Factsheets | Services for Business | HR Personnel Plus

Frequently Asked Questions

What is the Employer Protection Package?

It is a seamless combination of our employment law services and insurance that provides businesses with most cost effective way to remove the burden of employment and health and safety legislation (if the latter is appropriate).

I'm a good employer - why should I worry about the improbability of an employment dispute?

The chances of being involved in an employment dispute are already higher than your business incurring a serious loss from fire or theft. You readily insure your assets against traditional perils so why would you leave your balance sheet exposed to this increasing threat? You will see from your local newspapers that companies are having to regularly pay out for employment disputes and that it is not unusual for awards of in excess of £50,000 to be imposed by tribunals.

Newspapers focus on the extraordinary, how much is seriously at risk?

The number of claims lodged with the employment tribunals increased by just over 15% for April 2006 to 2007 (132,577 claims lodged) against the previous year. The figures for April 2007 to 2008 have yet to be published but an increase is expected again and with the current waive of redundancies the 2009 figures could see even greater increases. Awards for unfair dismissal have increased beyond £60,000 and awards in relation to discrimination are still unlimited; if you take into account the legal fees required for your representation as well then your business could be exposing its balance sheet to serious and possibly crippling financial losses.

I am only a small business with a few employees so I'm not high risk.

Employment legislation applies equally to all employers regardless of their size. Unlike big organisations, who can budget for in-house HR advisors and comprehensive risk management, smaller businesses employing less staff are at greater risk as they lack the management time and resources to effectively manage their staff. Fines, penalties or awards for breaching legislation are not calculated in consideration of what a business can afford and this puts smaller businesses at greater risk as they are often unable to withstand the un-budgeted and costly outcome of a dispute with just one employee.

How easy would it be for one of my employees to bring a claim against me?

It has never been easier and employees now have a greater awareness of their rights and how to play the system. With today's information on the internet, solicitors buying claims (no win no fee) and the Citizens Advice Bureaux (alongside many other free advisory services), employees need to pay nothing and do very little to lodge a tribunal claim against you. Once you have received notice of a claim you have to respond correctly and the costs then begin to mount.

How much can an employment dispute cost me even if the employee is just trying their luck and I have done nothing wrong?

AIt will cost more if you handle the early stages of an issue with an employee incorrectly. The cost of getting a solicitor to prepare a response to a claim by an employee (ET3 Form) is in the region of £1,000 and if the case progresses towards tribunal another £2,000 - £3,000 can easily be spent as the case progresses - whether on solicitor fees, interview attendance or other costs such as medical opinions. If the case does reach tribunal then the average cost of just one day in tribunal is £2,000. So you can see in monetary terms even a simple case resulting in 1 day at tribunal can cost £5,000 - £6,000. This cost does not take into account the wasted management time, business disruption, staff moral issues and bad publicity that could result from a dispute.

Surely if someone is just "trying it on" they will have to pay our costs once it has been proven their claim is unfounded?

Employment tribunals do not work the same way as other types of litigation. The employee can have their dispute heard in tribunal at no cost and your representation costs are normally not recoverable. Also the new grievance and disciplinary rules mean that if you have a made a procedural error in the handling of even those unfounded claims a tribunal is likely to find against you. Even if employers win at tribunal they are never really winners.

How does the package work?

It delivers a dedicated and effective fixed cost employment risk management solution that makes compliance easy and unexpected costs from disputes a thing of the past. In short we make sure you are compliant, we give you expert advice to help manage your staff in a way that best for your business and we protect your business from the cost of employment disputes.

I already purchase a similar service through an HR company. Why is yours better?

We are confident that because we are local, experienced solicitors whose primary duty of care would be to your business we will far outperform any other solutions in the market place. In addition to the expert personal nature of our advisory service the employment disputes insurers have authorised us to handle any claims on your behalf under the policy, this means you have seamless risk management and insurance protection that you can be certain of.

We would be happy to talk to you about the comparative advantages of the package above your existing arrangements should you require.

What does the employment disputes indemnity insurance offered as part of package do and how does it work?

The policy will cover the costs of tribunal awards and/or cost of settlements agreed as a result of conciliation proceedings arising in respect of a dispute with a previous, existing or prospective worker. It also covers the legal fees incurred by us in handling an employment dispute and any third party costs or disbursements incurred. Please note that not all employment awards are covered by the policy.

The level of cover will have been selected by you at the time of purchase and will be stipulated in your insurance cover note. This will include the applicable excess and limit of indemnity in respect of each and every claim.

It is a condition of the insurance that you follow our advice.

A full policy wording showing terms and condition is available if requested.

If you give such good advice and I have all the right employment contracts and procedures why should I need insurance?

We regularly see cases where making the right decisions as an employer is not enough to prevent claims arising, whether it is as a result of the actions of rogue managers, or just disgruntled employees. Unfortunately some employees are becoming experts at playing the system and spurious claims can still incur substantial legal fees and often require settlement as the most effective method alleviating a dispute.

It is important to note that under discrimination legislation there is a presumption that employers are liable for discriminatory acts carried out by their employees whether done with or without their knowledge. Awards for discrimination are unlimited.

For this reason employment disputes indemnity insurance is provided as part of the package. This protects you from unforeseen legal costs, settlement payments and possible awards of compensation that are not budgeted for.

I have a legal expenses policy that covers employment disputes already so why should I switch to this?

Unfortunately it is common for traditional legal expenses claims to fail because the insured has breached their policy conditions by not having adequate employment contracts or practices or having inadvertently taken an action that insurers deem to have compromised the defence of a claim. Unless you have had a claim you will probably not be aware of this problem and you should be aware that by the time this comes to light it is too late.

If you are interested in finding out more about the pit falls of buying legal expenses insurance please see the last question of these FAQ's.

Having an insurance policy that covers the legal costs and compensatory awards involved in an employment dispute does not stop the disruption to my business, bad publicity or wasted time by our staff in having to handle the dispute.

Because you are using our advisory services when any staffing decisions are made we are able to catch employment issues at the earliest opportunity or even before they start. This stops many claims from developing, leaving you to concentrate on running your business. The package is specifically designed to settle problematic disputes prior to tribunal further reducing wasted time and saving you from becoming embroiled in lengthy and difficult disputes.

Will the scheme affect my client solicitor relationship?

The basic answer is "no". We will continue to give you independent expert advice and to act only in your best interests. We can advise you commercially and in addition clearly explain to you from the outset how your insurance cover will react when you are contemplating all your options for handling employees.

How much does it cost?

A lot less than you think - just consider the cost of defending your business, funding unbudgeted compensatory awards and the disruption to your business. We are confident that you will find the cost of this essential protection excellent value. Remember, directors can personally be at risk for failing to implement compliant procedures that protect employees' rights - can you afford not to talk to the experts?

Why shouldn't I buy employment disputes legal expenses insurance without properly risk managing my employment practices?

Nearly all polices exclude claims if there are no reasonable prospects of mounting a satisfactory defence (this is determined by your insurer). If you do not operate with the following employment practices you will be very lucky to have your claim covered and you will find out when it is too late!

Clear set of terms and conditions
Clear employee handbook
Clear policies and procedures
Clear letters and forms
Clear database and records
Continuously updated documents

Unless you apply risk management in these areas you are buying insurance that will not be effective.

In addition if you take any action that could harm the defence (again in the opinion of your insurer) you will negate your policy cover. For this reason it is essential to have access to qualified advice on your day to day employment matters.

Your reactionary insurance may cover the consequence of a financial loss but it will not cover:

Business disruption & wasted management time
Bad publicity or staff relations

These can be very substantial costs to a business that only early professional advice and adequate risk management will avoid.

Your insurer may offer a helpline but this may only go as far as advising you to protect their insurance policy.

Without an adequate advice line how can you be sure:

That you receive independent advice on the consequences of business decisions relating to your employees? It is easier for insurers to advise you to take no action rather than expose their policy and this can be restrictive.
Exactly how your insurance cover will be effected affected prior to taking any action?
You do not negate your insurance protection unwittingly when an incident arises?
What you knew last year is the same this year, as employment legislation is constantly shifting?
If you have employment disputes insurance which assists you in handling your claim? Many clients who have legal expenses insurance still have to pay an employment solicitor to handle their claims and present their interest to the insurers.

We hope that these questions and answers have assisted in explaining some of the key benefits of this professional package. We strongly believe the combination of expert solicitors and insurance provides our clients with the best solution to this growing problem area for businesses. If you have any further questions that do not appear in this document we would be more than happy to answer them for you.

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