Litigation and the cost of employment related claims are on the rise; have you considered Employment Practises Liability (EPL) Insurance?
Employment tribunals have increased by more than 13% since the start of the pandemic, and by more than 30% since claimant fees were abolished in 2017. Effectively, it costs nothing for an employee to bring an employment claim, yet the employer will always have to defend themselves against such allegations.
After repeated lockdowns caused turbulence in the employment market, a smooth route out of the pandemic has been hampered by stratospheric energy prices, rising inflation, and plummeting consumer spending.
Unfair dismissals, with companies forced to lay off staff, were the single biggest cause of employee claims in 2020/21 (the last year for which full figures are available) while flexible working claims were up 50%, as Government mandated work-from-home restrictions were lifted.
All of which underlines the importance of Employment Practices Liability Insurance (EPL) and, in particular, the Rradar legal services that come with it.
With ever-changing employment legislation, unlimited court awards in some cases, and an uncertain business and employment climate, it’s worth exploring the benefits.
What is EPL insurance and what does it cover?
EPL insurance supports a company and its directors, managers, and staff in defending litigation claims made by past and present employees for alleged breaches of employment law.
It provides protection against the cost of employees bringing claims of discrimination, unfair dismissal, constructive dismissal, harassment, breach of contract, defamation, invasion of privacy, or any other alleged wrongful act.
Investigating complaints and defending yourself if the case goes to tribunal can be time-consuming and costly, which is why EPL insurance covers:
- Investigation costs;
- Legal fees in defending a case;
- Costs of any settlement or court judgement.
Each policy comes with the Rradar legal services, which combines professional legal representation when required, with specialist advisory teams to help prevent a legal crisis in the first place and provides support with general day-to-day HR related matters.
All aspects of employment law are covered from initial, preventative advice through to representation at an employment tribunal.
Help is also available in all areas of employment practices, such as contract wording, as well as guidance on what to do if an employee makes a complaint – or if you suspect they might.
Telephone and email advice is supplemented by a series of online guides covering employment law, as well as health and safety regulations, corporate governance, and contract law.
EPL cover is broken down into:
- Education and prevention: telephone, email, and online advice;
- Access to an intelligent legal assistant that will direct you to guides, advice, and the information you require;
- Access to an online digital reporting solution, allowing you to log health and safety incidents and near misses;
- Comprehensive legal advice across all areas of business law, including employment law and representation in court.
Our case study with Heat Norfolk explains how Managing Director Paul Wilkins used the Rradar service during the first lockdown when he had a host of questions about furlough and Covid working practices.
Why should businesses consider EPL?
Businesses are increasingly opting to include EPL in their Management Liability Insurance (MLP) package, alongside Directors’ and Officers’ Insurance (D&O) and Corporate Legal Liability Insurance (CLL).
Here are some of the key reasons to consider EPL insurance for your organisation.
Broad and changing employment legislation: HR teams face an onerous task in keeping on top of the broad range of employment legislation, including sex, age, and religious discrimination. Legislation is ever-changing, so it’s useful to have advice and education from the Rradar service, and vital to have cover for costs under EPL in case errors are made.
Covid-19: Covid-19 has changed the landscape for organisations, with a host of employment practices evolving since the start of the pandemic, particularly in relation to flexible working. Where companies laid-off staff, there has been an increase in claims for unfair dismissal based on age or sex discrimination.
Management must follow strict procedures if any potential case is not to be lost right at the start on a technicality. Are you confident your staff can follow the correct procedure? Even innocent slip-ups can prove costly.
Cost of defending a case: solicitors and barristers don’t come cheap, and the costs of defending a case can quickly escalate, and you will need to cover the claimants costs as well if they win the case.
The cap on court awards are increased each year, while discrimination cases have no upper limit at all.
In 2020/21, the highest discrimination case award was £265,719, while the top unfair dismissal award was £118,842, with an average of £10,812 – all on top of legal costs.
Rise in litigation: although tribunal cases are still down on those from 2013, when claimant fees were introduced, they have risen steadily since those fees were abolished four years later.
The bare figures, 117,926 tribunals in 2020/21, are the tip of the iceberg of employee complaints because many are settled before they reach court. EPL insurance also covers investigations, legal costs, and awards for those cases that do not reach a tribunal.
Reputation management: a public tribunal can cause reputational damage to a company and its management. Sound legal advice from the outset can prevent cases reaching court.
Rradar service benefits: the Rradar service provides a wide range of help and advice in connection with employment practices, but also in the day-to-day running of a business, including health and safety, tax, commercial contracts, and corporate governance.
We hope this has provided a good overview of the benefits of EPL insurance and the Rradar service, and if you’d like to discuss any aspect in any more detail, please speak to your account executive or contact us on 01603 218000.