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So what is an "Employment Practices Liability"? Many business owners would understand public liability insurance covers the business for their Liability (Or Legal Obligation) to a third party resulting from actions of a business. What many do not understand is that Public Liability is NOT the only type of Liability a Business and their owners (or directors) are exposed to! In simple terms, Employment Practices Liabilities are the legal obligations that a business may face resulting from the activities of employing staff, such as an allegation of underpay, unfair dismissal, harrassment, failure to employ, or failure to promote to list a few. There is also the exposure for businesses who rely on middle management levels, if the middle manager does not report or fails to act on a complaint by a junior, the directors and company can still be held liabile, or at the very least must defend their actions, for the middle manager's inaction. A small business owner would be aware earlier this year the Laws surrounding Employment changed under the new regime with Fair Work Australia. For many small business owners, getting help in understanding these laws can be difficult, and failing to understand the laws can result in Costly Legal Defences and even fines or penalties for non compliance. So where can you get help or find information? NSW Industrial Relations - This website has several short videos for NSW Employers that can provide excellent information. SWAAB Attorneys - We recommend Business Owners contact SWAAB Attorney's Employment Law Division to obtain advice relating to their employment contracts. With the right contract in place, business owners can reduce their potential liability exposure when it comes to employment Law. Even with all the right advice, preparation and contracts, an employee (particularly a disgruntled employee) can lodge a complaint, or allegation against your company. This allegation, whether true or false will take time out of your business, and money away from your cashflow to defend it or set the record straight. This is when it is important to at least consider Employment Practices Liability Insurance. What does Employment Practices Liability Insurance Cover? This insurance policy is designed to respond to an Allegation of misconduct in the areas of employment law, but do not respond to Intentional Misconduct. Most policies will provide cover for the Defence and Initial Response to an allegation (such as unfair dismissal) and depending on the insurer or product, some policies also extend to include extra cover such as Statutory Liability (payment of fines or penalties), Fidelity Cover (theft of own funds or customer funds), Insolvency Cover, and Public Relations Expenses. |
