Employers Liability Insurance For Subcontractors:
Employers’ Liability Insurance for Subcontractors (UK Guide 2026)
If you hire subcontractors for your business, you may still need employers’ liability insurance depending on how they work with you. Many UK businesses assume subcontractors are responsible for their own insurance — but in many situations the law and insurers may still consider them part of your workforce. This guide explains when employers’ liability insurance is required for subcontractors, how labour-only subcontractors differ from bona fide subcontractors, and how to protect your business correctly.
Do Subcontractors Count as Employees?
One of the biggest areas of confusion for UK businesses is whether subcontractors count as employees. Employers’ liability insurance is legally required if you have employees, but subcontractors do not always fall neatly into this category. The determining factor is usually how the working relationship is structured.
If a subcontractor operates independently and runs their own business, they are typically considered a bona fide subcontractor. However, if they work under your direct supervision and rely on your equipment or instructions, they may be treated as a labour-only subcontractor.
Labour-Only vs Bona Fide Subcontractors
| Type | Description | Insurance Impact |
|---|---|---|
| Labour-Only Subcontractor | Works under your supervision using your tools and equipment. | Often treated like employees for insurance risk. |
| Bona Fide Subcontractor | Runs their own business and completes jobs independently. | Usually responsible for their own insurance. |
Understanding the difference is crucial because the wrong classification could expose your business to significant financial risk if an accident occurs.
When Employers’ Liability Insurance Is Required
Employers’ liability insurance is legally required in the UK for businesses that employ staff. This requirement is enforced under the Employers’ Liability (Compulsory Insurance) Act 1969.
If subcontractors meet the criteria of employees, you may still be legally responsible for providing cover. Situations where this can apply include:
- The subcontractor works under your supervision
- You provide tools or equipment
- The subcontractor is paid hourly or daily
- The subcontractor does not carry their own insurance
- The work forms part of your normal business activity
Trades Where Subcontractors Are Common
Subcontractors are widely used across many industries, particularly in construction and property maintenance. Employers’ liability insurance is often essential for businesses in sectors such as:
If subcontractors are injured while working for you, your business may be liable for compensation claims.
Employers’ Liability vs Public Liability for Subcontractors
Employers’ liability insurance protects your business if a worker becomes injured or ill because of their work. Public liability insurance covers claims from members of the public.
Businesses that use subcontractors often require both policies.
Learn more about related cover: Public Liability Insurance for Subcontractors
Typical Employers’ Liability Cover Limits
Most employers’ liability policies provide at least £5 million in cover. Many insurers offer £10 million as standard, particularly for higher-risk industries such as construction.
How to Get Employers’ Liability Insurance for Subcontractors
To arrange employers’ liability insurance, insurers typically require details such as:
- Number of workers or subcontractors
- Nature of work performed
- Annual payroll costs
- Claims history
FAQs
Do subcontractors need employers’ liability insurance?
Subcontractors usually arrange their own insurance if they operate as independent businesses. However, labour-only subcontractors may still require cover under your employers’ liability policy.
Is employers’ liability legally required for subcontractors?
If subcontractors are considered employees, employers’ liability insurance is legally required in the UK.
Do self-employed subcontractors need insurance?
Self-employed subcontractors typically carry public liability insurance, but businesses hiring them may still need employers’ liability cover.