Who pays work injury compensation? My employer or their insurer?

Employer looking at injury claim paperwork on his desk

Employees often hesitate to claim compensation after a work-related injury, especially if they have a positive relationship with their employer. The thought of making a claim can seem like an act of disloyalty.

Concerns may also arise about the employer's ability to afford compensation, potentially jeopardise the company's stability and, by extension, the future employment of colleagues.

In this article we explain how the compensation process works and how making a claim should not financially impact your employer's business.

Accidents happen

Employers have a duty to provide a safe working environment for their employees. Health and safety standards and training vary according to the workplace, but both are essential in reducing or preventing workplace injuries.

Equipment must be properly maintained and not faulty. Suitable personal protective equipment (PPE) must be provided where required. You should be trained in the correct use of any equipment and made aware of any potential hazards.

Providing suitable workstations and chairs and ensuring the workplace is kept is a clean and tidy condition is also important.

Even in the most health and safety aware environments, accidents in the workplace are still common.

Employers' liability insurance

Employers have a legal duty of care for their employees’ health, safety and wellbeing at work. If you are injured at work as a result of your employer's breach in their duty of care, you may be able to claim financial compensation.

Under the Employers’ Liability (Compulsory Insurance) Act 1969, UK employers are legally required to hold employers' liability insurance (EL).

EL insurance protects employers from the financial consequences of an employee making a compensation claim. EL insurance is designed to ensure the injured worker receives the full amount of compensation they need to fund their recovery and rehabilitation.

The law requires EL insurers to provide up to £5m cover. Most insurers provide cover up to £10m.

The insurance policy should also cover employees when working away from their usual place of work or at home.

When making an injury claim, it is the employer's insurer who pays compensation, not the employer.

What if my employer doesn't have insurance?

It is very unusual for an employer to not have employers' liability insurance. The penalties for not holding insurance are severe - up to £2,500 for each day that the employer does not hold suitable cover.

If your employer does not hold EL insurance, you would ultimately need to claim compensation from the employer.

Are there any types of business exempt?

Family businesses (where all the employees are closely related to the employer) are exempt from the Employers' Liability (Compulsory Insurance) Act, unless the business is incorporated as a limited company.

Employers of domestic help (such as gardeners and cleaners) are not generally required to have liability insurance, as the 'employees' usually work for more than one person.

Letter of Claim

At the start of your personal injury claim, your solicitor will send a 'letter of claim' to the defendant. This letter is the first step in the Pre-Action Protocol for Personal Injury Claims.

This letter will either be sent directly to the defendant, to their solicitor, or to their insurance company. The letter sets out the basis of the claim and asks the defendant whether they accept liability for your injury.

See also:

My employer went bust - how can I identify their insurer?

How do I make a work injury claim?

Employers' liability claims claims

Work accident claims, or employers' liability claims, differ from other types of claim. Click on the icons below to read more about claiming:

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Chris Salmon, Director

Chris Salmon, Director