Directors need to think about more than money; they also need to create a professional, safe and fair working environment for their staff.

However, with so many rules in place, it can be easy for a single mistake to place a director’s assets under threat. For example, liability for areas including health and safety, work practices and even cyber security could lead to unexpected costs that could affect you and your fellow directors.

Although the latest government figures show that the number of employment tribunal cases has dropped over the last five years, this does not mean costs have too. In fact, the number of cost awards made by the Employment Tribunal in 2013-2014 has risen since last year: 889 compared to 651 last year.¹

Also in the 2013-2014 statistics, the average claim for tribunals relating to unfair dismissal and discrimination was £12,482. In the same time period, the highest amount awarded for unfair dismissal was £3.4m.¹

“The number of cost awards made by the Employment Tribunal in 2013-2014 has risen since last year: 889 compared to 651 last year.”

So, while high tribunal fees have reduced the number of cases brought to court, when they are they cost more. Plus, business secretary Vince Cable said that these fees are likely to be looked at, meaning that claim numbers could soon rise.²

Awareness of the perils

Without the right cover – such as Jelf’s specialist Management Liability Portfolio – directors face a number of issues, such as:

Claims of wrongdoing, including Corporate Manslaughter or Bribery

For example, companies which have staff who spend a lot of time on the road (such as delivery drivers) have to take responsibility for their drivers.³ If a worker is involved in an accident while using a mobile phone, or by falling asleep at the wheel, it is the directors who would face the charges.

Issues with pensions, bonuses or benefits schemes

One recent example includes a case against the Land Registry⁴, which had a bonus scheme that stated employees could not get a bonus if they took too much time off. A court found that the policy singled out disabled workers, who had to take time off because of their disability.

Claims of Data Protection Act breaches

This includes claims brought against you from use of the internet, email or extranet. For example, shoe store Office⁵ was warned by the Information Commissioner’s Office (ICO) after a hacker got hold of the details of more than one million customers through a data breach. The hack showed that older personal data was being kept for longer than needed, and that it was not protected with proper passwords.

Claims of discrimination, unfair dismissal or sexual harassment

This includes HR issues relating to discipline or performance. For example, employers risk facing unfair dismissal claims relating to comments posted by staff on social media sites, or by firing employees involved in ‘whistleblowing’.

Companies could also face legal cases for victimisation in the recruitment process, as shown in the Das v Ayrshire & Arran Health Board⁶, when a former employee was discriminated against while applying for a job because they had made legal claims against the company in the past.

Investigations by regulators

This includes investigations by Health & Safety or tax regulators. As well as obvious Health & Safety risks relating to machinery and working environments, directors can also be held liable for trips and falls, fire safety, or work carried out by staff that aren’t properly trained.

Jelf’s solution offers directors protection against the costs relating to claims. Some of the features of the cover include the protection of personal assets from defence costs, corporate legal liability, data breach costs insurance and more. For more information please contact your local Jelf office.

Sources:
^{1 https://www.gov.uk/government/statistics/tribunal-statistics-quarterly-april-to-june-2014%20
2 http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2015/02/26/tribunal-cases-could-rise-again-in-the-future.aspx
3 http://www.fleetnews.co.uk/news/2013/6/3/fleets-warned-against-complacency-over-corporate-manslaughter/47204/
4 http://www.wsandb.co.uk/wsb/news/2396268/land-registry-loses-disability-discrimination-absence-case
5 https://ico.org.uk/about-the-ico/news-and-events/news-and-blogs/2015/01/customer-records-left-exposed-after-shoe-company-data-breach/
6 http://www.employmentcasesupdate.co.uk/site.aspx?i=ed25945}

Print PDF