What employers’ liability insurance is
Employers’ liability insurance is intended to respond to certain legal liabilities an employer may have to its own employees for work-related injury or illness, in circumstances the policy describes. It is a different subject from public liability, which deals with third parties.
In South Africa, compensation for work-related injuries and diseases is largely governed by a statutory system. Employers are generally required to register and to make contributions under that system, and to comply with occupational health and safety law. Insurance does not replace those obligations, does not remove the need to comply with them and is not evidence that you have complied.
Whether employers’ liability insurance is relevant to your business, and how any wording would interact with the statutory scheme, is something we will confirm with you and with the insurer before an application is made.
Who may need to ask about it
- Contractors with employees on site who want to understand where any gaps may exist outside the statutory system.
- Contractors whose tender or contract documents mention employers’ liability among the required insurances.
- Main contractors reviewing the insurance and compensation status of subcontractors and labour suppliers.
- Businesses that use a mix of permanent employees, fixed-term staff and labour-only subcontractors, where the employment relationship matters.
What may be addressed, subject to terms
The scope depends entirely on the insurer and the wording. Questions to put to any insurer include:
- Which employees are included
- Permanent staff, temporary workers and labour-only subcontractors may be treated differently. Say who works for you and on what basis.
- Which liabilities are addressed
- Ask the insurer to describe in plain terms the kinds of legal liability the policy is meant to respond to, and which it does not.
- Relationship to statutory compensation
- Ask how the policy interacts with compensation payable under the statutory system, so that you understand what it is intended to add and what it does not.
- Legal costs
- Whether defence costs are included, and whether they sit within the limit of indemnity.
Important limitations and questions to discuss
- It does not replace statutory obligations
- Registration, contributions and compliance with occupational health and safety law are separate legal duties.
- Availability varies
- Employers’ liability cover is not offered in the same way by every insurer, and some arrangements may not be available for a given business.
- Exclusions and conditions
- Policies exclude liabilities that are dealt with elsewhere, and may attach conditions about safety management, training and supervision.
- Fines and penalties
- Fines and penalties imposed by regulators are generally not insurable. Ask how the policy treats legal costs relating to regulatory proceedings.
- Contractor and subcontractor boundaries
- Whether the main contractor is responsible for a subcontractor’s employees depends on the contract and the facts. Do not assume either way.
Keeping the related subjects apart
| Subject | What it is | Replaces the others? |
|---|---|---|
| Statutory compensation registration and contributions | A legal obligation for employers, evidenced for example by a letter of good standing. | No. It is not insurance, and insurance does not replace it. |
| Occupational health and safety compliance | Legal duties on employers and contractors, including site safety management. | No. Insurance does not discharge these duties. |
| Employers’ liability insurance | Insurance that may respond to certain employer liabilities, if offered and relevant. | No. It sits alongside the statutory arrangements. |
| Public liability insurance | Insurance for legal liability to third parties. | No. It addresses a different group of claimants. |
| Employee benefits such as group risk cover | Benefits arranged for employees, not a substitute for the above. | No. |
This table is a general orientation and not legal advice.
Information we usually need for a quotation
If employers’ liability is relevant to your business, the following will help us discuss it with you and with the insurer.
- The number of employees, and how many are on site.
- The kinds of work they do and the areas where they work.
- How you use labour-only subcontractors and labour brokers.
- Your compensation registration status and the date of your current letter of good standing, if you have one.
- Safety management arrangements, such as your safety plan and training records.
- The insurance clauses in the contract or tender that mention employers’ liability.
- Your claims history.
You do not need everything on day one. A short description of the work is enough to start, and the quote form only asks for the details relevant to your enquiry.
Frequently asked questions
Does this insurance replace registration with the compensation authority?
No. Registration and contributions under the statutory system are legal obligations that insurance does not replace. Where you are unsure of your obligations, ask your own advisers or the relevant authority.
Is employers’ liability the same as public liability?
No. Public liability concerns third parties. Employers’ liability concerns an employer’s liability to its own employees, in circumstances the policy describes.
My tender asks for employers’ liability. What should I do?
Send us the clause. We will help you understand what the tender is asking for and whether it relates to statutory evidence, insurance, or both.
Will an insurer offer it to every contractor?
Not necessarily. Availability and terms depend on the insurer, your business and the risk. We will tell you what we can and cannot arrange.
Related cover
- Public liabilityCover aimed at your legal liability to third parties for injury and property damage arising from your work.
- Contractors All RiskCover for the works under construction, such as roadworks, drainage, pipelines and structures, subject to policy terms.
- Professional indemnityCover aimed at claims arising from professional services a contractor provides, such as design, specification or supervision.
Related guides
- Construction insurance checklist for contractorsA construction insurance checklist for a broker conversation: project details, contract requirements, covers, plant, subcontractors and comparing quotations.
- Construction tender document checklistA construction tender document checklist that separates commonly requested company documents from contract-specific returnable documents, with notes on validity and insurance.
Industries this applies to
Sources and further reading
- Department of Employment and Labour (opens in a new tab) — occupational health and safety, and compensation for occupational injuries and diseases