A Guide to Employment Practice Liability Insurance

7/12/2021 12:00:00 AM

Employment Practice Liability Insurance, or EPLI as it is commonly known, protects businesses against claims made by their employees, when they believe their legal rights have been violated. The number of employees making claims against employers has seen a significant growth in recent years and due to the impact of the coronavirus pandemic - where many organisations have had to make redundancies, furlough employees or ceased trading altogether - that number is expected to grow.

What does employment practice liability insurance cover?

Employment practice liability insurance (EPLI) covers employers against various employee lawsuits including:

Wrongful termination
Discrimination
Sexual harassment
Breach of contract
Wrongful discipline
Negligence
Failure to hire or promote
Deprivations of career opportunity
Invasion of employee privacy
Illegal background check
Wrongful infliction of emotional distress
Mismanagement of employee benefits plans
Pregnancy and lactation accommodation

Trends to be aware of

There are many factors which contribute to changes in the workplaces. Some of these are external factors, which you as a business are unable to control, but you can control how your company reacts to the following areas.

Pandemic-related EPLI claims

Most organisations have had to make changes to the workplace, in response to the coronavirus pandemic, with over 36% of the population working from home in 2020 (Office for National Statistics¹, 2021). This is reflected in the top EPLI claims during the pandemic which included remote work capabilities and allegations of retaliation once employees objected to unsafe working conditions. Other pandemic-related EPLI claims included concerns about employee leave, and allegations of discrimination related to workforce changes/lay-offs.

Social movements:

Now, more than ever, employees are empowered to speak up if they have experienced sexual harassment in the workplace, thanks mainly to the #MeToo movement. According to career information website What to Become (2021), 70% of employees feel that companies are not taking sexual harassment seriously. It is also worth considering how the ongoing movement towards racial equality could be a factor in race-related workplace discrimination claims.

Diversity and inclusion concerns:

Workplace diversity can go beyond gender and ethnicity and, according to Glassdoor (2020), over 72% of job seekers said that it is an important factor for them when choosing an employer. Organisations can implement initiatives to foster a safe and comfortable environment for all employees and ensure compliance with law.

Age discrimination issues:

Did you know that, before the pandemic, almost one-third of UK employees were over 50 years old (Office for National Statistics², 2021)? However, this demographic has been severely impacted by the coronavirus pandemic, with the number of people over 50 years old looking for work more than doubling (Office for National Statistics², 2021). In light of this, it is crucial that employers are mindful of the potential for age discrimination issues to arise in the workplace.

Brexit related changes:

It is important for organisations to stay up to date and educated on the employment laws, following the end of the Brexit transition period.

What your company can do to prevent EPLI claims?

Review your policies

Take the time to go through your employee handbook and policies, to ensure you have all the appropriate policies and procedures in place. Ensure that you include a section on discrimination, harassment and retaliation, so that your employees are fully aware of the policies and procedures in place and explain transparently how they should proceed if they feel they need to make a claim.

Keep a record

Ensure that all evaluations and employee complaints are documented and logged efficiently. Keep track of any situations that arise, that result in an employee being disciplined or dismissed.

Access external factors

The coronavirus pandemic has resulted in many businesses needing to make organisational changes. Make sure to review these changes, and ensure that they are compliant with employment law, and that you implement appropriate training to all levels of managers, to help reduce the risk to your business

Management Liability Portfolio Insurance from Towergate

Even with the best training policies and procedures in place, businesses can find themselves with employment law claims. Management Liability Portfolio (MLP) Insurance provides you and your company with defence against claims made, that your standard Commercial Insurance policy doesn’t cover. We can include Employment Practices Liability Cover within your MLP insurance.

About the author

Mark Brannon Cert CII is a respected industry leader with over 17 years’ industry experience in a variety of roles within the business insurance sector. He works across a wide spectrum of insurance product and policy development, delivery and optimisation for clients, including claims, insurer relationships, marketing and communications, and risk management.