Every employer is responsible for the health and safety of their employees. However, even if safety rules are strictly followed, sometimes injuries or illnesses can occur. Employers’ liability insurance exists for just these situations. In this article, we’ll give you a clear explanation of how statutory insurance works, what it covers, when it applies and what to look out for.
Employers’ statutory liability insurance is a compulsory insurance that is designed to protect employees in the event of an accident at work or occupational disease. If such a situation occurs, the employer is legally obliged to compensate the employee. This compensation is then paid by the insurance company with which the employer has taken out the statutory insurance.
In other words, it is the employer’s insurance that covers the employer’s legal liability for damage caused to the employee in the course of his or her work.
The purpose of this insurance is to protect employees who are injured on the job, and to relieve the employer of the sudden high costs of having to pay out money to the employee for injuries and damages. The law states that the employer’s liability is strict liability, i.e. regardless of fault – the employee is automatically entitled to compensation if the injury or illness is directly related to work.
The obligation to take out statutory employers’ liability insurance is laid down in the Labour Code and the Decree on Statutory Liability Insurance for Occupational Injury or Occupational Disease.
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Statutory insurance applies to all employers who employ at least one employee in an employment relationship, on a fixed-term or permanent basis. Employers are automatically obliged to take out statutory insurance – there is no need to enter into a contract, the employer is covered by the scheme itself when it starts to employ.
On the other hand, self-employed persons (self-employed persons) who do not have any employees do not have this obligation – they cannot insure themselves because statutory insurance only applies to employees.
Statutory insurance is administered in the Czech Republic by two insurance companies: the Kooperativa insurance company and Generali Česká pojišt’ovna.
Decree No 125/1993 Coll. determines which insurance company is competent for a particular employer according to the assigned code of the main activity (e.g. according to the CZ-NACE classification). This system prevents employers from being able to ‘pick and choose’ the insurance company.
Statutory insurance covers all cases where:
The insurance company will then reimburse the employer for the costs that the employee has to pay, for example:
However, please note: The insurance does not cover cases where the employee causes the injury intentionally or through gross negligence (e.g. drunkenly operating a crane).
Tip: Do you want to know what an accident at work means and what you are entitled to? Read our article on this topic.
If an accident occurs, the employer first compensates the employee and then makes a claim for compensation with their respective insurance company.
In order for the insurance company to accept the employer’s statutory liability insurance claim, the employer must provide several key documents. The most basic is a properly completed accident record, which is kept on a prescribed form and contains all the key information about when, where and how the work-related injury occurred.
Another essential document is the medical reports and reports that document the extent of the employee’s injuries, the course of treatment and, if applicable, the period of incapacity for work.
In order to calculate the compensation for lost earnings, it is also necessary to provide pay slips from which the insurance company can determine the employee’s normal wage before the injury occurred.
In some cases, the accident investigation report may also be decisive, especially if the injury is more serious or if the circumstances of the accident are not entirely clear. This report is drawn up by the employer, often in cooperation with the labour inspectorate.
Complete and correctly documented documentation will significantly speed up the process of recognition and payment of the insurance claim.
As a rule, the benefit is paid in full if the employer has not violated the law (e.g. occupational health and safety). However, if there is a gross violation, the insurance company may refuse the benefit and claim compensation (so-called recourse).
The amount of the premium depends on the type of activity carried out (riskiness according to the OKEČ/CZ-NACE classification) and the amount of wages paid (the so-called assessment base).
The insurance premiums are paid monthly and the employer is obliged to report the amount of the assessment bases to the insurance company every year (by 31 January).
The insurance company can refuse to pay the insurance benefit in cases where the employer fails to comply with its legal obligations. Typically, these are situations where they fail to keep proper documentation of the work injury – for example, missing an injury record, failing to provide medical reports or failing to investigate the causes of the accident.
Benefits may also be denied if it turns out that the accident was not directly related to the performance of the work. For example, if an employee breaks his leg during a lunch break outside the workplace, it may not be a work-related accident and the insurer will refuse to pay the claim.
Another reason for denial may be a gross violation of occupational health and safety (OHS) rules by the employer. For example, if an employer fails to train an employee to work with dangerous machinery and an accident subsequently occurs, the employer is liable for this error.
In such cases, the insurance company has the right to claim back compensation paid by the employer under the so-called recourse procedure. The employer must then pay the damages out of its own funds.
An available lawyer recommends: If the insurance company has denied you compensation, do not wait and contact us. Each case is individual and the denial may not be final.
Tip: Not sure when and how to withdraw from an employment contract? In our article you will find out under what conditions it is possible, what the difference is compared to termination and what you need to do to make the withdrawal valid.
Statutory insurance only covers accidents and occupational diseases of employees. It does not cover damage that employees may cause to third parties, property or as a result of professional misconduct. Therefore, consider commercial employers’ liability insurance, which also covers these situations. If an employee accidentally damages a customer’s goods, statutory insurance will not help you. Commercial insurance, however, will.
We recommend that employers focus on prevention first and foremost. Investing in occupational health and safety (OHS) training , regular maintenance of machinery and providing appropriate protective equipment will significantly reduce the risk of workplace accidents. It is also important to keep careful documentation, keeping records of training, inspections and any accidents. In the event of an insurance claim, communication with the insurance company is crucial. Don’t be afraid to ask what documents need to be documented and how to proceed correctly, this will prevent unnecessary complications. And if you do have a dispute with an employee or the insurance company denies you benefits, don’t hesitate to contact an experienced attorney. He or she can help you protect your rights, saving you time, money and unnecessary stress.
Employer’s liability insurance is mandatory for all employers with at least one employee (including FTEs and FTEs) and covers damages caused by an occupational injury or illness. The insurance is administered by two insurance companies – Kooperativa and Generali Česká – with jurisdiction determined by decree according to the employer’s activity. The insurance company covers the costs of compensating the employee (pain, medical treatment, lost earnings, annuity or funeral), but only if the employer fulfils the legal obligations (e.g. documentation of the accident, compliance with OSH regulations). Otherwise, it may refuse to pay and demand recourse compensation. The amount of the premium depends on the riskiness of the activity and the amount of wages and is paid monthly. The statutory insurance does not cover damage caused to third parties, therefore commercial supplementary insurance is recommended. Prevention, training, protective equipment and meticulous record keeping are the keys to a trouble-free claim.
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