Employment Practices Liability Insurance

Understand how employment practices liability coverage can provide protection

 Employment practices liability coverage

Management liability and employment practices liability

With greater employee awareness of their rights and how to exercise them, the cost to defend employment disputes/business-insurance/directors-and-officers/what-is-management-liability-insurance-and-why-you-need-the-coverage can require significant time and financial resource. Employment practices liability insurance is cover typically provided under a management liability insurance policy and provides the company and their directors, officers, employees, protection from claims arising from a range wide range of employment disputes.


Employment practices liability coverage

Employment practices liability insurance will provide a legal defence and coverage for financial losses arising from a wide range of employment related disputes. Including but not limited to: discrimination, harassment, invasion of privacy, negligent reference, negligent evaluation, refusal to promote, sexual harassment, unfair dismissal, wrongful demotion, wrongful dismissal, and wrongful infliction of emotional distress.

It's worth noting that if a employment dispute is only made against a director, cover maybe be provided under your directors' and officers insurance. However, most employment disputes will seek compensation from the company which would not be covered.

Do you need insurance cover for employment disputes?

Dealing with employees can be highly emotive and if internal procedures aren't followed, you can leave yourself open to successful employment practices liability claims.

Employment disputes can take up significant amounts of company time and resource. Even with established HR policies and procedures to mitigate exposures, the company and managers can find themselves embroiled in emotive and costly disputes. Employment practices liability insurance can provide timely access to a a legal defence and pay damages awarded by an employment tribunal.

 EPLI Claims

What about EPLI cost and deductibles?

Employment practices liability coverage will typically start at £350 - £400 annually for less than 10 employees for a limit of £100,000. How insurers determin the premium for your employment practices liability can vary. However, the following are key considerations when insurers make their decisions: number of employees, highest paid employee, overseas employees, and industry. 

The cover will typically have a £5k or £10k deductible because employment disputes can occur frequently. However, it is important to remember insurers negotiate some very favourable rates with some of the best employment law firms. Which means you'll have the best chance of defending employees making allegations and bringing them to employment tribunal.

 Employment practices liability

We work with a wide range of insurers that provide EPLI

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Frequently asked questions

Why employment liability claims occur?

HR policies and procedures for employment disputes will only be effective if they are followed. A common failure of companies is the application at a management level. Adequate training should be offered to managers concerning employment disputes to ensure they have the necessary skills and awareness. Talking to employees and trying to find an early resolution can often be the most effective way of dealing with any issues. However, having to deal with frustrated or disgruntled employees can be highly emotive. If internal procedures aren’t followed, you can easily become the target of a successful employment tribunal claim.

How are employment disputes heard?

The independent body that hears and decides employment disputes is called Acas, the Advisory, Conciliation and Arbitration Service. The formal process is beyond the scope of this article, but their website provides details for both employees and employers.

Why is EPLI important?

Employees are the foundation of any successful business, however if employees aren’t achieving their individual goals or become disruptive, it becomes increasingly difficult for management to achieve their strategic objectives. For many small businesses HR advice and support may not be readily available. However, dealing with employment disputes under a formalised process can be the difference between parting company amicably or being tied up in an employment tribunal. Employees are increasingly aware of their rights and willing to enforce them, whether the allegations have merit or not. Employment practices liability insurance can offer a safety net and timely access to a pannel of law firms willing to protect your interests.

What if we are planning to make redundancies?

Strategically reducing the number of employees at your business will increase your exposure to employment practices liability claims. Redundancies and restructuring require sensitive handling to ensure fair treatment of employees. Redundancy legislation is complex, and employers need to understand their obligations, including employees' rights and the correct procedures to follow. It is prudent to have employment practices liability insurance in place, before you undertake a restructuring of the business.

How to compare employment practices liability quotes?

Claim trends in the UK suggest that employment practices liability circumstances are reported more frequently with lesser amounts sought, as opposed to high severity claims resulting from the legal framework. Competition within the market for companies with good controls and procedures, that are not planning to make significant redundancies. If your business has a high hazard exposure or significant claims paid you should engage with your employment practices liability insurance broker early to ensure a satisfactory renewal.

Will insurers require us to maintain certain procedures?

Insurers will expect you to provide a written statement of the main terms and conditions of their employment, which includes policies and procedures for dealing with both disciplinary and grievance issues.

It is common for insurers to require you to seek external advice before terminating an employee - which is good risk management because wrongful termination is a common cause for sucessful employment related claims. 

What employment procedures should we follow?

Employers in the UK are required to give employees policies and procedures for dealing with both disciplinary and grievance issues. Even for a small business it is important to maintain and follow policies that comply with current ACAS guidelines. To guard against employment disputes, policies and procedures should be carefully considered with respect to: discipline and termination of employment; preventing discrimination and harassment; and handling complaints of harassment, inc sexual harassment and discrimination.

What is professional indemnity?

What is corporate legal liability?

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