My favourite quote from Winston Churchill is ‘Don’t believe everything you read on the internet’. This came to mind because I have just read a post online which said, ‘you don’t need Employer’s Liability Insurance if you are using subbies who have their own insurance’!
Hopefully you already know that this is NOT correct and hasn’t been for several years. There is the odd exception, but Employers’ Liability Insurance is a LEGAL requirement for most businesses even if they are using self-employed labour-only subcontractors. In fact, you could face a fine of up to £2,500 per day if you are breaking the law by not having this cover. We’d like to rename this type of cover to ‘Employers’ and Lead Contractors Liability Insurance’ which may make it a little clearer!
Even if somebody is not your employee for tax purposes, this does not mean you are free from the legal requirements under the Employers’ Liability (Compulsory Insurance) Act. Confusion often arises because there are different classes of subcontractors – Bona fide subcontractors and Labour-only subcontractors. You can read more about the difference between these in our insurance guide.
So, like Winston says ‘don’t believe everything you read on the internet’ – unless it’s written by us of course 😉.
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