Why is the polarity LED always lit?

Incorrect polarity lights up if:
  1. The polarity is incorrect.
  2. The wiring is balanced (no defined polarity).
  3. Earth and Neutral have a significant voltage between them (weak/bad earth).

A simple test is to use a multimeter set to AC and 500V AC range and to test the voltage between Earth (black probe) and the two power connections.

One should read 0V, the other should read 220/240V AC (depending on the precise local system).

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