The Employers' Liability Tracing Office (ELTO) was set up because it was sometimes impossible to trace the EL insurer, or in some cases insurers, of a firm that has since ceaced trading.

By Tim Foster, Pound Gates Insurance Brokers

In April 2012 the insurance industry will create the Employers’ Liability Tracing Office (ELTO).  ELTO is a centralised, database of employer’s liability (EL) policies. It is planned to become fully operational in April 2012 and so now needs to complete creation of the database.

The ELTO was set up following pressure from private individuals and Trades Unions who were finding it impossible to trace the EL insurer, or in some cases insurers, of a firm that has since ceased trading.  So why is this a problem?

In general terms the intent of an EL policy is to insure the liability of an employer for injury suffered, or disease contracted, by an employee during the employee’s time spent working for that employer.  For an industrial accident the relevant dates are easy to establish.  It is with diseases, especially of a long-term or gradual nature, that problems arise.

UK law has developed over time resulting in an employer being held liable now for medical conditions contracted by current and former employees exposed to, say, asbestos, 30 years ago.  Some medical conditions can take many years for their symptoms to become noticeable leading to a lengthy gap between exposure of an employee to a harmful substance and a claim being made.  It is the EL insurer(s) who covered the employer at the time the employee was exposed to the harmful substance that is required to respond to a claim, provided of course that insurer can be proven to have been on risk.

EL insurance has been compulsory by law for nearly 40 years.  During this time some EL insurers have ceased trading, often due to insolvency. There is a compensation fund, administered by the insurance industry, to deal with valid EL claims against a failed insurer, but evidence of policy cover is a pre-requisite for the fund to operate.  

As mentioned earlier it is quite common for a company to change names over time, especially if it is sold or changes the nature of its trade. Thus a request to trace an EL policy based solely on name may fail. This is why, in addition, the ERN of each firm is required from you as of 1 April, 2011 onwards.  It is expected that, via access to HMRC records, a cross check can be made if an enquiry by name fails.

Pound Gates are now asking their clients for both their full corporate structure (particularly subsidiaries with employees) and the individual Employer Reference Numbers (ERNs) held by each firm. Your ERN will be on your PAYE records and so is often referred to as the PAYE number.

To speak to Tim with any questions call 01473 346046 or e-mail tim.foster@poundgates.com.

Editor’s note:  Pound Gates has explained to The Mover that there is currently no obligation at law for a firm or other business to submit this information to an insurer. Neither are they expected, or even asked, to lodge it direct with the ELTO. Insurers – or others acting on their behalf – are tasked with doing this.  Over 90% of the UK insurance market (that writes EL cover) has now subscribed to ELTO and it is expected to be compulsory for any insurer offering EL cover by April 2012.

Employer’s Liability insurance is compulsory for any business with employees, so moving companies would be wise to co-operate with their insurance company and provide the information requested.  It is, as yet, unsure as to how individual insurers will be approaching ELTO however, it is possible that cover could be cancelled if the necessary information is not on file.  This will put you out of business.  Please co-operate for the benefit of all involved.

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