While Trinidad companies, particularly small and medium enterprises, have been slow to recognize the need for Directors and Officers Liability (D&O) insurance, the number of cases being brought has increased substantially over just a few years ago. However, coverage is limited to actions brought against named directors and officers.
In a post ‘me too” era, employees are more aware of their rights and currents trends indicate that more employers are being taken to the Industrial Court when employees feel aggrieved.
Large companies are now enquiring about Employment Practices Liability to cover this exposure. Similar in scope to D&O, Employment Practices Liability provides coverage to employers, rather than named persons, against claims made by employees alleging:
- Discrimination (based on gender, race, age or disability)
- Wrongful termination
- Sexual Harassment
- Other employment-related issues, such as failure to promote
Large companies typically have substantial experience in dealing with these issues and with the Industrial Court. However, smaller and new businesses usually lack industrial relations officers or an up-to-date employee handbook detailing the policies and procedures that guide hiring, disciplining or terminating employees or fail to adequately implement or update them.
The Employment Practices policy reimburses or pays on behalf of the employer any loss resulting from a claim first made against the employer by an employee during the policy period, for an employment practices wrongful act;
The cost of Employment Practices Liability coverage depends on a variety of factors, such as:
- number of employees
- previous employee claims
- employee turnover
- documented employment practices in place
- adequate financial statements
Coverage is usually provided on a claims-made basis. This means a claim has to be made during the period of coverage. Employment claims are often made months or even years after the alleged incident, so companies are vulnerable if the insurance coverage was dropped or if tail coverage (liability insurance that extends beyond the end of the policy period) wasn’t purchased.
Many matters now brought before the Industrial Court can be covered by the policy, even if only for legal fees, which can be substantial, particularly for a smaller company.
Please contact your Account Executive to find out more about the cover and cost of this coverage.