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Employment dispute insurance - how to protect your business?

by Simon Taylor


Ensure a understanding of the legal environment and purchase employment dispute insurance to protect your business

Employees are the foundation of any successful business, especially in the early phases of growth. 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.

Legal landscape for employment disputes

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.

In 2017, the Supreme Court declared that tribunal fees were an unlawful and were scrapped. The removal of the fee (up to £1,200) has subsequently led to a significant increase in the number of employment disputes coming before tribunals. With no cost to the claimant, disgruntled employees can cost your business valuable time and money.

There has been some suggestion the Ministry of Justice may bring tribunal fees back at a lower level to strike a balance between the employee and the employer, but to date there have been no further updates.

Below we take a look at the legal landscape and what you can do to protect your business from employment disputes:


Maintain employment dispute procedures

Employers in the UK are required to give employees 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.

A formalised set policies and procedures can save you a lot of time and money in the long run. 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 & discrimination.

The rise of the #MeToo campaign has put a spotlight on issues that still occur in the workplace. Creating an environment in which employment disputes are taken seriously and employees are protected from retaliation, will come from directly from the top and how the company’s policies are enforced.

Educate and train your managers

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.

A valuable resource of information and capacity to provide training courses to your employees is available from Acas. The website provides a wide selection of advice through all the stages of an employment dispute and tribunal.

Seek independent employment dispute advice

Employment law can be a complex and businesses can hold misconceptions about their obligations and rights. If there are specific employment issues you are concerned about or if you plan to terminate an employee, seek HR advice or legal advice.

Not all SMEs will have resource available in-house to deal with employment disputes, but obtaining sound advice on your plan of action can protect your business from a time consuming and costly employment tribunal.

Employment dispute insurance

Engage with your insurance broker to consider the cost of purchasing employment disputes insurance cover under a management liability policy. 

Insurers will have access to a panel of law firms at their disposal to protect their interest. Reacting quickly with a thorough legal defence can often be the most effective response to an allegation.

Employment practices liability insurance will provide your legal defence and cover the cost of any damages or settlement. Alternatively, a legal defence can be provided under legal expenses insurance.

Bitter and embroiled employment disputes can take a heavy burden on your business. An insurance policy can mitigate the financial cost and manage any claims on your behalf through to resolution.

Employment dispute insurance in the UK


Originally posted by Get Indemnity

This guide is for information purposes and based on sources we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.