A common question we are asked by clients, is whether there is any cover under their Employers’ Liability Insurance for legal disputes with employees. From a clients’ perspective makes perfect sense – Employers Liability Insurance is legally required and therefore it might cover a range of disputes.

 

Unfortunately, this is not the case, an Employers’ Liability policy is designed to protect employees who sustain an injury or illness during their normal business activities by providing compensation. It will defend a business but it does not cover any allegation or disputes relating to harassment, bullying in the workplace, unfair dismissal or discrimination.

 

This cover is however provided under the Employment Practice Liability section of a Directors and Officers or Management Liability Insurance policy.

 

Directors & Officers Insurance covers the management decisions of a business. The insurance offers financial protection to the directors, partners or officers of a company and it is designed to cover the cost of claims for compensation made against the insured individual.

 

Being a director of a company brings with it certain responsibilities to employees and other stakeholders such as customers and regulators. It can also make the individuals holding a position personally liable for the actions or omissions they make in the performance of their company duties, meaning that they can personally be the subject matter of claims submitted, which could lead to the payment of fines, compensation or imprisonment.

When a company’s workers claim their legal rights as employees have been violated, Employment Practices Liability insurance can protect against the resulting litigation, as an example this could be from claims of sexual harassment, discrimination and wrongful termination.

 

A breach of employment law can have a big financial impact on a company. Insurance helps protect the company and management by meeting damages, judgements, settlements and defence costs for many types of violations.

Unfortunately the number of employment tribunal cases being heard have increased in recent years. However in reality businesses face a lot more employment actions than that, because so many are settled in private without ever getting to tribunal.

 

There’s also a broad range of legislation for businesses to keep track of, such as age or religious discrimination and strict enforcement of areas like sexual discrimination is reflected in the number of cases.

 

Managing your reputation

A public case can be bad for the reputation of a company and its leaders. Our clients get access to high quality public relations assistance to plan and manage a communication strategy that will help manage your public image.

 

Cases are getting more expensive as the caps on awards are increased each year – although they are unlimited in discrimination cases. Businesses also need cover against defence costs – and they will have to pay their employees costs as well if they lose the case.

 

We have access to insurers that offers broad, flexible Directors and Officers and Employment Practices Liability insurance.

 

Call or email for no obligation quotation.