New Government, New Directions- Employment Law
Raymond Silverstein Employment Partner at Browne Jacobson LLP and Hamza King, Underwriting Team Member at Rising Edge shine a light on what the Labour Government’s Employment Rights Bill means for EPLI policies.
The Browne Jacobson Analysis
The risk landscape is changing fast for employers with significant new employment law in place and on the near horizon.
The Employment Rights Bill sets out 28 employment law reforms. A highly respected Labour Law KC recently wrote, “I suggest that the Employment Rights Bill is a revolution”, and it does not stop there. A number of other proposed changes fall outside the Bill as outlined in the Government’s policy paper “Next Steps to Make Work Pay”. The Government has also announced consulting on the Equality (Race and Disability) Bill. Back in the present, the newly introduced anticipatory duty on all employers to take reasonable steps to protect staff from sexual harassment at work, including the work-related environment, is now in force as is the new uplift to compensation. Every employer therefore needs to re-evaluate their approach to preventing workplace sexual harassment to protect staff and the organisation itself.
This direction of travel was highlighted on 25 October 2024 when the FCA published its “Culture and non-financial misconduct survey – findings” following its survey last February.
Two findings in particular should make most employers review and improve their practices and policies to protect staff and reduce risk.
· Over one third reported bullying and harassment
· Over one fifth reported discrimination
The findings may surprise some given the regulated nature of the sector and may point towards worse workplace cultures elsewhere.
In addition to getting “their house in order” to meet the changes, employers will be looking for guidance and assistance on them from brokers and others to help reduce their risk in this increasingly challenging landscape as well as help with finding the right EPLI cover.
The Rising Edge Analysis
This Bill will have a substantial impact on employment contracts, changing the expectations employees have of their employers. Employment practices liability insurance (EPLI) policies must be carefully reviewed to ensure they provide adequate coverage in this changing landscape. A good starting point for policyholders and brokers is to always review the key coverage definitions: ‘Claim’; ‘Employment Practices Wrongful Act’; ‘Employee’; ‘Insured’; and ‘Loss’.
Given that the establishment of the ‘Fair Work Agency’ could lead to an increase in employment practices related regulatory investigations, it is essential to assess whether the definition of ‘claim’ includes employment-related regulatory investigations against the entity and/or its director/employees.
The new laws aimed at preventing sexual harassment, particularly third-party harassment, may also result in a rise in sexual harassment claims from non-employees. This raises the question: does the policy’s definition of ‘Employment Practices Wrongful Act’ cover these scenarios? Extending coverage to include third-party claims could also be considered to mitigate this potential risk.
Globally, there is a trend towards personal accountability in liability claims, with regulatory agencies and claimants increasingly targeting individuals. As this shift continues, it will be important to ensure that the definition of ‘insured’ includes both the entity, and its employees/directors.
While many of these reforms are still a year away and subject to extensive consultation, it’s clear that the Labour Government is committed to reforming employment law. This will undoubtedly influence future employment claims trends.
These are just some of the key areas that should be carefully reviewed to ensure EPLI policies provide adequate coverage in this evolving employment landscape.
To hear more current thinking and to join the discussion on the new Employment Rights Bill and what it means for the EPLI cover you write, join us for this co-hosted breakfast event on Tuesday 19th November at the offices of Browne Jacobson LLP.
Tickets for this event are limited, register for yours here.
Disclaimer.
The opinions expressed above and at the event are those of team members at Browne Jacobson and Rising Edge. They are not advice.