Business Clinic: What insurance do I need as a new employer?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Rory Gibson, regional director, Scotland, A-Plan Rural Insurance, explains the areas of insurance and health and safety that a new employer needs to be aware of.

See also: Business Clinic: What insurance is needed when contracting?

Q. I have a modest-sized mixed arable and livestock farm which until now I have run on my own. However, from this autumn I’ll be almost doubling my acreage with a contract farming agreement and will need to employ someone full time. I’ve never been an employer before – what do I need to do insurance-wise?

A. Taking on your first employee comes with lots of new responsibilities, including insurance requirements. These are some of your main considerations. 

Taking out employer’s liability insurance will be among your first priorities and is a legal requirement.

If your employee is injured or ill as a result of work, it will cover you for potential compensation pay-outs or legal fees.

Failure to have cover in place can result in a fine of £2,500 for each day you are uninsured. 

It is not only full-time staff you need to consider; employer’s liability insurance is needed for anyone working or helping out on your premises under your supervision, including volunteers, subcontractors and family.

The minimum cover is £5m but most policies start at £10m, sometimes more. Speak to a broker to get the right level of cover.

Other insurance considerations

Other covers you might consider include personal accident and sickness insurance.

This includes cover for you and your employees against accidental injury and sickness and is helpful if you have key workers without whom you couldn’t operate.

If you have such a key employee, you could go a step further and take out key person insurance, which protects you against the loss of profits if they fall seriously ill or die.

If your new employee will be driving farm vehicles as part of their job, you may need to update your motor insurance policy to ensure they are covered while operating those vehicles.

Different policies may have different rules about who is covered to drive what equipment and there are age restrictions in some cases.

Don’t forget any qualifications and licences they will need, too. This will depend on what machinery they will be using.

For example, anyone using a forklift is legally required to undertake appropriate training.

Update your health and safety policy

Taking on staff makes it even more important to be proactive about health and safety and manage the risks on your farm. This includes:

• Staff handbook: Outline potential health and safety hazards, explain employees’ responsibilities, and provide information on how specific tasks should be carried out.
• Incident book: Record and report details of work-related injuries and incidents.
• Training records: Instruction on how to work safely is vital and a legal requirement. Keeping records can help you decide if refresher training is needed.
• Farm safety emergency plan: For an effective response to H&S incidents and other emergencies, such as spillages and contamination.
• Farm communication system: Ensure employees can be easily reached.
• Risk assessments: Once you have five or more staff, you must carry out written health and safety risk assessments covering all significant hazards.