Employment practice liability – a growing area of concern for businesses
As society in general becomes more and more litigious and employment legislation is tightened up almost year on year, employment practice liability cover is something that many companies are now considering. It covers issues like sex, age, sexuality, disability, religious belief, and race discrimination, and is something that you should think about whether you work in the corporate world or you run a small chain of shops. Though areas like financial services, construction and engineering have traditionally seen the greatest number of claims of this nature, it is becoming an issue for all sectors.
Though nobody likes to think that someone they employ would ever sue them, if an employee feels that their rights have been violated, they are entitled to not only speak out about it, but also to seek compensation. With the benefit of legal aid many people will take their chances in court, and if a case like this is brought against you or someone working for you, it could end up costing you hundreds of thousands of pounds to defend it.
Though the cover provided by different insurers will differ, employment practice liability should cover your legal costs and expenses as well as the awards made by the court in respect of a whole range of different employment law violations. And unlike, directors’ and officers’ liability, it may also cover the business entity itself rather than just the senior officers. This means that things like the disruption to the business and resulting losses can be taken into account as well.
Most providers will require you to have a human resources department and a carefully thought out employee handbook detailing company codes of practice before they will offer you cover. They may also insist that you have additional cover in place such as directors’ and officers’ liability. Some providers will cover third party actions and include a broad definition of who is insured which includes subsidiaries and prospective employees as well as the key stakeholders within the company. However, this type of comprehensive cover may come at a premium price, so whether or not you should pay this price depends on how much of a priority this type of cover is for your company.
As with most other types of insurance that cover you for the expense of going to court, there may well be lots of caveats and exclusions in the terms of the policy. It’s therefore really important that you double check the policy wording and seek advice if you’re not sure what any of it means or if there is any ambiguity. With many employment legislation cases taking weeks if not months to resolve, the last thing you need is to be footing the bill because your insurance didn’t cover you.
