Employers’ Liability insurance: Increasing payouts mean employers need more than minimum protection 

Richard Willis, Managing Director, Willis Insurance and Risk Management

Richard Willis, Managing Director, Willis Insurance and Risk Management outlines  Employers’ Liability insurance.

All companies are legally required to purchase Employers’ Liability insurance, and those that flout the obligation face heavy fines as a result, amounting to up to £2,500 for each day the firm goes without cover.

Protection of around £10 million is normal and safeguards the employer in cases where a claim results from an employee’s workplace accident, or where the work carried out by a staff member leads to them becoming ill.

However, policy holders must be aware of crucial limitations to what is covered with cases relating to unfair dismissal and other issues that result in an industrial tribunal, among the exclusions.

This has become all the more important in recent weeks following changes in the amount that companies can be ordered to pay out in cases where they are found to have treated staff unfairly.

There has been a rise in the maximum total award for unfair dismissal, comprising the maximum unfair dismissal compensation, plus the maximum basic award, from £95,211 to £98,922.

Meanwhile, what could potentially become uncapped awards for claims such as discrimination and whistle-blowing, have also been introduced.

In a nutshell, employers, often operating in intense environments where cases can be brought against them for a variety of reasons, now face greater liability risk. In some instances, cases can be brought because of non-compliant behaviour by employees, and not just the company itself.

Two high-profile cases in recent months have illustrated the potentially high costs involved. In February, it was revealed the Northern Ireland Policing Board was asked to pay out £86,000 after the dismissal of an employee was deemed to have been unfair.

Meanwhile, Edward Bell, a Belfast-born man from an Irish Traveller background was awarded £300,000 after an employment tribunal in Manchester found that he had been racially harassed in the workplace and later dismissed unfairly.

To safeguard against facing potential action, it is prudent for employers to carry out a review review of all HR policies and procedures and enlisting the support of employment law experts can help to identify any gaps in existing systems.

Many businesses also seek wider protection, such as from Employment Practices Liability insurance which guards them against damages, including those awarded in cases of injury to feelings, settlements and defence costs.

Legal costs are also typically covered, along with the cost of wages between date of dismissal and the date of judgment, if the employer has to reinstate their member of staff.

Some policies also cover breaches in restrictive covenants and instances where a firm’s operating licence could be suspended, altered or revoked.

Ensuring the required levels of liability insurance is in place forms just one element of any company’s efforts to ensure they are fully compliant with all appropriate employment law.

Seeking professional guidance will help ensure this and other vital elements are not missed and ensure the company, and its employees, are adequately protected when something goes wrong.

For more information on Employers’ Liability insurance visit www.willisinsurance.co.uk

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