Protecting Your Business and Your Employees

As your business grows, so do your liabilities, especially when you start hiring more employees. This growth brings additional risks and obligations that you need to be prepared for. No matter what type of business you run, if you have employees, you share common employment-related liabilities.

 

Workers' Compensation vs. Employer’s Liability Insurance 

Under COIDA (Compensation for Occupational Injuries and Diseases Act), workers' compensation is mandatory for most employers in South Africa. Employees should be covered for medical costs, rehabilitation, and part of the lost wages if an employee gets injured or sick due to work. It provides financial relief for both the employer and the employee.

Employer’s liability insurance, on the other hand, covers the legal costs if an employee sues their employer for negligence related to a workplace injury, which isn’t covered by COIDA. For example, if an employee gets hurt using a tool at work and feels that workers' compensation hasn’t covered all their expenses, they might sue the employer for not maintaining the tool properly.

These might seem similar, but they cover different aspects of workplace incidents and complement each other. Workers' compensation covers the costs related to the injury itself, without claiming the employer is at fault. Employer’s liability insurance kicks in if the employer is sued for negligence.

 

What Else Employer’s Liability Insurance Covers 

  • Third-party-over action lawsuits:

If an employee sues a tool manufacturer for a defect, and the manufacturer then sues the employer for poor maintenance.

  • Loss of consortium:

If an employee dies or suffers a severe injury affecting their ability to perform daily duties, a family member can sue the employer for negligence.

  • Dual-capacity lawsuits:

If the employer also makes or supplies the product that caused the injury, the employee can sue the employer in both capacities.

  • Consequential bodily injury:

If an employee's severe injury causes a family member to suffer a related health issue, like a heart attack, the family member can sue the company.

 

Do You Need Employer’s Liability Insurance?

If you have employees, you need employer’s liability insurance to protect against claims resulting from injuries, illnesses, or deaths caused during employment. Even if you hire temporary or contractual workers, this coverage is important.

 

Protecting Your Business

To reduce the risk of lawsuits, create a safe and healthy work environment. Implement good health practices and provide protective gear to your employees. Adding employer’s liability insurance to your existing coverage is a smart move to protect your business from unexpected legal costs.