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Rules and paperwork
Employers' liability insurance for a trades firm: £5 million cover and up to £2,500 a day, worked for a first hire
GOV.UK says employers' liability cover must be at least £5 million and a firm can be fined £2,500 every day it is uninsured. Worked for a first hire.
You have just offered an apprentice a start date on Monday. The offer letter is out, the van is booked for his first day and nobody has asked whether the firm has employers' liability insurance. Public liability, which most tradespeople already hold, is a different policy and does not cover your own staff.
What GOV.UK says
The GOV.UK page on employers' liability insurance sets out these points:
- You need it "as soon as you become an employer".
- The cover must be at least £5 million, from an authorised insurer.
- If you are not properly insured you can be fined £2,500 every day.
- If you do not display the certificate, or show it to inspectors when asked, you could be fined £1,000.
- You do not need it if you only employ a family member (as the page defines it) or someone based outside England, Scotland and Wales.
Note the wording "as soon as you become an employer". The fine runs by the day, so the policy has to be in place before the first working day, not found at the end of the first month.
The sum
The figures below are the maximum under the GOV.UK wording, not what a court will actually order. They show how fast a gap grows.
| Days uninsured | Working | Maximum fine |
|---|---|---|
| 7 | 7 x £2,500 | £17,500 |
| 30 | 30 x £2,500 | £75,000 |
| 90 | 90 x £2,500 | £225,000 |
Add the possible £1,000 for not displaying the certificate and a 30-day gap has a ceiling of £75,000 + £1,000 = £76,000. Check: £2,500 x 30 is £75,000, because £2,500 x 10 is £25,000 and three tens make £75,000. This is our arithmetic from the GOV.UK figures. I did not read what premiums cost, so I cannot say what the cover would have cost over the same period.
AI staff and workflows for trades and building firms. Starting with enquiry to quote.See what we would set upDoes your firm need it?
| Situation | Needs cover? (from GOV.UK) |
|---|---|
| Employed joiner, labourer or apprentice | Yes |
| Only your spouse or child, as the page defines family | No |
| Only someone based outside England, Scotland and Wales | No |
| Self-employed subcontractor, genuinely in business on their own account | The page does not say; check with your insurer |
The last row matters on a building site, because who counts as an employee can be argued. The tests are covered in the CIS contractor checklist for taking on a subcontractor.
What to put in place
- Before the first day: buy the policy, check the limit is at least £5 million and that the insurer is authorised.
- Display the certificate where staff can see it, or keep an electronic copy they can reach, and have it ready for an inspector.
- Diary the renewal. A lapsed policy starts the daily clock again.
- Fit it into your hiring list. Alongside the cover, a first hire brings payroll duties: see the first employee and employer National Insurance and auto-enrolment for a first employee.
- Check public liability separately: see do I need public liability insurance as a self-employed tradesperson.
What I did not read
The GOV.UK page did not say how long to keep policy records. I did not read the Employers' Liability (Compulsory Insurance) Act 1969 or its regulations, any exemption for a limited company with a single employee, the rules for subcontractors, how fines are set in practice or what a policy costs. Ask your insurer or broker about your own case.
Overlyft builds AI staff who join your trades team and keep the insurance, renewal and certificate diary, prepare the new-starter checklist and flag a missing policy before a start date, with the office manager approving each step.
This is general information, not tax or legal advice. Check the GOV.UK page and your insurer for your own firm.
Where this comes from: GOV.UK, Employers' liability insurance (https://www.gov.uk/employers-liability-insurance): cover of at least £5 million from an authorised insurer; needed as soon as you become an employer; fine of up to £2,500 every day you are not properly insured; fine of £1,000 for not displaying the certificate or showing it to inspectors; not needed if you only employ a family member or someone based outside England, Scotland and Wales. Read 21 October 2026.
AEO Lookup editorial team
We write practical guides for people who run small UK firms, and we check every fact against its source on the date shown. Read how we review, or tell us if something has changed.
