ASK – DO YOU REALLY NEED IT?
Many national HR service providers include insurance cover for legal expenses and/or awards at Employment Tribunals as part of their ‘package’ – which inflates the cost of their service due to the fact that you are essentially paying for a Barrister / specialist to be on call 24/7. This provides ‘peace of mind’, but it can be a costly way to achieve it! We believe that, more often than not, these insurance indemnities are misunderstood and represent an excessive and unneeded cost in many cases.
Our range of HR services are more cost effective (cheaper!) and more bespoke, yet still minimize the risk of legal issues by ensuring that you do what the law, and your business, requires.
Implementing sound Contractual / Policy documentation, following correct procedures and entering into a spirit of mediation with employees can be inexpensive and should solve the vast majority of issues.
However, unfortunately there may be some occasions where a business requires the services of a dedicated Barrister/ legal specialist e.g. if you are defending a high risk, high value award case such a Disability, Racial or Sexual Discrimination claim. These types of cases are rare, and it is cheaper for most businesses to acquire these specialist legal services on a pay-as-you-go basis.
Points to bear in mind when considering whether to purchase this type of insurance or retained services are as follows:
- Draw a parallel with other business insurance decisions. How much do Tribunal awards, incurred fees and associated resources actually cost your business? Does the cost of the indemnity represent a saving on this? Do not fall into the trap of paying over the odds for ‘peace of mind’.
- Always remember that you are entering into an insurance agreement, and as with any insurer, expect them to ‘wriggle’ when it comes to a claim. For example, it is a condition of most indemnities that you contact them before making any staff disciplinary decisions. This essentially places your business in a ‘straightjacket’ and can be highly unpractical to manage.
- It is always worth asking them the question: “How many indemnity claims have you turned down or only part covered in the last year?”
- Check the small print! Does it cover both legal costs and awards? Understand which types of awards and costs are covered by the indemnity. For example, many do not cover the high value Employment Tribunal awards such as Race Discrimination or Sexual Harassment, and you cannot insure or indemnify against HSE Prosecution judgements / fines as this falls under criminal law.
If you do decide that having an indemnity in place makes commercial sense for your business we recommend going to your own Professional / Employers Liability insurer first. Due to the competitive nature of the insurance industry this is often your cheapest route. If you are a member of a general business or industry specific association (FSB, Chamber of Commerce etc), check to see if a legal expenses and/or awards cover is included as part of your membership fee.
Having said all that if necessary, we can assist clients with the following services as & when they are required:
- Purchasing insurance cover for legal costs and/or awards incurred at Employment Tribunals;
- Gaining defence representation for Employment Tribunals.
Please get in touch on 0845 331 2325 to dicuss this issue or your requirements further.