Reducing your risk
A recent case saw a real estate business successfully sued by an employee for unfair dismissal. The employee was employed on a base salary for the first 12 months, plus commissions on sales. After 12 months the employee was dismissed without any reason, meaning they would lose out on $30,000 of commissions. The employee lodged an unfair dismissal claim. The case was settled, with the employee receiving their full entitlements.
The legal costs associated with these sort of matters can be substantial and sometimes will well exceed the actual amount claimed.
One of the best ways to reduce your risk in these sort of situations is by taking out Employment Practices Liability (EPL) protection. Realcover offers this as a coverage extension to its professional indemnity insurance policy.
EPL covers your business against a range of employment-related matters, such as:
- Dismissal or termination
- Breach of any oral or written, express or implied, employment contract
- False or misleading representation, or advertising relating to employment
- Failure to employ or promote
- Unfair deprivation of a career opportunity
- Unfair counselling or discipline
- Negligent employee evaluation or performance assessment
- Workplace harassment
- Denial of natural justice
- Breach of privacy legislation
- Unlawful discrimination.
Preventing employee lawsuits
As well as taking out EPL protection, there are four main actions you can take to help prevent employee lawsuits:
- Your employment contract should set out what’s expected from all parties, including any post-employment restraints.
- Ensure your company policies and procedures are up to date and communicated to all employees.
- Make sure there are procedures in place to deal with complaints.
- Always ensure everything is documented.
It’s not a question of trust, but more a case of making sure you’re prepared for all eventualities.
While care has been taken in preparing this article, and the information in it has been obtained from sources that Realcover believe to be reliable, Realcover does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose that the article may be used. Realcover accepts no liability for any loss or damage (whether caused by negligence or not) resulting from the use of this article.