We offer Craft Insurance for a wide variety of different craft organisations and businesses. From hobbyists, to sole traders, Limited companies to craft clubs and societies. Some have unpaid volunteers, some pay helpers cash in hand, and some have official employees for which they are registered for PAYE.
Whilst talking to our customers, it has become apparent that many people are unaware of the legislation regarding compulsory Employers’ Liability, so we have tried to collate some information to help people interpret the guidelines.
First of all, the reference guide that we often refer to in the office is:
This is a nice clear guide which explains what employers liability is, what it covers, who may need it, and who is exempt.
Do I need Employers Liability?
If you have employees, and you do not hold Employers’ Liability cover, you may be in breach of legal requirements.
An employee isn’t solely classed as someone where you are responsible for their tax and national insurance contributions. If you have volunteers, assistants, helpers or work experience students, paid or unpaid, full time or part time, who are working under your supervision, direction or control, they could be deemed employees.
According to the guide http://www.hse.gov.uk/pubns/hse40.pd an employee could be someone where:
- you deduct national insurance and income tax from the money you pay them;
- you have the right to control where and when they work and how they do it;
- you supply their work materials and equipment;
- you have a right to any profit your workers make although you may choose to share this with them through commission, performance pay or shares in the company;
- you require that person only to deliver the service and they cannot employ a substitute if they are unable to do the work; or
- they are treated in the same way as other employees, for example, they do the same work under the same conditions as someone else you employ
I’ve told my unpaid helper/volunteer that they aren’t covered if they get injured whilst helping me, isn’t this sufficient?
The simple answer is, no!
If you have an unpaid helper or volunteer who comes to help you out at a craft fair, and they are injured whilst assisting you, they could still make a claim against you, regardless of whether you tell them they aren’t covered by your insurance if they get hurt, or they have promised to not sue you – this simply doesn’t cut it. You have a duty of care under health and safety laws.
If you are found not to have adequate Employers’ Liability insurance, you could be convicted and fined by the Health and Safety Executive (HSE) who enforce the law on compulsory Employers’ Liability.
Wouldn’t an injury to a volunteer/helper whilst they were helping me, be covered under my public liability insurance?
Should any volunteers/assistants/helpers/employees be injured, whilst assisting you at a craft event or workshop, whether paid or unpaid, it would not be covered under the public liability aspect of your policy. Under the craftsman policy that we offer, public liability excludes cover for injury to employees.
Is anyone exempt from employers’ liability insurance?
The following employers are exempt:
- family businesses, ie if all of your employees are closely related to you (as husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister). However, this exemption does not apply to family businesses which are incorporated as limited companies; However, this exemption does not apply to family businesses which are incorporated as limited companies
- limited companies employing only their owner where that employee also owns 50% or more of the issued share capital in the company
So, put simply, Limited companies that have two or more directors require compulsory Employers’ Liability cover, regardless of whether they are family businesses, or the directors are husband and wife.
Limited companies with one director, owning 50% or more of the issued share capital are exempt from compulsory Employers’ Liability cover, so long as nobody else is assisting or doing any work or activities within the limited company (paid or unpaid)
This is dictated by Employers’ Liability (Compulsory Insurance) Act 1969, not the insurance company.
If in any doubt, take legal advice or contact your local citizens advice bureau.
Here at Ian W Wallace Ltd, we act on a non advisory role only, so we can tell you what we understand the current legislation to be, but we cannot give you advice on your circumstances.
Employers’ Liability is pretty serious stuff – if you are found not to hold suitable insurance when you should, you could be convicted and fined, for every day that you don’t hold the cover. So it’s worth doing your homework and worth getting it right.
This article Contains public sector information published by the Health and Safety Executive and licensed under the Open Government Licence