Employment Practices Liability

1. Employment Practices Liability Presentation to UMAL By Chris Hewitt19 May 2009

2. What are the key issues confronting employers in the current environment? •  Cases always attract high profile – reputational risk. •  Legislation is continuously evolving. •  The bear traps (Employment Acts): • Sex Discrimination Act • Race Relations Act • Disability Discrimination Act • Employment Rights Act • Awards on the increase • Compensation in the following areas uncapped: • Health and safety • Whistleblower legislation • Discrimination or wrongful dismissal

3. What is on the horizon? • Age Discrimination – Rewriting of the rules • Foreign citizens – EU • Increase in legislation

4. What should you be doing to minimise/ manage your exposures? • Comprehensive employment hand book • Continuous staff training in the following areas: • Recruitment • Training • Pay and benefits • Management skills • Employee relations – managing and retaining staff • Discrimination • Harassment • Unfair dismissal • Maternity/paternity • Disciplinary procedures • Be aware of the legislation changes – employ specialists • All employment issues to dedicated team

5. What solutions are available to manage your risks? • Don’t have any employees!!! • Good risk management • Insurance – Employment Practices Liability (EPL) policy covers the company and employees

6. What is Covered? • Damages (including injury to feelings), judgements, settlements, defence costs, legal representation expenses and awards of claimant’s costs as well as pre- or post- judgment interest; • Cost of paying wages from date of purported dismissal to date of judgment in the event that the company is ordered to re-instate or re-engage worker; • Punitive and exemplary damages where insurable by law; • Acts committed prior to inception of the policy; and • Acts worldwide (except USA which can be added by endorsement)

7. Who is covered? • The company; • Its subsidiaries, including automatic cover to subsidiaries acquired or created during the term of the policy that increases the total number of workers up to 20%; • Past, present and future directors and officers; • Spouses, estates, heirs and legal representatives of directors and officers; • Past, present and future workers; and • Individuals who are not ordinarily considered workers (including independent contractors, agency workers or secondees) This is added by extension to the standard policy.

8. Who is included in the definition of worker? • Worker is broadly defined in employment law, such as the Employment Rights Act 1996. Rights such as protection of wages, national minimum wage and flexible working hours are all available to workers, not just employees.

9. What wrongful acts are covered? • Wrongful or unfair dismissal, including constructive dismissal; • Breach of oral or written or implied contract; • Discrimination, whether based upon any category currently protected by law or that becomes protected by law during the term of the policy; • Harassment of any kind, or the alleged creation of a harassing workplace environment • Retaliation, including: • any act of discrimination comprising victimisation • detrimental treatment because a worker has asserted an employment related right • detrimental treatment on grounds relating to union membership or activities

10. What wrongful acts are covered? • Breach of data protection laws; • Failure to provide accurate work references; • Wrongful discipline or demotion; • Wrongful failure to employ or promote or wrongful deprivation of career or training opportunities; • Defamation, humiliation, invasion of privacy or false imprisonment. • Includes cover for “any actual or alleged employment-related breach of duty whether arising under statutory law or common law or otherwise”.

11. What constitutes a claim? • Broad definition of types of acts that constitutes the basis of a claim, including: • a written demand; • a civil proceeding; • an arbitration proceeding; • a criminal prosecution; • a legal administrative or regulatory proceeding; and • an employment investigation.

12. Other highlights of EPL • Extension of cover for claims of harassment or discrimination brought by third parties (i.e. non-workers such as customers or clients of the company). • Extension of cover for outside directorships held. • Additional time for reporting of claims of 45 day after the expiration of the policy period. • Provision to advance defence costs up to the policy limit. • Availability of discovery period on a bi-lateral basis. • No retention applied to claims brought solely against individual insureds • Retention reduction of 50% available for election and completion of Acas Arbitration Scheme as respects a claim.

13. The Reality Employee rights are set to continue to strengthen, further increasing the need for employers protect themselves against the potential financial loss an employee claim could incur.