Q: Does a company need any insurance if it has just one employee but two directors? If I do would that still be the case with just one director who is the employee?
Sep 15 2011
Answered by: Jason Stockwood Ask a question
Great question, and often a thoroughly confusing area for many. To generalise greatly for a moment; it is often dictated by how the company is formed.
To put it simply, if you are a sole trader and do not employ anyone or you only employ close family members, you should be exempt; these tend to be the closest of family relationships only, and it’s worthwhile checking with the Health and Safety Executive (HSE) or a legal adviser. However, if you occasionally hire staff or use temps or seasonal workers, you must take out Employers’ Liability Insurance.
Once you employ your first member of staff, you are required by law to take out Employers' Liability Insurance. This will protect you and your employees if they fall ill or are injured in the course of their work. Your insurance certificate must be displayed where your staff can see it.
The only exception to this rule is that you don’t need employer's liability insurance if your limited company has only one employee, who owns 50 per cent or more of the issued share capital.
It is also worth bearing in mind that whether or not you need employers’ liability insurance for someone who works for you depends on the terms of your contract with them, which can be spoken, written or implied. It doesn’t matter whether you call someone an employee or self-employed, nor does it matter what their tax status is. What matters is the real nature of your relationship with the people who work for you and the level of authority that you have over the work that they do.
In the meantime, there is some useful information on the HSE website that should provide you with all the information you need. That information can be found by clicking here.
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