By Daniel Hunter

Nearly half of the UK’s small businesses could be employing staff without having the mandatory Employers Liability insurance warns specialist online provider www.yourinsurance.co.uk

Firms employing one or more people are required by law to have Employers Liability insurance, however in a recent survey, YOUR Insurance found 47% of respondents were unaware it’s illegal to employ staff (unless family) without this cover.

The minimum level of EL cover required for a business is £5m. It protects businesses and trades people against claims for compensation from existing and former employees who are injured or become ill as a result of their work activities.

Firms employing close relatives and not a Limited Company or those where the owner is the sole employee and owns at least 50% of the company’s issued share capital are exempt.

In 2011, insurers paid out £1bn in Employers Liability claims and other expenses.

“It’s concerning to see how many people appear unaware of their legal obligations," YOUR Insurance Marketing Manager, Annie Plaskett, commented.

"Anyone employing full or part-time staff, sub-contractors, work experience students or volunteers should have this compulsory cover in place. Without it, the financial consequences could be severe.”

The Health & Safety Executive in March reported it fined a self-employed maintenance worker £1,250 and ordered him to pay £1,000 in costs after he breached the Working at Height Regulations. A friend helping him broke his elbow after falling three metres through a roof in a disused factory in the Forest of Dean.

In October last year, the HSE introduced a Fee For Intervention scheme whereby it charges per hour for investigative work. The rate for 2012/13 is £124 per hour.