In the following examples, legal costs of defence of action and awards made against the company or its employees would be covered by an Employment Practice Liability Policy.
An employee brought an action against her former employer, a restaurant chain, alleging constructive dismissal in allowing her to be exposed to sexual harassment by a member of the public
An employee brought an action against her former employer, a small IT company, alleging wrongful dismissal and racial discrimination following redundancy. The employee alleged she was unfairly treated differently to employees whose services were retained.
Personal claims against individual directors and officers can be brought by staff who may allege that they were discriminated against (age, gender, religion etc) or had their employment terminated unfairly
A marine and transport services company made the difficult decision to reduce the numbers of its staff. Business volume had declined and this was the only way forward. Upon receiving notice from the company, several members of staff consulted an “employment practice lawyer”, and they began a legal action against the company and the individual directors responsible for their dismissal.
At the same time, a different member of staff who had also been dismissed began a separate legal action. Her allegation was that one particular director had always discriminated against her on grounds of her being female and of a differing religious faith. She considered that this was why she had been made redundant
D&O underwriters were approached and lawyers appointed to defend the allegations against the individual directors. An allocation of costs was agreed for the defence of the company (not itself insured under a D&O policy) and the defence costs for the “insured persons” i.e. directors. At the subsequent employment tribunal, the individual directors were cleared of any wrongdoing and the company reached a settlement with the former employees. D&O defence costs for the individual directors were significant.
