Employment practices liability insurance

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Any employer knows that the people they hire are their most important asset, but this does not mean that relationships between employers and employees are always straightforward. Disputes can and do happen frequently, over a wide range of issues from maternity pay to disciplinary proceedings. 

Although HR departments in larger businesses are trained in these matters, the fast-changing nature of employment legislation, paired with the fact that it often favours the employee, can make it difficult to feel fully protected. 

Major pieces of UK legislation which currently ensure employees are protected during disputes include:

  • Employment Act 2002
  • Race Relations Act
  • Disability Discrimination Act
  • Sex Discrimination Act
  • Equality Act

In order to operate in the assurance that you will not accidentally fall foul of employment law, having the right insurance in place is crucial. 

What is employment practices liability insurance?

Disputes with employees can have a devastating impact upon a business, both financially and reputationally, and a fully-equipped HR department can only do so much to limit the fallout of a disagreement.

If you are accused of unfair dismissal or discrimination, you could find that you are liable for thousands of pounds in costs. An employment practices liability insurance (EPLI) policy protects your business against these expenses, covering essential costs such as:

  • Solicitors’ fees
  • The cost of an employment tribunal
  • Any compensation awarded to the accusing party if they are successful in making their claim

When will you need employment practices liability insurance?

There are many circumstances in which your business could find itself in need of EPLI in order to protect its future. These include:

  • Unfair dismissal cases, where the employee claims to have had their employment terminated unlawfully
  • Constructive dismissal cases, where an employer’s unacceptable conduct gives the employee the right to end their employment contract
  • Discrimination cases, such as those in which a female employee finds that male employees at the same level are being paid more
  • Misconduct cases, where, although an employee broke the terms of their employment contract, the dismissal is found not to have been handled correctly

Your business may have excellent relationships with all its employees, and follow all employment laws to the letter. Even so, such relationships can sour quickly and it is vital to be protected in case of the unexpected.

employment practices liability insurance (EPLI)

EPLI, coronavirus, furloughing and redundancies

As a result of the global Covid-19 pandemic and resulting lockdown, businesses are facing a period of extraordinary difficulty that no insurance policy could have foreseen. It is particularly important for employers to be protected in a period where furloughing and redundancies have unfortunately had to become commonplace.

The situation continues to unfold and the insurance market’s response to Covid-19 more broadly is still becoming clear. It seems almost inevitable that the crisis will create a spike in claims against unfair dismissal and the like, and employers may face rapidly escalating disputes. 

You should ensure that you are familiar with the terms of your insurance policy to ascertain which of the costs incurred as a result of coronavirus are likely to be covered. While insurance policies such as these do not cover an unprecedented medical emergency like this, many of the resultant employee claims are likely to be covered in some form.

Application for employment practices liability insurance

It is a result of not only the unpredictable era in which we live but also today’s widespread ‘compensation culture’ which makes it so necessary to be covered by EPLI. Anybody can make a financial claim if they believe that they have been treated unfairly.

EPLI is usually offered as an extension of directors’ and officers’ (D&O) insurance, part of a comprehensive cover package for businesses. You should speak to your insurance provider if you believe that having EPLI would be worthwhile for your business – and in the vast majority of cases, there are many reasons why it would be.

Speak to a D&O insurance broker

At Heath Crawford we are here to guide you through the coronavirus crisis and beyond. Please do not hesitate to contact our friendly team today, whether you are looking to discuss D&O insurance or EPLI. Call 0208 421 7030 or email hello@heathcrawford.co.uk to ensure that your business is protected against the unexpected.