Do sole traders need employers' liability insurance?

Employment status for insurance follows the reality of the relationship, not the label. People you control, pay and equip are generally employees for EL purposes, even if you call them "helpers" or "subbies". That commonly includes part-time, temporary and casual workers, apprentices and trainees, and labour-only subcontractors who use your tools and work under your direction.

Genuinely independent contractors who bring their own tools, control their own work and carry their own insurance usually aren't. Ask them for their public liability certificate anyway.

GOV.UK and HSE guidance exempt an employer whose only employees are close family members (spouse or civil partner, parents, grandparents, children, grandchildren, step-relations, siblings and half-siblings), but this exemption doesn't apply if the business is incorporated as a limited company. Separately, a limited company whose only employee is its owner holding 50% or more of the shares is exempt. These differences are set out in sole trader vs limited company insurance.

Employees based entirely outside England, Scotland and Wales are also outside the Act's scope; Northern Ireland has its own equivalent rules.

EL is often sold bundled with public liability. A small employer's EL premium is driven by trade, wage roll and number of staff. You must display the certificate where employees can see it (electronic display is permitted) and show it to inspectors on request.

EL premiums are an allowable expense, explained in is business insurance tax deductible for sole traders. If staff drive for you, check your motor cover too, in business car insurance for sole traders. If you employ people at your home, see working from home insurance. EL protects you against staff claims, not your own lost income if you're injured; that's income protection.