A recent study has found that unfair dismissal claims have risen by 10% a year since the introduction of the Fair Work Act in 2009. Now sitting at an average of 17,000 annual claims [Paul Oslington, Australian Catholic University, December 2014], unfair dismissal presents a considerable risk to today’s business owner.
Regardless of blame, the effect of an unfair dismissal claim on the business can be extremely damaging, both in terms of reputation and cost. In the event that the claimant is successful, costs incurred can be irreparable. The Fair Work Commission found that in 57% of cases where a payment of money was awarded, the payment amounted more than $10,000 [Resolving Issues, Disputes and Dismissals, 2014].
Under the Fair Work Act, claimant success rates have increased to 51%. The outcome of unfair dismissal cases can be difficult to predict, and even the smallest oversight on the part of the business makes it impossible for them to win. For example in Dent v Halliburton Australia Pty Ltd , Mr Dent was dismissed for breaching the company’s driving safety policy when he was found speeding in a company vehicle. The Fair Work Commission found that Mr Dent had been speeding in the company car, but concluded the dismissal was unfair as Mr Dent had not been given sufficient notice of the disciplinary meeting and was therefor denied a reasonable opportunity to respond to the allegations. Mr Dent was awarded compensation in the amount of 11 weeks wages.
Cases like this are on the increase, so it is imperative that you and your business are covered. Without adequate protection a claim against you and your Directors can have a significant impact on your cash flow and even personal assets. Management Liability insurance is designed to protect you and your company against the risks and exposures of running the company. This includes unfair dismissal claims as well other claims brought against the Directors and Officers from shareholders, statutory bodies, competitors and even the corporation itself.
Management Liability is an important part of any business insurance program. Check whether your current insurance policy covers Management Liability or whether you need specialist Management Liability cover. We have access to employment specialists, Employsure, who can review your workplace policies and provide advice and assistance on a range of employment policies and procedures. Contact us if you would like Employsure to help protect your business.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.