Search for insurance help

Employment Practices Liability Insurance Explained

Business Insurance Liability Insurance Small Business Insurance Insurance Claim Professional Services Insurance Legal Services Insurance Professional Services for Trades Insurance

Employment issues are a key concern for business owners. As the legislation around employment law increases employment-related risk is becoming more complex and more common.

Employers are at risk of being held liable for the decisions they make regarding employment, promotion, and dismissal, the procedures they follow, and the type of working environment provided for employees.

What is Employment Practices Liability Insurance?

Employment Practices Liability insurance also known as EPL provides cover for actions taken by employees against employers. These could include a range of issues that relate to employment including alleged discrimination, unfair dismissal, constructive dismissal, sexual harassment, and bullying.

EPL insurance covers you for the legal cost to defend these allegations and claims as well as damages if the claimant is successful.

Why should I consider EPL insurance for my business?

An employment-related claim can be expensive to defend putting pressure on your cash flow. Mistakes, oversights, and miscommunication can happen in any business exposing employers to liabilities relating to their responsibilities to their employees. It is worth noting that these types of claims can come from perspective, past or current employees whether they have been employed on a full-time, part-time, or casual basis.

Employment-related claims against your business also have the potential to create substantial damage to your brand, reputation, or culture and may even spark media attention and public scrutiny.

What does EPL insurance cover?

Employment Practices Liability insurance covers allegations involving:

unfair dismissal,
harassment, bullying, and discrimination,
wrongful dismissal,
constructive dismissal,
workplace defamation, and

generally covers you for damages and compensation, claimant costs, settlements, and defense costs. In some cases, the policy will respond to cover investigation costs and penalties.

What doesn't EPL insurance cover?

Losses arising from claims against you that relate to:

Management Liability Insurance

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

Details Get Quote

Business Insurance

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

Details Get Quote

Business Package

Purchase up to six products under one Business Insurance Package.

Details Get a quote!

Losses arising from claims against you that relate to:

Under-paying employees' wages or employee benefits or entitlements (i.e.: redundancy or superannuation payments)
Bodily injury claims
Criminal proceedings
Fraud and dishonesty
Prior or pending claims (i.e.: claim arising before the period of insurance)

EPL Claims

Australian insurers cover and defend thousands of ELP claims each year and the numbers are increasing, as is the compensation being awarded by courts.

Below is a shortlist of actual claims that have occurred recently - all were covered under the business owner's EPL policy.

Bullying and Harassment

An employee alleged bullying and harassment by another staff member. The employer failed to address the complaint or comply with its own bullying and harassment policy. The court awarded damages totaling $77,000 to the employee.

Unfair Dismissal

An employee of an accounting firm alleged unfair dismissal and lodged a formal claim for compensation with Fair Work Australia. Although the business owner had strong grounds for dismissal due to gross misconduct the case was settled prior to court proceedings. The settlement was agreed at $15,000 for compensation, and the business owner incurred $40,000 in defence costs.

Wrongful Dismissal

A senior employee was dismissed after making complaints of bullying, racial and disability discrimination, and aggressive conduct by the Managing Director. An action was commenced in the Federal Court and the matter was settled for a 6-figure sum.

Constructive Dismissal

A manager claimed he was forced to resign after being poorly treated by his employer. He claimed he was shouted at by directors, that his management capabilities and confidence were undermined in front of staff and that problems he escalated were ignored. The claim was successfully defended but cost $35,000 in legal fees.

Unfair Dismissal

A pregnant employee is dismissed for non-attendance. The manager who dismissed her says he was not aware of her pregnancy and the company fails to reverse this decision when the employee produces confirmation from her G.P. The case is settled for a 5-figure sum.

The above information is very general in nature and should not be considered as personal advice, for a more tailored discussion about your circumstances please call us for a chat.

REEF INSURANCE BROKERS PO BOX 750 Bungalow Q 4870 Mob: 0473 007 606 hello@reefib.com.au reefib.com.au

The above information is very general in nature and should not be considered as personal advice, for a more tailored discussion about your circumstances please call us for a chat.

Management Liability Insurance

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Reef Insurance Brokers Cairns and Tablelands, ABN 48646410335, AFSL 327131