As a business owner, we are sure that from time to time you have been called about Tribunal Indemnity Insurance; and how it protects your business in the event of being taken to tribunal by a former employee.

If you’re outsourcing your HR services you are likely to have been told that tribunal indemnity insurance is a necessity, or have been strongly encouraged to take part for the sake of  ‘peace of mind’. As HR Consultants in Manchester, we would like to outline the options and leave up to you to decide whether it’s right for you.

What is it?

Tribunal indemnity insurance is a policy that protects businesses from negative financial consequences related to Human Resources. The scheme claims to cover all issues from redundancy and discrimination to unfair dismissal and whistleblowing. The insurance professes to cover a variety of costs, from legal costs to compensation. It is difficult to quantify potential costs resulting from tribunal claims, hence why business owners may look into investing in tribunal indemnity insurance.

Do you need it?

In July 2013 the law made it increasingly difficult for employees to ‘get their day in court’. The introduction of Tribunal Fees saw a drastic reduction (circa 70%) of claims being brought to the Tribunal Courts. In July 2017, The Supreme Court decided that tribunal fees are unlawful and a barrier to justice, abolishing them with immediate effect. This means that employees can now bring a claim against their employee – justified or not.

It goes without saying that tribunal claims can have a negative effect on your business, be it financial cost or reputation. Indemnity insurance can cushion the blow of the financial implications. However, our HR Consultants believe that preventative measures can be taken in order to minimise the risk of a tribunal and ensure that your reputation as an employer stays intact.

The true key to protecting your company is to have strong and stable HR strategy supported by sound policies and procedures from the outset. Here at Triple Three Solutions, we can help you to build and maintain a positive approach to all people matters; developing line manager in the art of managing their people, helping to reduce the likelihood of tribunals.

We can help employers develop a strong relationship with employees, ensuring fairness and translucency within your business. As HR Consultants, we are experienced in dealing and resolving delicate issues such as bullying in the workplace or matters of health. Triple Three Solutions are therefore able to address these situations, where managers may be uncertain or undertrained. Nevertheless, should situations escalate where employees become likely to make a claim – our HR Consultants can act as a mediator between your employee and your company.

Things to consider:

Insurance companies will often use scaremongering tactics to pressure businesses to take out tribunal indemnity insurance. Once their tactics are successful, many businesses have experienced drawbacks such as insurance companies avoiding pay-outs; by covering themselves with several get-out clauses that can invalidate the policy. Another area to consider is that these policies do not take into account the costs associated with the amount of time that management has to invest during and after a tribunal. Nor does it account for the impact it may have on other employees’ work morale.

So what should you do?

We recommend that you study the facts. Don’t listen to scaremongering tactic and sign up on the dotted line for the next 5 years. There are alternatives out there. At Triple Three Solutions we have access to a cost effective product, should you want to cover those risks. Also, ask your Insurance Broker, do you have this cover already via a Director’s policy you already have in place. We have clients who have this facility, and therefore don’t end up paying twice.

Although tribunal indemnity insurance may seem a simple and effective solution, we have a different option. It is more effective and financially sound long term, to invest in your HR in a different manner. Working with professionals such as Triple Three Solutions can ensure your HR is managed in a commercially focused way. We consider the business and its employees, rather than simply taking out insurance that may have more pitfalls than benefits.

As HR Consultants, we believe developing a strong HR strategy and supporting policies and procedures to avoid tribunals. However, remember that there are options. To learn more, get in touch with our HR Consultants on 0333 050 3330 or via email at lisa@triplethreesolutions.co.uk. We are here to help.