Response to the DWP consultation on waiving the requirement to obtain ELCI for Limited Companies that only employ their owner
Thompsons Solicitors is the UK’s most experienced trade union and personal injury law firm. It only acts for the victims of injury, never for employers or insurance companies. The vast majority of personal injury cases pursued by Thompsons relate to employer liability claims on behalf of trade union members. At any one time the firm will be running 70,000 claims.
Thompsons Solicitors is opposed to the proposal to exempt limited companies where the owner is the sole employee.
As the largest claimant personal injury law firm we are only too familiar with firms that consider themselves to be the proverbial one-man band with no duty of care towards their casual workers. If their duty to insure is removed then the chances are that they will believe themselves even less responsible for the welfare of those they employ, illegally or legally.
We do not believe it is enough to place trust in such companies to declare the employment of casual staff and therefore do not support the proposal that these firms should be exempt from ELCI. We also believe that it will give rise to legal wrangles about the definition of “casual” and “temporary” employees.
All limited companies should be compelled to insure. Given that the insurance industry appears to be coming around to the idea that premiums should reflect a company’s claims record and if, as implied, the claims record of single owner-employee firms is zero, then their premiums ought to be nominal.
If the DWP is determined to alter the ELCI arrangements of firms that employ only their owner then it is important that some kind of insurance cover remains, not least to preserve the principle of insurance. Provision must be made for ensuring that should they employ anyone on a casual or temporary basis they are insured.
We would propose therefore that a one-off premium be levied on such firms to cover them against risk for the lifetime of the business as a single owner-employee operation.
This premium need not be more than a few hundred pounds and if the insurance industry used risk-based/claims-based premiums the amount that each company would pay would be limited.
A one-off premium should also deal with the employers’ arguments about unnecessary burdens and red tape for small businesses.
Firms would simply have to make an annual declaration that they have not employed anyone other than the owner. Should they be found to be in breach then they would face severe financial penalties.
However, Thompsons is concerned that any change in the insurance arrangements for firms where the owner is the sole employee does not become the thin end of the wedge. Firms with just one other employee may argue that the new arrangements should apply to them too. Worse still they may look at ways of “dis-employing” their workers to avoid paying ELCI.
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