Employer's Liability Insurance Requirement

Employer's liability (EL) insurance covers the legal liability of an employer to its own employees for bodily injury, illness, or death sustained in the course of employment. In many European countries, EL insurance is compulsory by statute. In public procurement, contracting authorities include EL insurance requirements in selection questionnaires and contract conditions to ensure that suppliers operating on or in connection with public contracts have adequate protection for their workforce.

What is an Employer's Liability Insurance Requirement?

An employer's liability insurance requirement in procurement specifies the minimum cover a bidder must maintain for injury or illness claims brought by its employees. In the UK, the Employers' Liability (Compulsory Insurance) Act 1969 mandates a statutory minimum of GBP 5 million per claim for all UK employers, though most policies are written at GBP 10 million. In EU member states, equivalent obligations exist under national labour law, though the specific statutory minimum and compulsion mechanism vary by jurisdiction. In Germany, employer liability for workplace accidents is administered through the statutory accident insurance system (Berufsgenossenschaft) rather than through private insurance, so the concept and evidence requirements differ.

When contracting authorities include an EL requirement in a procurement, they are confirming that the supplier has met its statutory obligations and that its workers are protected during contract performance. This is particularly important for contracts involving manual labour, construction, facilities management, catering, security, and other physically active roles. For desk-based professional services contracts, EL is still required by law but is less likely to be the primary focus of the authority's financial requirements.

Directive 2014/24/EU permits contracting authorities to require proof of insurance as part of technical and professional ability or as a contract condition, subject to proportionality. For EL specifically, the authority is largely verifying statutory compliance rather than imposing an additional commercial requirement. Bidders should provide evidence in the form that the authority specifies, typically a broker's certificate, a copy of the Employers' Liability Certificate of Insurance (required to be displayed at premises in the UK under the 1969 Act and its regulations), or an equivalent national certificate.

EL insurance works in parallel with public liability insurance, which covers third-party claims, and professional indemnity insurance, which covers professional errors. A full suite of insurance evidence for a major public contract will typically include all three, plus any project-specific cover required by the contract conditions.

Why it matters for bidders

For most trading businesses, EL insurance is a statutory requirement and will already be in place. The main procurement-specific risk is that the policy has a gap: it may have lapsed without renewal, the limit may be lower than the procurement specifies, or the policy may not cover the specific activities or locations involved in the contract. Bidders should confirm cover is current, adequate, and applicable to the contract scope before submitting.

International suppliers or those operating across multiple European jurisdictions must also understand that national compulsory insurance regimes differ significantly. What counts as compliant EL cover in one country may not satisfy an equivalent requirement in another. Local legal and insurance advice is advisable for cross-border contract bids.

Example

A UK local council tenders a three-year street cleaning contract and requires bidders to hold employer's liability insurance of at least GBP 10 million per occurrence, as evidenced by a valid certificate of insurance. The bidding facilities management company holds an existing EL policy at GBP 10 million and provides the certificate number, insurer name, and expiry date in its tender submission. The council confirms this meets the stated requirement at the selection stage.

Frequently Asked Questions

Does an employer's liability requirement apply to self-employed subcontractors?

Generally no. EL insurance covers employees (including workers treated as employees under national labour law), not genuinely self-employed individuals who bear their own risk. However, if the main contract requires that the main contractor ensures its subcontractors hold adequate insurance, the authority may require evidence of EL cover from the subcontractor chain. The procurement documents should clarify the scope of insurance requirements for subcontractors.

What if we are a sole trader with no employees?

If a sole trader genuinely has no employees and does not engage workers who are legally classified as employees under national law, EL insurance is typically not required by statute. However, if the procurement documents specify an EL insurance requirement, the bidder should raise a clarification question asking whether the requirement applies to sole traders with no employees, as the authority may need to confirm or amend the requirement.

How does the German statutory accident insurance system interact with EU procurement EL requirements?

German employers are legally required to register with the relevant Berufsgenossenschaft (statutory accident insurer), which provides accident and occupational disease cover for all employees through a collective system funded by employer contributions. This satisfies the functional equivalent of the EL insurance requirement in most EU member state procurement contexts. German bidders tendering for UK public contracts should note that the Berufsgenossenschaft certificate may not satisfy the UK statutory EL certificate requirement directly, and should take insurance advice for UK-specific submissions.