What is employer indemnity insurance?
Employer indemnity guide
Employer indemnity is available to cover certain awards made to current or former employees, who succeed in their claim before an Employment Tribunal. The amount is decided by the Tribunal where it is believed the claimant (employee) should be compensated for matters such as their loss of earnings or unfavourable treatment. It also extends to health & safety and other regulatory prosecutions, as well as covering the employers’ costs of dealing with and/or defending such prosecutions.
Fortunately, businesses can now protect themselves with this type of indemnity insurance. Peninsula's employer indemnity insurance policy, provided through Irwell Insurance Company Limited, is authorised and regulated by the Financial Services Authority (FSA). It has a high upper limit for a single event and for a policy year. As you might expect, once in place, this takes the weight off the shoulders of many employers, because even if the worst happens, they will still have support and cover, subject only to policy conditions and advice guidelines.
Peninsula’s employer indemnity insurance will cover most awards (on the basis that advice is followed and policy conditions are met)
- Peninsula’s fees for handling a tribunal
- Costs incurred in collective and individual claims
- Basic pay and compensation awards (but not redundancy payments)
- Costs in Health and safety cases
- Awards in unlawful discrimination claims
- Awards in Unfair dismissal cases, unless the employer can demonstrate there were reasonable grounds for dismissal
This final example is now very important. With the default retirement age being scrapped in 2011, employers cannot now use retirement as a reason for dismissal and will have to rely on one of the other potentially fair reasons e.g. capability, conduct etc. Experts believe this could lead to a rise in unlawful dismissal cases, so having the security of indemnity insurance could mean fewer sleepless nights.
Protecting your business
Of course, prevention is always better than cure, and sometimes it won't be necessary to have to rely on the employer indemnity insurance. In the best case scenario, Peninsula's expert advice on all employment law and health & safety matters will mean that clients never even progress to the tribunal or court stage. For example, our advice and resources cover employment law and working time regulations, effective health & safety management, tax advice and more.
