At the onset of the pandemic in Australia, business owners were left scrambling, doing the best they could to minimise damage to their bottom line, keep employees in the job and manage the health risks of COVID-19. Unfortunately, employment practices laws often fell by the wayside, or were misinterpreted without the appropriate legal advice.
With the Job Keeper benefit ending in March, the economic impact of COVID restrictions still being felt, and the ongoing risk of outbreaks, it is essential for business owners to carefully consider Australian employment practices laws. Failing to do so could open companies to sizeable legal action.
Employment practices risks and COVID-19
Business owners carry considerable legal responsibility when it comes to their employees. There are a number of employment practices exposures that have emerged for businesses as a result of the pandemic:
- Unfair dismissal or wrongful termination claims
- Liability risks of employees returning to work following lockdowns or outbreaks
- The ongoing risk of staff working from home
Below we discuss each of these exposures in more detail, as well as the importance of Management Liability Insurance to minimise the risk of large financial losses in a claim against your business.
1. Unfair dismissal and other employment relations issues.
DID YOU KNOW?
During the Coronavirus crisis, unfair dismissal claims skyrocketed by 70% - Fair Work Commission
While Australia is seemingly through the worst of the pandemic, the economic hangover, ongoing restrictions and end of JobKeeper are seeing many organisations focus on lowering their overheads. More often than not, this means redundancies and employees being stood down.
This troubling trend is leading to an increase in unfair or wrongful dismissal claims against companies in Australia. As a result, it is incredibly important that all businesses take extra care to closely follow employment law and seek professional legal advice when making the call to let go of staff members.
Other steps employers can take to avoid unfair dismissal claims:
- Ensure you have documented procedures for employee termination, and ensure they are followed with rigor.
- Ensure all employee statutory entitlements are paid, and paid correctly. Disagreements often emerge between businesses and employees when this isn’t done.
Other issues which can expose companies to employment practices disputes can arise from:
- Discrimination or harassment when individuals or groups of employees feel targeted or wronged.
- Biased policies when it comes to accessing annual leave, sick leave or personal/carers leave if self-quarantine is imposed.
The below claim example illustrates how businesses can find themselves embroiled in a sticky employment practices situation…even when the company has seemingly viable reasons for dismissal.
An employee of an accounting firm alleged unfair dismissal and lodged a formal claim for compensation with Fair Work Australia. Although the company had strong grounds for dismissal due to gross misconduct on the employee’s part, the case was settled prior to court proceedings. Settlement was agreed at $15,000 for compensation, and the business incurred $40,000 in defence costs, both were fortunately covered by a Management Liability Insurance policy. (Source: Berkley Insurance Australia)
This example shows how you can never be too careful, and the importance of having insurance to protect against this risk.
2. Returning to work risk: Providing a safe workplace
Another area employers may find themselves exposed, is if they fail to provide a safe work environment, and take insufficient steps to protect the health and safety of employees.
Even though COVID case levels are extremely low in Australia, risk management strategies and steps should still be taken seriously. As we have all seen, things can change in an instant.
Some COVID health and safety risk management examples are as follows:
- Staggering work days and start times
- Considering the requirements of those who need to travel by public transport, and accounting for this in who is required to return to the office
- Social distancing and hygiene protocols in kitchens, meeting rooms, lifts
- Removal of hot desking
- Desk dividers in open plan offices
Another point to note is being mindful of creating a safe mental health work environment…
Companies with inflexible work policies may be faced with mental-health related employment practices claims if they start forcing staff to return to work or, enforce a continual work from home policy. While it may feel difficult to please everyone, it is important to manage the risk by listening to what employees want, taking it on board, and having evidence you have done so.
Even if your company is not found liable through the legal process, if an employee brings a claim against you, there are still legal expenses incurred to defend yourself. The cost of mounting a legal defence alone, makes it essential to put in place clear health risk mitigation strategies.
3. Working from home risks
While many are keen to return to the office slowly, some employees are continuing to work from home. This is another health and safety risk to account for, and one business owners should have considered from the height of the pandemic in 2020.
For any employees who do work from home, it is important to ensure their workplace health and safety is considered, just like it is when in an office. Some things to consider are:
- Ask all employees to complete a workstation audit, and act to make improvement where there are issues. If due care is not shown and an employee brings a legal claim against your business, it’s important to have evidence that shows a reasonable effort was made to provide a safe working environment. For example:
- Do employees have the right equipment to complete their daily responsibilities?
- Is the area clear of electrical cords?
- Is their chair suitable, and is their screen at a suitable height?
- How is your business managing slip and fall risks in the home? Will your insurance policies cover claims of this nature given it is not in the office?
How can insurance mitigate some of these workplace COVID-era exposures?
Employment Practices Liability risks can be covered as part of a Management Liability policy or insured on a standalone basis under an Employment Practices Insurance policy.
Management Liability Insurance
Management Liability Insurance is designed to protect small and medium businesses against the risks and liabilities of running a business. This includes allegations arising from employment practices and associated legal defence costs. For example, unfair dismissal, wrongful termination, bullying, harassment etc. Click here to read more on Management Liability.
Employment practices liability (EPL) Insurance
EPL Insurance is designed to protect businesses against claims alleging violations of employment law. This includes claims for discrimination, sexual harassment, wrongful termination, and denial of a career opportunity brought by employees, former employees or potential employees. It can also protect you by covering investigation and defence costs and any compensation that may be ordered payable as a result.
Many policies will exclude cover for bodily injury, however this can sometimes be amended to cover allegations of a mental injury.
When assessing purchase of an EPL Insurance policy, it is important to refer to your policy wording or speak to a qualified insurance broker who can advise you on coverage available and what is suitable for your personal circumstances. Click here to read more on EPL Insurance.
A Whitbread specialist can assist
New norms created by COVID-19, is exposing business to different types of risks they never would have dreamed of in years gone by. This makes it all the more important to take stock and reassess your exposures, to ensure your insurance cover moves with the times.
To understand how best to protect yourself against liability claims of this nature and a suitable insurance solution for your business, speak to a Whitbread business insurance specialist who can provide advice and make suitable recommendations for your circumstances
If you require any further assistance, or have any queries. Our team are here for you to achieve the best possible outcome.
This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.