A worker falls from height, or is struck by machinery, or is injured lifting something the site should have made safer. That happens on building sites across the country, and it is precisely the situation employers' liability insurance exists to answer. The insurer investigates, negotiates, and if the claim holds up, pays. Take the insurer out of that sequence and the sequence does not stop. It just has nobody standing behind it.

Where a builder has no employers' liability cover in place, the injured worker's claim does not disappear because there is no policy to pay it. The legal duty of care an employer owes to the people working for them exists independently of whether they insured against it. What changes is who is left holding the claim, and what is left to pay it with.

The employer's position

An uninsured employer facing a genuine injury claim is exposed personally. There is no insurer to fund a defence, negotiate a settlement, or absorb the cost of a judgment. Separately from the injury claim itself, operating without the required cover is a breach of statutory duty in its own right, with consequences of its own.

The worker's position

The injured worker is not left without a right to claim. What they lose is the straightforward route: a claim to an insurer, backed by that insurer's resources, with a reasonable expectation that a valid claim gets paid. Instead they are pursuing an individual or a small business directly through the courts, with no guarantee that a judgment in their favour can actually be collected if the employer has little to pay it with.

The mechanics of both routes, the statutory framework behind the requirement to insure, and what the worker's legal options actually look like in practice are set out in the sections that follow. What Each Cover Actually Does explains where employers' liability sits alongside the other covers a building business typically needs, and the terms used here are set out in full in The Small Print, Translated.

The Employers' Liability (Compulsory Insurance) Act 1969 is the statute that makes this cover mandatory. It requires most employers carrying on business in Great Britain to insure against liability for bodily injury or disease suffered by their employees arising out of and in the course of their employment. A builder taking on staff, or subcontractors who count as employees in law, is caught by it from the day the first person starts work.

The £5 million floor

The Act sets a minimum level of cover of £5 million (Employers' Liability (Compulsory Insurance) Act 1969, as amended, verify current requirement) for any one occurrence. That figure is a floor, not a target: most policies sold in the market are written at £10 million or more, because a serious injury claim involving long-term care or loss of earnings can exceed £5 million on its own, and an employer whose policy caps out below the claim is left carrying the difference personally.

The daily fine for trading without cover

Trading without employers' liability insurance in place is a criminal offence. An employer who fails to hold a compliant policy is liable to a fine, and the exposure runs by the day the business operates uninsured rather than as a single one-off penalty, which is why the gap tends to widen the longer it goes unnoticed. The Health and Safety Executive enforces this, separately from and in addition to whatever happens with an injured worker's own claim.

Who counts as an employee

The Act's protection follows the contract. Anyone working under a contract of service, including apprentices, counts as an employee for this purpose, and on a building site the harder question is usually the labour-only subcontractor: someone paid gross, treated as self-employed for tax, but working under the direction and control of the main contractor in a way that can still make them an employee for employers' liability purposes. A builder who assumes a subcontractor's own trade cover removes the need to check this is making an assumption the law does not automatically support.

The next section sets out what actually happens when a worker is injured on site and no employers' liability policy is in place, and the one after that looks at the different route an injured worker has to follow when there is no insurer standing behind the employer. For how this cover sits alongside the rest of a trade policy, see What Each Business Insurance Cover Actually Does, and for the terms used along the way, The Small Print, Translated is the reference layer.

When a business carries employers' liability insurance, an injured worker's claim is, in practice, a claim against the insurer. The employer notifies its insurer, solicitors on both sides correspond with the insurer's claims handlers, and any settlement or court award is paid from the policy. The worker rarely has to think about whether the employer itself has the money, because the insurer does. Take the insurer away and almost every part of that process changes.

The claim still has to be brought against the employer

There is no fund equivalent to the Motor Insurers' Bureau, which steps in when a driver is uninsured or cannot be traced. If a builder has no employers' liability cover, the injured worker's only route is a personal injury claim against the employer directly, following the same pre-action protocol and Civil Procedure Rules as any other injury claim, and subject to the same three-year time limit under the Limitation Act 1980. The legal process itself does not change. What changes is who is expected to pay at the end of it.

A judgment is only worth what the employer can pay

Winning the case establishes that the employer owes damages, but a court judgment is not money in the bank. If the business is a limited company with few assets, or if it becomes insolvent before or during the claim, the worker becomes an unsecured creditor competing with HMRC, suppliers and other creditors for whatever is left. Directors are not usually personally liable for a company's debts, so a worker cannot simply redirect the claim to the person who ran the site, except in the rare cases where the corporate structure itself is challenged in court. Where the employer is a sole trader, the position is different again: the individual's personal assets are exposed, but whether those assets are worth pursuing is a separate question entirely.

Funding the claim gets harder.

Solicitors who run personal injury claims on a no-win, no-fee basis, known as a conditional fee agreement, rely on the defendant's insurer being good for the eventual damages and costs. Without an insurer standing behind the employer, a firm takes on the added risk that a judgment, once won, cannot be enforced. That does not weaken the worker's claim in law, but it can make representation harder to find, and it puts cost and delay onto someone already injured through no fault of their own.

None of this affects the separate question of whether the employer broke the law by trading without cover in the first place; that is a matter for the Health and Safety Executive and the courts, covered in the law section above. Whether the employer is prosecuted and whether the worker is ever compensated are two different outcomes, decided by different processes, and one does not guarantee the other.

For how employers' liability cover is meant to work when a policy is in place, see What Each Cover Does. For the general mechanics of how a claim moves from injury to payment, or refusal, the guides section sets out the process in more detail.