What steps should my business take to minimise the risk of a COVID-19 related Employment Practices Liability (EPL) claim?
Employers are now facing an increased risk of COVID-19 related Employment Practices Liability (EPL) claims as employees return to the workplace and in some cases, resume normal operations. It is predicted that this will result in an increase in EPL claims arising from furloughs, lay-offs, employees alleging employers failed to take proper steps to reduce health and safety risks, and discrimination against employees with COVID-19 concerns including their decisions of which employees should return to the office.
There has been a 25% increase in the total number of employment tribunal cases over the last five years. In 2019/2020, redundancy cases were the jurisdictional category with the highest level of claimant success, with 48% of cases in this category recording a ‘successful at hearing’ verdict. Employees that win their case are likely to be granted compensation by their company. This is partly due to tribunal fees being abolished on 26 July 2017 which has led to a yearly increase with claims being made as now an unhappy employee can use the tribunal system without it costing them anything.
COVID-19 is likely to lead to a rise in redundancies, another EPL risk. Whilst many redundancies were avoided due to the government’s furlough scheme and other short-term measures, there will sadly still be redundancies in many industries due to the impact of the pandemic which has resulted in either business closures, a workplace closure and/or reduced requirements. For example, claims for unfair dismissal and/or discrimination as to redundancy selection, claims concerning redundancy payment entitlement and claims in relation to collective redundancy consultation duties. Below, we have listed guidance that an employer should consider before making an employee redundant.
Key considerations for employers prior to making a redundancy dismissal
- On 24 September, Rishi Sunak announced the government’s plan to protect jobs and support businesses over the coming months under their Winter Economy Plan, which includes a Job Support Scheme. This scheme will protect millions of workers, extend the self-employment income support scheme and provide a 15% VAT cut for the hospitality and tourism sectors. To find out more and whether your business is eligible, visit here.
- Your organisation must ensure that any selection criteria is fair and non-discriminatory.
How can an employer minimise the risk of an EPL claim?
- To reduce the risk of a claim arising from dismissal, employers should ensure that the ‘reason’ for termination is fair and that your business has acted reasonably in treating that reason as sufficient in justifying the dismissal. Redundancy would be classified as one of the potentially fair reasons. For an employer to have acted impartially in dismissing an employee by reason of redundancy it should engage in a period of consultation, adopt a fair selection process using objective criteria and consider suitable alternative employment within the organisation.
- EPL insurance provides a legal defense for allegations made against a business. During a time when redundancies are on the rise from COVID-19, it is essential that your organisation has the appropriate insurance protection in place that can assist with managing future costs. If you are a client who has any questions about your individual insurance programme, please get in touch with your usual Griffiths & Armour contact or click here to submit your enquiry.
- One of the ways to avoid an employment tribunal is to have the appropriate training and procedures in place. Businesses should offer training for their HR team and those in managerial positions on the basic requirements of employment law and advised on how to handle grievances respectfully.
- It is essential that your business has the correct documentation in place. This includes a contract of employment and a formalised set of policies and procedures. Documentation is a key factor in any claim raised and having poor or no documentation leaves your organisation with no real defense. Clear documentation, fully categorised and in chronological order, is hard to argue against. Sadly, in many cases, organisations do not have this in place, which is where EPL insurance provides integral protection.
We are always interested to hear your views so if you have any questions or comments on this article, please get in touch with your dedicated insurance broker at Griffiths & Armour or alternatively, click below to submit your enquiry.
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