Employment practices liability - ForeFront Plus Chubb Specialty Insurance
PURPOSE: To insure organisations and their directors, officers, employees, volunteers and, to some extent, independent contractors
for defence costs and legal liability incurred on account of claims and prosecutions against them for wrongful employment
Key cover features
Cover for liability and defence costs of the insured organisation, directors, officers, employees, volunteers and, if requested
by an organisation, independent contractors
Wide range of wrongful employment practices covered (including: wrongful or unfair dismissal; sexual harassment; other workplace
harassment; discrimination; wrongful demotion, denial of tenure or refusal to promote; negligent evaluation; wrongful discipline;
negligent reference; defamation; invasion of privacy; retaliation against employee for whistle-blowing or exercising legal
rights; misrepresentation; defamation; failure in corporate employment policies; negligent retention or supervision; negligent
misrepresentation; false imprisonment; wrongful infliction of emotional distress
Advancement of defence costs as and when incurred
Defence costs for certain claims in which the claimant seeks compliance or restraint orders rather than monetary compensation;
e.g. an order to adapt premises to disability
No dishonesty exclusion
No avoidance or rescission for misrepresentation or non-disclosure (not even for fraudulent misrepresentation or non-disclosure).
Cover limitations only for those individuals who knew of the non-disclosed or misrepresented facts and for organisations where
particular persons knew.
Covered loss includes damages for mental anguish, emotional distress and humiliation
Punitive, exemplary, liquidated and aggravated damages, and the multiple portion of any multiplied damages award, not excluded
Covered loss includes USA front pay and back pay
Broad acquisition cover for new subsidiaries: in many cases automatically covered; new subsidiaries above certain thresholds
must be reported to Chubb, but then this will trigger an automatic 90 days (from acquisition or creation) of cover
Free consultation with well-known law firm via “ForeSight from Chubb” trouble-shooting telephone hotline (subject to time
Here are a few examples of when you may need employment practices cover:
Mothers’ working hours An employee of a magazine publisher told a tribunal that she was forced to resign after bosses refused to allow her to change
her hours to look after her new-born baby. She had previously worked alternating shifts but after having her baby she needed
to finish work at 5pm. She claimed £43,593 compensation for sexual discrimination which included £5,000 for injury to feelings.
Equality of pay A former human resources manager won £19,000 compensation from her employer in a settlement after claiming she was paid less
than a male colleague in an equivalent job. The payout came less than 2 months after new rules gave workers the right to submit
a questionnaire asking if a colleague of the opposite sex in an equivalent job was being paid more.
Retaliation The former manager of a bowling alley brought a successful action at tribunal on the grounds of sex discrimination, claiming
that she had been dismissed for becoming pregnant. The company settled the case out-of-court for £11,000. Later it refused
to provide a reference for her. She brought a second action claiming that this refusal was in retaliation for her earlier
action. This was upheld at tribunal, which awarded her £195,000.
Unfair redundancy selection A telecommunications company agreed to pay £50,000 in compensation to the parents of a former employee whose claim for unfair
dismissal was successful at an Employment Tribunal two years after his death. In the landmark ruling, the tribunal heard the
employee had been made redundant after taking time off for dialysis sessions. He was selected for redundancy on the grounds
of an appraisal, which criticised his performance and attendance in a previous job. He died after contracting a flu virus
but his parents continued with his claim of unfair dismissal.
Women bullies pregnant colleague G became pregnant and told her manager, M, also a woman. There was no attempt to adjust working practices or to make a health
and safety risk assessment. The Employment Tribunal unearthed a catalogue of vicious behaviour to G by M and other managers
– a sustained campaign of bullying and discrimination that had been targeted, deliberate, repeated and consciously inflicted,
showing a total lack of concern for the welfare of G and her unborn child. For injury to feelings, G was awarded £25,000.
As well as the company being liable, the tribunal held M jointly liable with the company, because she had aided unlawful discrimination
under the Sex Discrimination Act 1975. The case reached the Court of Appeal which upheld the decisions.
Claim by employees sacked for moonlighting Two joiners employed by a company were found working for someone else during working hours, using the company’s equipment
and transport. The company sacked them. They claimed unfair dismissal on the grounds that another employee, who had behaved
in a similar way, had been given a final warning. The Employment Tribunal found in their favour and it needed taking the case
to the Employment Appeal Tribunal for the company to obtain victory.
Inadequate English The duties of a security worker on the evening shift included answering the phone. After complaints about his ability to communicate,
he was told his English was not good enough and he was moved to the day shift which did not require answering the phone. The
day shift meant less paid hours of work and at a lower hourly rate. He sued for racial discrimination. His claim failed, although
the tribunal did find that he was entitled to reasonable notice of the changes and this had not been given.