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Policy Matters - Employment Law Protection

Policy Matters - Article 2

Employment Law Protection

When it comes to Employment Legislation, companies must navigate an increasingly complex minefield of rules and regulations. Every business whether public, private, partnership, or not-for-profit, should have a risk management strategy and this strategy must take into account the potential for the business to become involved in what can be costly employment disputes.

Employers in this country must be aware not only of legislation evolved in the UK but also the effect of European Directives relating to the rights of employees.

Whilst larger companies may have a dedicated personnel department, the ever increasing duties owed by employers to employees, regardless of size or type of employer, has meant that all businesses are having to commit additional resources in this area.

For the smaller employer, responsibility often falls upon the shoulders of one or two individuals who may have to carry out a number of other equally important tasks. Such individuals may use their best endeavours to ensure things are done properly but they will often need professional guidance when they are faced with an employment or health and safety problem.

Employment disputes are becoming more frequent and more costly providing one of the fastest growing areas of corporate liability. In the UK the Employment Relations Act 1999 has considerably extended the rights of the employee against his or her employer. The publicity surrounding the implementation of the Act has increased employees’ awareness of their rights and the expectations they have of their employers.

Examples of other UK statutes that impose duties upon Employers include:

A potential employee who has been for an interview, but not employed, can bring an action against your business for sex or race discrimination or discrimination on the grounds of disability. The Employment Relations Act 1999 increased the limit on awards made by employment tribunals from £12,000 to over £50,000 for claims by employees for unfair dismissal but for sex, race or disability discrimination claims there is no limit to the amount of compensation that an Employment Tribunal can award which could run to tens or even hundreds of thousands of pounds.

The Health and Safety Executive, the Equal Opportunities Commission and the Commission for Racial Equality are official bodies who can launch investigations into businesses for any number of reasons. Businesses suddenly caught up in such investigations will often have to pay dearly for expert guidance and representation.

Editors Insurance Comment

Protection against the costs of defending an employment action can be provided by a legal expenses insurance policy but “are such policies worth having?”

Traditionally, businesses have had to jump through a plethora of hoops to successfully prosecute a claim and often find the insurer trying to thwart them at every turn rather than provide real assistance at the time it is most needed. The natural consequence of this is a certain scepticism towards this area of insurance, both by businesses and insurance brokers. The last thing a broker wants is to offer a policy to clients which is ineffective at the time they need it most!

A couple of insurers have recognised this failing in the market and have produced an employment law policy which works like any other insurance contract; a claim can be made at the point at which a loss is incurred, i.e. when an employment dispute cannot beresolved; they:-

They do not insist on prior referral to a helpline in order for a claim to be accepted but do provide extremely useful website services as part of their policy offering, which includes helplines manned by fully trained lawyers.

The policies really do work and because they cannot fall foul of bureaucratic reporting requirements they are an extremely important business management tool.

For more information on the topic covered by this article please contact Richard Rampley via email or phone 01223 720 322.

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