Many pub licensees and restaurateurs take out insurance against the costs of fighting employment tribunal claims and HR4UK has today said that these policies are worthless, as insurance companies do not cover cases where the employer has acted incorrectly.
Rule changes that came into effect in 2013 have seen the overall number of claims being made fall by around 80%, according to HR4UK. It is now a requirement for ex-employees to go through Acas Early Conciliation before they can have a claim heard. An upfront cost of £250 and further £950 must be paid before there is a hearing is thought to be the reason for this drop.
Peter Abraham of HR4UK said: "No employee is going to put up over £1,000 of their own money for a tribunal hearing unless they believe they have an exceptionally good chance of winning. The claims that are being filed are therefore those where the initial investigation shows the employer has made some error and is likely to lose.
"These are the very cases that are not covered by the insurers under their 51% chance of success clause. Is it worth paying for insurance that is unlikely to cover you should there be a claim? I suspect that most employers would say it was not.
"Also, our experience is that premiums are not being reduced and insurers are creaming in profits on this area of business as many small businesses simply renew a policy without reviewing its costs and benefits."
"We no longer see a need for legal expense insurance to fight employment tribunal claims because the misguided and ridiculous claims that flooded the system in the past are simply no longer there.”
HR4UK is an online employment support service launched in 1980 with the intention of helping small businesses.