Employers’ liability and public liability insurance for recruitment agencies

Recruitment agencies face unique risks - from placing temporary workers to managing sensitive information. Having the right insurance is essential, not just for legal compliance, but for protecting your agency’s operations, finances, and reputation.

Two of the most important covers for recruitment businesses are employers’ liability insurance and public liability insurance. Here, we explain exactly what these policies mean for your agency.

What does employers’ liability insurance cover?

Employers’ liability insurance (EL) is a legal requirement for almost all UK recruitment agencies with employees. For agencies, this means:

• Cover for your own direct employees, including back-office staff and consultants
• Cover for PAYE temporary workers and agency staff under your direct supervision, direction, or control
• Protection if a staff member or temp suffers illness or injury in the course of their work, and your agency is held legally responsible

Typical scenarios for agencies:

• A recruitment consultant slips in your office and suffers a serious injury
• A PAYE temp you’ve supplied to a client is injured at work, and your agency is contractually responsible for their supervision and welfare

EL insurance helps pay compensation, legal fees, and related costs, reducing your agency’s financial exposure.

Legal minimum: UK law requires at least £5 million of EL cover. Not having the right policy can result in fines of up to £2,500 per day. Who is not covered: Independent contractors and limited company contractors are not covered unless directly employed or under your control—such workers generally need their own cover.

When do recruitment agencies need employers’ liability insurance?

If you employ anyone in the UK—whether permanent, temporary, part-time, or even apprentices—your agency almost certainly needs EL insurance. Family-only or true one-person businesses may be exempt, but most recruitment agencies do not qualify for exemptions.

You may wish to review your legal obligations or consult a broker if you’re unsure.

What does public liability insurance cover?

Public liability insurance (PL) is not required by law, but is considered essential for most recruitment agencies because it protects against claims by third parties (not your employees) for injury or property damage caused by your agency’s work.

This means:

• If a client, visitor, or supplier is injured at your agency’s office, or
• If your own staff cause accidental property damage while visiting a client site on your business (for example, during client meetings or audits)

Common claims:

• A visitor trips and falls in your office reception
• An agency employee damages a client’s computer during a site visit (PL is about your business’s direct activities, not the actions of placed workers)

What is not included: PL insurance for agencies does not cover injuries to your own employees (that is what EL is for), nor does it cover the clients’ business, premises, or their own workers.

Cover for temporary and contract staff

Employers’ liability If you place PAYE temps or agency workers who are under your direction, they will usually be treated as your employees and included in your agency’s EL policy while working on assignments arranged by you.

Public liability PL may cover your own agency’s direct business activities—such as agency staff visiting client offices—but it does not automatically cover the actions of independent contractors or temps while on assignment, unless your policy specifically extends to vicarious liability and you are contractually responsible.

Kingsbridge Recruitment Insurance’s agency policies can include vicarious liability extensions as required, specifically to protect your agency when you’re held liable for the actions of PAYE temps or contractors, but this is for your risk only, not for client companies or contractors themselves.

How much cover does your agency need?

• Employers’ liability: The minimum is £5 million. Many agencies choose higher limits (Kingsbridge Recruitment Insurance can arrange up to £25 million), especially if placing large numbers of temps.
• Public liability: Typical cover is £2 million to £10 million (Kingsbridge Recruitment Insurance offers up to £10 million). Your clients may specify minimum requirements in contracts.

Always check client onboarding forms and supply contracts, as minimum levels of EL and PL are often non-negotiable for PSLs and frameworks.

The benefits of a combined recruitment agency insurance policy

Most agencies benefit from having a combined policy designed for recruitment, which can include:

• Employers’ liability insurance
• Public liability insurance
• Professional indemnity insurance (for claims of professional negligence or candidate vetting errors)
• Vicarious liability (for certain temp/contract placements, as contractually required)
• Drivers’ negligence (if you place drivers and are contractually responsible for client vehicle damage)
• Cyber liability (for data breaches or ransomware affecting your own agency’s operations)
• Legal expenses (covering the agency’s costs for employment or contract disputes)
• Management liability (protection for directors and officers)

These covers are strictly for your recruitment agency and do not extend to providing cover for clients or for workers’ own business operations.

Staying compliant and protected

• Employers’ liability insurance is a legal requirement for agencies with staff or temps.
• Public liability insurance is not required by law but is often essential to secure contracts and protect your agency’s reputation.
• Combined recruitment insurance helps agencies meet legal, client, and operational needs without leaving gaps in protection.
• All insurance features and examples here apply only to the recruitment agency’s own risk and operations—not to clients, contractors, or umbrella companies.

If you need help reviewing your current insurance or want to ensure you’re meeting all client and legal requirements, the Kingsbridge Recruitment Insurance team is ready to support you.