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Employment Practice

Employment practices liability insurance

Employment practices liability
There is NO LIMIT to the compensation that an Employment Tribunal may award following race, disability or sex discrimination. There is also no limit on whistle-blowing claims. Compensation following unfair dismissal may be as much as £55,000 plus a basic award based on length of service.

Increasing claims
In recent years there has been a significant increase in the number and cost of employment related claims due to many factors including:

  • Greater awareness by employees of their rights
  • Action from groups (e.g. Campaign for Racial Equality)
  • Re-interpretation of existing legislation
  • Increasingly more stringent legislation for employers
  • Proliferation of 'No Win – No Fee' agreements

Employment liabilities
Employers are liable for discrimination not only by the company’s directors and management, but also by employees acting on their own initiative, unless reasonable steps have been taken to avoid it. Furthermore, if an employee suffers harassment by a third party, such as a client or supplier, the employer again becomes liable unless reasonable steps have been taken to prevent it.

Employment practices liability insurance
Employment Practices Liability Insurance provides defence of an action being brought by a complainant and payment of any damages awarded. It can also include cover for criminal prosecutions and any administrative or regulatory proceedings, (though cover can not include fines or penalties imposed).

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Who is covered

  • Directors, officers and employees
  • Independent contractors
  • Subsidiary companies
  • The insured organisation

What is usually covered

  • Defamation
  • Discrimination based on sex, race, disability, religion or politics
  • Failure to employ or promote
  • Harassment
  • Injury to feelings
  • Misrepresentation
  • Whistle-blower retaliation
  • Wrongful deprivation of a career opportunity
  • Wrongful disciplinary action
  • Wrongful infliction of emotional distress
  • Wrongful or unfair dismissal

Cover can also extend to include claims for discrimination or harassment brought by non-employees, customers, clients, suppliers or vendors.

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Examples of claims

  • A 58 year old accounts clerk who had been bullied by her manager over a five year period suddenly walked out. She claimed constructive dismissal. She was awarded £48,000.
  • An Employment Tribunal awarded a former employee of a City Council £67,000. The former part-time Housing Officer told the Tribunal how a change of role sent her into a downward spiral because she had not been trained to cope.
  • A 58 year-old police officer was dismissed whilst on sick leave. He was awarded £110,00 for disability discrimination and unfair dismissal.
  • An Asian computer operator was awarded over £350,000 for persistent racial discrimination over a period of time.
  • A former detective constable was awarded £184,000 for compensation for sexual discrimination. She claimed that advances she received from a sergeant, which she continually rejected, made her life miserable.
  • A single mother who lost her airport job was awarded three years’ pay by an Employment Tribunal for unfair dismissal and sex discrimination.
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