OC 1/8 - Employers' liability (compulsory insurance) act 1969 (ELCI)

Review Date:

10/10/2011

Open Government Status:

Partially Open

Version No & Date:

2: 10/10/2008

Author Unit/Section:

FOD NWHQ Legal & Enforcement

Target Audience:

All HSE Staff

Introduction

1 Since 1975, HSE has been the enforcement body for the Employers Liability (Compulsory Insurance) Act 1969 (ELCI) as a result of an agency agreement between HSC and the Department of Employment (now the Department for Work and Pensions (DWP)).

2 All HSE operational Band 2, 3, and 4 inspectors should be warranted to enforce ELCI, and should routinely ask for sight of ELCI certificates during inspection visits (NB. ‘routinely’ does not necessarily mean ‘all’). Health and Safety Awareness Officers (HSAOs) and Working Time Officers (WTOs) who have undertaken ELCI training¹ may also be warranted to take an active role in ELCI enforcement.

3 At present, it is not possible for LAs to enforce ELCI as they do not have the necessary powers. ELCI is not a relevant statutory provision (RSP), and is enforced via the agency agreement between DWP and HSC. Therefore, FOD will continue to deal with all LA referrals.

Recording and DWP returns

4 It is important to record on COIN specific ELCI outputs, i.e. ELCI prosecutions and ELCI Notices to Produce served (as DWP require statistical returns). General ELCI contacts and enquiries need not be recorded on COIN – other than where they are dealt with as a complaint; and where failure to produce a certificate when asked results in an investigation (usually by a Complaints Officer or HSAO).

Guidance for inspectors

5 Revised guidance for HSE staff involved with ELCI is included. For training purposes, an ELCI presentation is available via the Legal & Enforcement home page (see also Employer's liability compulsory insurance (ELCI)) ¹.

Additional information and guidance is also available in local office libraries in the form of an ‘ELCI Information Pack’ and an 'ELCI Self-Learning Pack’. The ELCI Notice to Produce is available as a Word Template. 

Date first issued: October 2008

Employers' Liability (compulsory insurance) Act 1969 (ELCI) - guidance for inspectors contents

Revised guidance for inspectors - introduction

1 The Employers' Liability (Compulsory Insurance) Act 1969 (ELCI) obliges employers to insure against their liability for personal injury to their employees. The relevant regulations are the Employers' Liability (Compulsory Insurance) Regulations 1998, SI 1998 No 2573 (the 1998 Regulations), the Employers’ Liability (Compulsory Insurance) (Amendment) Regulations 2004, SI 2004 No. 2882 (the 2004 Amendment Regulations), and the Employers’ Liability (Compulsory Insurance)(Amendment) Regulations 2008, SI 2008 No. 1765 (the 2008 Amendment Regulations).

2 Since the first Regulations made under ELCI (the Employers' Liability (Compulsory Insurance) General Regulations 1971, SI 1971 No 1117) came into force, the Act has been qualified many times by Exemption and Amendment Regulations. In 1995 a comprehensive review of the Act and related legislation was carried out. This resulted in the 1998 Regulations, which, with the exception of certain provisions relating to offshore installations, consolidated all the existing ELCI Regulations and came into force on 1 January 1999. A further review of ELCI announced by DWP in December 2002, produced the 2004 Amendment Regulations which came into force on 28 February 2005. A DWP consultation in September 2007 on proposed regulatory changes to Regulations 4 and 5 of the ELCI Regulations 1998 has resulted in the 2008 Amendment Regulations which came into force on 1 October 2008.

3 The 1998 Regulations introduced several changes, principally:

• increasing the sum to be insured to not less than £5 million;
• prescribing more information about the cover provided in the wording on the certificates;
• requiring certificates to be kept for 40 years;
• giving authorised inspectors a new power to require the production, not just of the current certificate, but also of past certificates;
• requiring employers of offshore employees to produce a copy of the relevant certificate of insurance on request from an employee within 10 days;
• extending the provisions that ensure that any policy excesses negotiated between the insurer and employer do not affect the employee’s right to be fully compensated by the insurer.

4 Other requirements of the Act (and the 1971 Regulations), notably the requirement for employers at onshore premises to display their certificate of insurance at their places of business, are unchanged. The 1998 Regulations also maintain a provision limiting the minimum level of cover to group companies; other connected organisations that are not subsidiaries of the parent company still require their own insurance.

5 The 2004 Amendment Regulations amend the 1998 Regulations by adding a new paragraph 15 to the list of employers exempted from insurance at Schedule 2 of those regulations.

6 This means that from 28 February 2005, a limited company run by its owner, who is also the sole employee of the company, will no longer be required to have ELCI.

7. The 2008 Amendment Regulations amend Regulations 4 and 5 of the 1998 Regulations by removing the requirement for retention of expired ELCI certificates and making the ‘display’ requirements more flexible by allowing businesses to ‘display’ by making the certificate available in an electronic form.

8. This means that from 1 October 2008:

• there is no legal requirement for employers to keep copies of out of date certificates; and
• employers now have flexibility in how they display their current certificate including making the current certificate available in electronic form to its employees.

9. Appendix 1 contains a table of duties, powers, offences and penalties. The Act is contained in the current edition of Redgrave’s Health and Safety (Fourth Edition 2002) page 35. The 1998 Regulations, the 2004 Amendment Regulations and the 2008 Amendment Regulations are on the HMSO Website.

Routine inspection and investigation

10. Previously, Regulation 4 of the 1998 Regulations required employers to keep copies of out of date certificates for 40 years. Under the 2008 Amendment Regulations, this legal requirement has been removed (2008 Amendment Regulations, reg. 2(2)). However, employers will be advised, as far as is possible, to keep a complete record of their employers’ liability insurance in case of claims from former or current employees who may have been exposed to the cause of their illness decades earlier. .³  

11. Regulation 5 of the 1998 Regulations required that paper copies of current certificates must be physically displayed at each place of business for the information of employees. Since 1 October 2008, this requirement to display has changed and employers have flexibility in how they display their current ELCI certificate (2008 Amendment Regulations reg. 2(3)). If the employer chooses not to display physically at each place of work but to go for the electronic option, then each employee to whom it relates should have “reasonable access” to the certificate in its electronic form.

12. Where an employer chooses to display electronically rather than physically, Inspectors will not have a visible display that can be checked easily at a glance.³

Reasonable access – advice from DWP

14.²

Application offshore

15. ELCI is applied offshore by reg.21 of the Offshore Installations and Pipeline Works (Management and Administration) Regulations 1995 (SI 1995 No. 738). This also changes some of the wording in the Act for use offshore.

Duties of employer

16. With certain specified exceptions, an employer carrying on business in Great Britain is required to insure against liability for injury or disease to any employee, arising out of and in the course of his/her employment in Great Britain in that business (ELCI Act 1969 s.1 (1)). (This does not give an automatic right to damages. For an employee to qualify there must be evidence that the injury or disease was due to some fault on the part of the employer. Cases where injury was due to the negligence of a fellow employee acting in the course of his/her employment would be covered, but negligence of a third party, e.g. an independent contractor, would not be covered).

17. The employer is also required:

• to display copies of the certificate of insurance at the place or places of business (s.4(2)(a) and the 2008 Amendment Regulations reg.2(3));
• in the case of an offshore installation or associated structure, para (1) above does not apply but the employer of relevant offshore employees is required to produce a copy of the relevant certificate of insurance on request from their employee within 10 days (1998 Regulations reg.5(4));
• to produce the certificate or a copy, on demand, to any inspector duly authorised by the Secretary of State (s.4(2)(b));
• on being served with a notice on behalf of HSE, to produce or send to the officer specified in the notice, the certificate of insurance, or a copy (s.4(2)(b), and 1998 Regulations reg.6). This applies to current certificates only (reg.6(a)). Certificates are normally valid for 12 months only; and
• permit the policy, or a copy, to be inspected by an authorised inspector at the firm's registered office or place of business, at such reasonable time as the inspector may require (s.4(2)(c) and 1998 Regulations reg.7).

Definitions

18. Definitions are as follows:

• Approved policy' - s.1 (3)(a). HSE does not 'approve' policies; the only effect of the word 'approved' is to invalidate for the purposes of the Act any policy with prohibited conditions that would enable the insurer to escape liability. For prohibited conditions, see ELCI Regulations 1998 reg.2..²
• ‘Authorised insurer' - s.1 (3)(b). HSE does not 'authorise' insurers. The definition is by reference to the Financial Services and Markets Act 2000. The Financial Services Authority (FSA) maintains a register of authorised insurers. You can check whether a company is authorised by searching their register on www.fsa.gov.uk , or telephoning the FSA on 020 7066 1000.
• ‘Amount of insurance’. Minimum £5 million pounds in respect of claims arising out of any one occurrence (1998 Regulations, reg.3).
• ’Certificate of insurance’. For prescribed form, see 1998 Regulations reg.4(1) and Schedule 1.

Exemptions

19. Insurance is not required for

• employees who are close relatives of the employer (s.2(2)(a));
• in most cases, employees not ordinarily resident in Great Britain (s.2(2)(b), but note that employees are covered if they have been employed for not less than 7 days on an offshore installation or for not less than 14 days in GB (see ELCI Regulations 1998 reg.1);
• 'public service' employees - see s.3 and ELCI Regulations 1998 reg.9 and Schedule 2; and
• a single person limited company - see paragraphs 5 and 6 above, and the 2004 Amendment Regulations

Enforcement of ELCI and other enforcing bodies

20. HSE is the enforcing authority for ELCI for all employers irrespective of who is the enforcing authority under HSW Act. Complaints about apparent non-compliance relating to LA-inspected premises should be passed to the FOD Enforcement Liaison Officer (ELO) to action. Where an authorised inspector intends to visit LA-inspected premises for the sole purpose of investigating complaints of non-insurance, s/he should first notify the LA - unless the LA referred the complaint.

Appointment of inspectors

21. ELCI is not a ‘relevant statutory provision’ under HSW Act 1974 and special arrangements are needed for its enforcement. Certain enforcement duties under ELCI Act may only be carried out by 'an inspector duly authorised by the Secretary of State for the purpose of this Act'. The inspector is required to have 'some duly authenticated document showing that he is so authorised' (ELCI Regulations 1998 reg.8). Certificates of Appointment issued under HSW Act s.19 do not meet this requirement as they do not refer to ELCI Act, and so a separate instrument of appointment (warrant) is required.

Powers of inspectors

22. Inspectors duly appointed under ELCI Act have limited specific powers. These are to:

• demand by written notice (see para 23 below) the production of a current certificate of insurance or a copy (s.4(2)(b), 1998 Regulations reg.6 and 2008 Amendment Regulations reg. 2(4)).
• inspect an insurance policy or copy at such reasonable time as the inspector may require (s.4(2)(c) and ELCI Regulations 1998 reg.7);

23. The demand for production of a certificate of insurance is made by serving the employer with a notice requiring them to send the certificate of insurance, or a copy, to an officer of HSE. Specimen letters and Notice to Produce are at Appendices 2, 2A, Appendices 3, and 3A).

24. Inspectors should give the employer reasonable notice that they wish to inspect the policy. There is no specific power to enter premises or to require any person to make a statement (as in HSW Act).

25. In England and Wales, Form LP70 [PDF 307KB], not Form LP7, should be used for taking statements of employee witnesses. In Scotland, Form LPS9 [PDF 85KB] should be used to record the statement (Enforcement Guide (Scotland) - Statements that are not compelled)’

26. Whilst administrative staff may prepare ELCI letters and notices for an inspector, only authorised ELCI inspectors can sign them.

Names of policyholders on certificates

27. Instances may arise where certificates of insurance under the above Act are on display which refer to 'associated' or 'subsidiary companies' and not to the specific employer as the policyholder. The use of this form of words was accepted by DE in 1973 in an administrative agreement with the Association of British Insurers (ABI), provided that the contract between the parent and subsidiary could be established.

Asbestos contractors

28.²

Requests for information

29. Stocks of leaflet HSE 40: Employers' Liability (Compulsory Insurance) Act 1969 - A Guide for Employers and HSE 39: Employers' Liability (Compulsory Insurance) Act 1969 - A Guide for Employees and their Representatives are held in HSE offices. It is hoped that giving the enquirer a copy of the appropriate leaflet will satisfy most requests for information.

Action on complaints

30. Where an office receives a complaint, or any other enquiry which cannot be dealt with by the issue of leaflets HSE 39/HSE 40, the enquirer or complainant should be given a brief acknowledgement (including the name and official address of the officer to whom the matter has been referred) and full particulars should be forwarded as soon as possible to the inspector. Appendix 4 gives guidance on the types of complaint that may be received and the appropriate response.

31. ³

Offences

Section 4 offences

32. It is an offence to fail to:

• display certificate or copy (s.4(2)(a));
• produce certificate or copy to inspector duly authorised (s.4(2)(b));
• produce or send certificate or copy after service of notice (s.4(2)(b)); and
• permit the policy or copy to be inspected (s.4(2)(c)).

The penalty for all s.4 offences on summary conviction is at 'level 3' (see para 35).

Section 5 offences

33. Employer not insured on any day - s.5. This offence may be committed by the employer never having insured, or by 'not maintaining' insurance, i.e. allowing it to lapse. Penalty on summary conviction is at ‘level 4’ (see para 35 and Appendix 5 ). See paras 36 to 38 regarding offences under s.5 by a director or manager.

34. ³

Penalties

35. Penalties are prescribed by ss.4(3) and 5, as amended by the Criminal Justice Act (CJA) 1982, ss.37 and 46, as amended by CJA 1991, s.17 (1). The fines are fixed by reference to a ‘standard scale’. The scale has 5 levels, each corresponding to a certain amount. This means that the level of fines can be updated by changing the value of each level, without the need to amend the legislation relating to each separate offence. The current values of the standard scale (which can be found in Archbold or the inside front cover of Stones) are maximum fines of £1,000 (level 3 on the standard scale) in respect of s.4 offences, and £2,500 (level 4 on the standard scale) in respect of s.5 offences. These offences are triable only summarily.

Directors, managers etc - action on complaints

36. Where the employer is a corporation and the offence has been committed with the consent, connivance or neglect of any director, manager, secretary or other officer, that person may also be proceeded against under s.5 and is liable on conviction to a level 4 fine.

37. ³

Enforcement

39. ²

42. ²

46. Employers who experience difficulty in renewing their ELCI insurance cover, without which they are unable to employ persons, are advised to contact the Association of British Insurers (ABI) on 020 7600 3333 or the British Insurance Broker's Association (BIBA) on 0870 950 1790 - Customer helpline.

Time limits

47. It must be remembered that ELCI offences are not triable either way and are, therefore, time-barred 6 months after the date of the offence. For offences under s. 4(2)(b) of the Act and 1998 Regulations reg. 6 (as amended by the 2008 Amendment Regulations), inspectors should bear in mind that where there has been a breach, the date of offence is the date on which the person failed to produce the certificate upon request, and there is then a period of 6 months from this date to lay the informations.

Draft information

48. A draft information for a s.5 offence is at Appendix 6.

Further advice

49. Queries on policy or interpretation of ELCI that cannot be resolved within the office or with the help of local sources of expertise (i.e. previous ELCI inspectors) should be referred to your Directorate HQ.

Exemptions
2	S.42 (Legal Professional Privilege)
3	S.31 (Law Enforcement)