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Don’t Be Wrong-footed By HR Slip-ups

  • Adroit Insurance and Risk
  • May 18, 2016

HR slip-ups are costly. No matter how stringent the HR processes you can never completely avoid the risk of claims against your company by employees.

In fact, in 2014-2015 there were 11,125 unfair dismissal applications recorded in Australia, which is almost double the figure from 10 years ago. Proving the ease in which unfair dismissal applications can now be brought against employers in Australia.

Many companies feel that employment practices liability doesn’t apply to them, why should it? They haven’t done anything wrong, they follow all the guidelines and do not intend to ever stray from these practices. But accusations will be thrown, wrongly or rightly, and defense fees are expensive.

It is also a fact of life that all managers and business owners are prone to the odd mistake and poor judgment call, they’re only human after all.

That said, some of these mistakes and slip-ups can be particularly devastating. Things such as not taking complaints seriously are judged particularly harshly by the tribunal in this day and age. For instance, recently a woman made several sexual harassment complaints to her employer, only for them to be either laughed off or dismissed. This example of mismanagement led to a complaint with the Fair Work Commission and the woman was subsequently awarded over $1m in damages.

Such a large claim can have dramatic and far-reaching consequences on a business.

For one, it can create bad publicity, damaging the brand and affecting the business’ ability to prosper in the future. Additionally, these claims can lead to some very tricky financial consequences. Claims like the above can really impact on cash flow and sometimes make it impossible for businesses to recover, particularly in the event of lengthy and costly litigation.

Fortunately, employment practices liability (EPL) insurance can limit this exposure. EPL gives business owners and managers an added ‘safety net’, helping them deal with the consequences of HR mismanagement.

We always say, “you can’t control the playground”. However, you can protect yourself and employment practices liability is an important part of having comprehensive management liability protection.

For more on Management Liability, check out our Management Liability Essentials kit – it’s free to download and features some top tips from our expert risk advisers. It’s a must read for business owners and managers alike.

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