HR & Employment Law Insights

Helping family businesses, start-ups, charities, social enterprises, and other growing or established businesses throughout the UK make sense of HR and Employment Law challenges.

3 Common Mistakes of Employment Tribunal Insurance

Employment law is a complex area full of loopholes and potential liability, leaving employers scrambling for protection. This only benefits those in the tribunal insurance field because most businesses can’t afford the time, expense, and hassle of an employment tribunal. This means that they sell more insurance because employers don’t want to consider the bad publicity or expense should something go wrong.

But, what is employment tribunal insurance? And for that matter, what are some of the most common mistakes employers are making with it? 

  

What is Employment Tribunal Insurance?

Employment tribunal insurance is insurance in various forms that is meant to protect against tribunal claims. This might mean that you carry insurance for all legal and compensatory costs arising from a tribunal claim to potentially just the legal costs of the tribunal.

The problem is that it’s difficult for most employers to quantify what a claim is worth. Because of this, many companies secure expensive tribunal insurance policies to ensure they’re covered in the event that something does happen. A more significant problem is that many employers don’t need insurance or don’t need as much insurance if they have proper HR policies and procedures in place. Moreover, costs aren’t typically as expensive as most expect.

So, what are you supposed to do? The best advice is to get familiar with the most common mistakes employers make to ensure you don’t do the same. Below, we detail 3 of the most common mistakes you may already be making.

 

Mistake 1: You May Not Need Tribunal Insurance But are Still Paying for it

No one purchases insurance and fails to take measures to prevent using it. For example, if you had a facility by a river, you wouldn’t watch the river flood without taking steps to protect your building. So, why shouldn’t the same logic apply to people in your workplace?

It’s important that before you just decide you need insurance, you evaluate whether you actually do. Typically, it’s best to reform HR practices to protect yourself against tribunals before you resolve to purchase insurance to pay for it.

 

Mistake 2: Your Costs Aren’t All Covered

The cost and time spent handling a tribunal claim are more than substantial. And, while many companies pay for insurance to protect against such an occurrence, they’re surprised to find out when a tribunal claim proceeds that their insurance isn’t going to cover the entire amount.

Keep in mind that your staff will also spend a lot of time preparing for and otherwise handling the tribunal. More importantly, common knowledge of the tribunal is likely to impact employee morale and further diminish business operations.

It’s always best to turn to HR practices and solutions before assuming insurance is the best protection against tribunal costs.

 

Mistake 3: Assuming Insurance Companies Will Pay Because You Have Coverage

You purchase tribunal protection because you assume the insurance company will step in and pay when they’re supposed to. However, there are many “get out” clauses in this particular type of insurance, meaning you may pay for your company to reject your claim.

Most often, claims are invalidated if an employer doesn’t follow every last rule accordingly. Consulting with an HR professional can help with this problem, but most HR consultants eliminate the need for insurance altogether.

 

Are You Making Tribunal Mistakes?

If you’re making any of the mistakes above, you’re throwing away money and giving your company a false sense of security where one doesn’t, or shouldn’t, exist. As such, it’s best for you to choose a knowledgeable HR firm, like The HR Booth, to address underlying issues that diminish the need for tribunal insurance, to begin with.

If you’re interested in learning more about tribunal insurance mistakes, have questions, or are interested as to what our services entail, contact us on 01383 427325. We look forward to speaking with you and clearing up any lingering confusion on the topic.