Employers Liability Insurance

Employers Liability Insurance

Didn't find your answer?

The government is to remove the requirement for incorporated owner/sole employee businesses to have employers liability insurance. Legislation to be introduced in early 2005.

The DWP report on ELCI for limited companies that employ only their owner has now been published, following consultation earlier this year. The covering letter says that "the government has decided to take steps to remove the requirement for ELCI from incorporated owners/sole employees".

The report itself is available online at http://www.dwp.gov.uk/publications/dwp/2004/ria/elci_sum_resp_final.pdf

Consultation sometimes does have positive results !

One small victory for commonsense.

The next step is to remove the ELCI requirement from incorporated family businesses - to make a level playing field by comparison with unincorporated family businesses which do not have to pay ELCI premiums.

Steve Henley

Replies (2)

Please login or register to join the discussion.

avatar
By User deleted
11th Oct 2004 16:56

I don't know
Hi, Lis -
Should start by saying that I'm not an accountant or a lawyer, but a director in my own company.

My wife and I are both directors, and we don't have written service contracts. We receive directors fees from the company, paid through PAYE (as they must be, by law). However, these fees are not related in any way to the amount we work. We take just the UEL in fees, and pay the remainder in dividends. This means that according to the Inland Revenue rules we are not employees for the purposes of NMW legislation etc, but merely office-holders.

However, the ELCI legislation is completely separate, and administered by the Health & Safety Executive - and I really don't know whether their definition of an employee is different from the IR definition. I have seen conflicting advice on this.

My own interpretation is that we aren't employees and are not subject to ELCI - but I think in your rather different case the advice might be different as there are several (presumably unrelated) people involved.

In any case, I did make enquiries about ELCI and drew a complete blank. Nobody would offer my company the insurance at any price, since my business involves international travel, sometimes by non-scheduled carriers, and visits to quarries and underground mines overseas. A bit too risky for them - even if there's virtually no chance of my making a successful claim. So, depending on your client's company's business sector, the question might be academic !

Thanks (0)
avatar
By griffithwilliams
11th Oct 2004 11:56

Does a company necessarily have any employees?
Hi Steve,

Perhaps you could shed some light on this for me.

A client asked me recently whether he needed employer's liability insurance.

He is a director / shareholder of a recently set up company that has not yet started trading, but has incurred some expenses.

He has 3 co-director / shareholders.

Nobody has a contract of employment with the company.

Nobody receives any salary or any other form of remuneration from the company at this point.

I consider that the directors are potentially not actually employees at this point. So does the company have to have ELI?

Thanks (0)