## Understanding Employers’ Liability Insurance

Employers’ liability insurance covers injury or illness suffered by employees while working for a landlord. It provides compensation and covers legal costs if the employer is found liable. In the UK, most businesses with employees must hold EL insurance with a minimum cover of £5 million, though many policies offer £10 million as standard.

For landlords, this means if you directly employ anyone—whether caretakers, cleaners, or maintenance staff—you are generally required by law to have EL insurance. Failure to comply can lead to significant fines and financial exposure from injury claims.

## When UK Landlords Must Have Employers’ Liability

Landlords typically need EL insurance if they directly employ workers involved in their rental business. This includes:

– Caretakers or building supervisors on the payroll
– Cleaners or gardeners hired directly rather than through an agency
– Maintenance staff or handypersons working under the landlord’s control, using their tools and schedule
– HMO managers or wardens employed directly, not via a managing agent

Additionally, for limited companies or LLPs, directors who carry out manual work on site may be considered employees for EL purposes. In uncertain cases, it is prudent to arrange EL insurance as the cost is usually modest compared to the risk.

## When Employers’ Liability May Not Be Required

Employers’ liability is generally not needed if landlords only engage bona fide contractors or agency workers who have their own insurance. Examples include:

– Hiring a cleaning company whose staff are employed by that company
– Using managing agents who employ caretakers
– Employing Gas Safe engineers or NICEIC electricians who carry their own EL and public liability insurance

However, landlords should exercise caution. Simply labelling a worker as “self-employed” does not guarantee they are not an employee. If a worker primarily serves one landlord, follows their instructions, uses their equipment, or has tax and National Insurance deducted by the landlord, a court may deem them an employee, requiring EL cover.

## Distinguishing Bona Fide and Labour-Only Subcontractors

Insurers differentiate between:

– **Bona fide subcontractors (BFSC):** Independent businesses with their own EL and public liability insurance, risk assessments, and method statements. Landlords should annually verify and keep copies of their insurance certificates.
– **Labour-only subcontractors (LOSC):** Workers who are effectively part of the landlord’s workforce, directed by the landlord and supplied with tools or materials. These individuals count towards the landlord’s employee numbers and wage roll and should be covered by the landlord’s EL insurance.

## Employers’ Liability vs Public Liability

Public liability insurance covers injury or damage to third parties such as tenants, visitors, or neighbours. It does not cover injuries to employees. Employers’ liability insurance is specifically for employee injuries. Many landlord claims arise from slips or falls during maintenance work, so without EL insurance, injuries to staff could be uninsured.

## Practical Portfolio Examples

– **Single-let landlords using contractors only:** EL insurance is usually not required, but contractor insurance certificates should be kept on file.
– **HMO landlords employing a weekly cleaner:** EL insurance is necessary; the cleaner should be added to the payroll and included in wage roll declarations.
– **Block owners with on-site caretakers:** EL insurance is required, often with a £10 million limit due to higher footfall and risk.
– **Limited companies where directors perform repairs:** Insurers often require EL insurance; full disclosure at quotation is essential.

## Common Pitfalls to Avoid

– Misclassifying workers as “self-employed” when they function as employees
– Failing to obtain and file insurance certificates, risk assessments, and qualifications from contractors
– Under-declaring wage rolls or employee numbers, risking claim refusals or premium increases
– Relying on public liability insurance to cover employee injuries, which it does not
– Not informing brokers when new staff or labour-only subcontractors are engaged mid-term

## Managing Risk and Documentation

Insurers expect landlords to maintain reasonable health and safety controls. Recommended documentation includes:

– Employment records such as contracts, induction notes, and training logs
– Risk assessments and method statements for routine tasks like ladder use and manual handling
– An accident book and incident reporting procedures
– Contractor vetting logs with EL and public liability certificates, qualifications, and renewal dates
– Equipment maintenance records, including PAT testing and COSHH sheets for cleaning agents

## Recommended Employers’ Liability Cover Levels

Most landlords opt for £10 million EL cover, often bundled with public liability insurance. The cost difference between £5 million and £10 million cover is usually small, and higher limits are often required by managing agents, freeholders, or lenders for larger properties.

## Disclosure Requirements at Quotation and Renewal

Landlords should provide brokers with clear information about:

– The number of employees, including directors performing manual work
– Wage roll details, distinguishing clerical and manual staff
– Use of labour-only subcontractors and bona fide subcontractors, including vetting procedures
– Any higher-risk activities such as roof work, power tools, or lone working

## Quick Decision Guide for Landlords

1. Do you pay anyone regularly to work on your properties? If yes, proceed to step 2.
2. Are they employed by you or labour-only subcontractors under your control? If yes, you likely need EL insurance.
3. Are they genuine contractors with their own insurance? If yes, retain their certificates; EL may not be required.

## Conclusion

Employers’ liability insurance is straightforward in principle: if you employ people, you must insure them. The challenge lies in identifying grey areas involving self-employed or subcontracted workers. When uncertain, it is safer to arrange EL insurance and maintain thorough documentation. This protects landlords from significant financial risks and fills a critical gap in their insurance coverage.

## Contact for Quotes

Landlords seeking tailored quotes can contact the team on 01832 770965 for personalised assistance when ready with portfolio details.

Suggested internal link anchors
– Employers’ liability insurance
– Public liability insurance
– Landlord insurance requirements
– HMO management
– Contractor insurance certificates
– Labour-only subcontractors
– Risk assessments for landlords
– Wage roll declarations
– Landlord health and safety
– Property maintenance insurance
– Self-employed workers in property
– Landlord insurance claims

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/