, lenders treat it as a baseline expectation. Its absence signals a compliance failure that reflects badly on the company's governance and increases the lender's exposure to regulatory or reputational association. Lenders conducting due diligence will typically ask for a copy of the current certificate or include EL maintenance as a continuing obligation in loan covenants.
Frequently asked questions
Are sole directors of a limited company required to have employers' liability insurance?
If the limited company has no employees other than the sole director, and that director holds more than 50% of the issued share capital, EL cover is not required under the statutory exemption. However, if a second director or any other worker is engaged, the obligation arises immediately.
Does EL cover claims made years after an employee leaves?
The policy responds based on when the injury or disease was caused or contracted, not when the claim is made. This is why long-tail risks — particularly occupational disease — require you to keep historical certificates. If cover was in place when the employee was exposed, that historical policy should respond to a later claim.
Funding for UK limited companies
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