Employment Practices Liability
Employers are finding life more difficult every day because of actions taken by employees against them for a variety of reasons. These can relate to alleged discrimination, unfair dismissal and sexual or workplace harassment.
For this reason protecting yourself with an Employment Practices Liability Insurance protects both your company and its employees if they become legally liable to pay claims made by other employees, contract workers, temporary workers or any applicant for employment.
Why do you need it?
Even though the labour force is decreasing in size, it is becoming more educated and more aware of its rights. It is becoming much more litigious. The result is likely to be a steady increase in employer-related type claims. An “EPL” policy can assist employers reduce the business stress and cost exposure associated with such claims.
Due to complex legislation surrounding employment related issues, employers are finding themselves being sued by employees for issues such as unfair dismissal/termination, sexual harassment and discrimination.
Complaints also have several indirect consequences for your business:
- bad publicity,
- poor industrial relations,
- workplace disruption, and
- loss of productivity.
This on top of the direct financial cost if an employee pursues a legal claim Recent statistics show as much as one in three companies had been hit with an unfair dismissal claim in the recent year. The Department of Workplace Relations' "Changes at Work" survey reported that 1 in 6 workplaces experienced a sexual harassment complaint and 1 in 17 a racial harassment complaint.
Who is covered?
The insured is amended to include the insured entity, being the company and its subsidiaries as specified in the schedule. Please note: The D&O policy already provides cover for Insured person (being past, present or future natural person; i.e., director, secretary, executive officer or employees, acting in their capacity as directors and officers).
What is covered?
The policy cover includes:
legal liability for employment wrongful acts,
defence costs for employment wrongful act claims,
court ordered payment of reinstated employees salary for period from date of dismissal to date of reinstatement order,
This type of policy covers such matters as:
- wrongful dismissal, discharge or termination of employment,
- wrongful failure to employ or promote,
- wrongful deprivation of career opportunity,
- misleading representation or advertising in respect of employment,
- wrongful disciplinary action,
- negligent employee evaluation,
- wrongful demotion,
- breach of employment contract,
- sexual or workplace harassment (including having a workplace environment conducive to such harassment),
- wrongful discrimination,
- failure to grant tenure, invasion of privacy, and
What is the starting cost of a stand-alone EPL policy?
Premiums start from as low as $500.00 plus government and statutory charges.
There is usually an excess or a minimum co-insurance deductible of 10 per cent of the loss which is be borne by the insured. An employer with fewer than 10 employees conducting business in a low risk occupation risk such as a small manufacturing company or a small association would likely be rated at the minimum premium.
Is it possible to take out an EPL cover as part of a Directors & Officer’s policy?
Yes. It is possible to take out an EPL optional extension to a D&O policy and also in some Professional Indemnity policies.
For small to medium private businesses, we suggest Management Liability Insurance instead because it not only includes D&O cover but also the EPL option is automatically included.
There is a benefit to combining these policies together as often claims are brought both against the corporation and the alleged offending director or officer. Also, in joining both policies together, there is a saving on administration costs. Consequently this is passed on to you.
Is it possible to take out an EPL cover along with a full Risk Management program?
Yes. A company called Employsure offers a four pronged package:
- clients receive a complete audit of their workplace documentation,
- unlimited professional advice on workplace relations issues,
- expert representation in courts and tribunals, and
- comprehensive insurance cover if they face a claim.
Who can help?
An insurance broker's role is to act as your representative and work in your interests, seeking the best cover at the best price for you from market knowledge.
Call a good one. Call CPR – Experts who will save you.