ELI is compulsory for most employers following the introduction of the the Employers’ Liability (Compulsory Insurance) Act 1969 which requires employers to have at least a minimum level of insurance against any claims for compensation following an injury at work. The minimum level of cover is £5m
The following are extracts from the guidance issueed by the DWP:
"All employers must have employers’ liability insurance except the following:
most public organisations including government departments and agencies,
local authorities, police authorities and nationalised industries;
health service bodies including National Health Service trusts, health authorities,
primary care trusts and Scottish health boards;
some other organisations which are financed through public funds, such as passenger transport executives and magistrates’ courts committees."
"There are also exemptions for certain family businesses. Your employer will not need
employers’ liability insurance to cover you if you are closely related, ie if your employer
is your husband, wife, civil partner, father, mother, grandfather, grandmother,
stepfather, stepmother, son, daughter, grandson, granddaughter, stepson,
stepdaughter, brother, sister, half-brother or half-sister. However, this exemption
does not apply to family businesses which are incorporated as limited companies."
So as you can see it may not be as simple as you think.
Firstly are the small companies you speak of family businesses employing relatives. Are they "one man band" operations.
Secondly you speak of an obligation to report these businesses to the HSE. There is no obligation, you report them if you want to, you aren't obliged to unless it is part of your contract in assessing workplaces to do so.
If you do decide to report them to the HSE and you are certain that they aren't exempt as a family business employing relatives then you can do so at any local HSE office.
The employer can be fined up to £2500* for any day on which they are without suitable insurance. If they do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, they can be fined up to £1000