It is critical for employers to have systems in place to prevent and respond to workplace issues.

Employer ordered to pay $1.3 million in damages to employee

Employee awareness of the laws that protect them in the workplace has increased exponentially in recent years, meaning employers are being faced with more claims, with greater penalties.

Recent cases awarding large sums for compensation and damages to employees serve as a warning to employers of the irreparable damage these legal claims can cause. A large penalty could not only cause significant time and financial loss, but can also cause irredeemable damage to the employer’s brand and reputation, if not putting the whole company out of business in paying the hefty fines.

In a recent case a female employee working as a road construction labourer alleged she had sustained serious psychiatric injury as a result of being subject to ongoing sexual harassment and bullying by other employees and subcontractors in the workplace. The events took place over a period of 18 months, in which time the employee complained numerous times to her foreman, site manager and HR, all of whom took no action. The employee was awarded $1.3 million in damages as a result of the employer’s negligence in failing to provide the employee with a safe working environment, and for being vicariously liable for the acts of its employees and subcontractors.

Another case yielded a result of almost $600,000 which was awarded to an employee who developed severe psychological disorders from an established pattern of workplace bullying by her manager. The court found the employer was negligent due to an absence of:

  • Job descriptions setting out employer’s expectations regarding duties
  • workplace behaviour policies
  • training about appropriate behaviour and how to respond to complaints
  • an investigation about the complaint
  • counselling of the bullying manager – he was not told the conduct would not be tolerated
  • monitoring of ongoing behaviour
  • policy or process
  • A safe return to work procedure.

The decisions in the above cases have the potential to increase the chance of larger sums of damages being awarded in successful claims. For small businesses, being faced with penalties as significant as those above could result in the business closing. It is therefore critical for employers to have systems in place to prevent and respond to workplace issues.

Employment Practices Liability insurance

Unfortunately, having policies and procedures in place does not completely eliminate the chance of employee claims. Employment practices liability (EPL) insurance can cover businesses against claims by employees, including the following types of claims:

  • Wrongful dismissal
  • Discrimination
  • Sexual harassment
  • Breach of employment contract
  • Other employment-related torts such as defamation, infliction of emotional distress, humiliation, failure to enforce company policy, invasion of privacy, negligence and more.

The costs of EPL cover depends on several risk factors such as number of employees, company turnover, any past claims against the company and whether or not the business manages its HR risks.

We can help reduce your EPL premiums

EPL premiums are lowered when employers take certain precautions such as instituting policies, developing employee standards handbooks, regularly measuring employee’s performance, developing complaints systems, to name a few. Our services provide you with extensive policies and documentation for you to implement to help lower the premiums. T

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Need to let an employee go? Use our letter of termination template to ensure you are using the correct format. 

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