The truth about employment law protection products

Thinking about entering into an employment law insurance scheme? Then read on….

[This is an update of an article I did some time ago on another site.]

There are many employment law protection products on the market, and if you think that they are all the same, then think again. The range of prices and service levels you can expect varies significantly, and just because one type of product isn’t right for you, doesn’t mean that all of them aren’t. The difference in price relates primarily to the features and benefits of the product you are purchasing, and as with anything… you get what you pay for… but it also only worth paying for something you actually need.

So what does an employment law protection scheme entail?

Typically they will include an HR/employment law help line, and some form of warranty or insurance to cover you in the event of an employment tribunal claim (if you have taken and followed advice), all for a fixed monthly fee. After that, the variation is huge.

At the budget end of the market (where you will find most of the well-known and prolific products) you will find the lower service levels; longer contracts (maybe 3 or 5 years in duration); less specialist and less strategic advice; you will probably have access to a set of standard form employment documentation that may or may not be suitable for your business; and the advice line will be staffed mostly by unqualified and anonymous paralegals who are likely to give extremely cautious advice.

At the other end of the scale you will find higher service levels; direct lines and email addresses for named and experienced specialist employment lawyers at a firm of solicitors of your choosing; bespoke documentation for your business; and shorter contracts (typically 12 months). Those solicitors will be able to give you the specialist, strategic and commercial employment advice that you really need, and will even be able to tell you what you can do which would not be covered by insurance (and the risk associated with it), to enable you to make a judgement call based upon commercial, strategic and cost considerations. But sitting behind this high level of service there would be an insurance policy, which protects you against the unexpected risks.

In the middle, there is a huge range of approaches, which for the most part combine elements of both of the above.

Some products use an online service, so you can effectively take all of your advice online and through email (with or without insurance), and that approach is likely to grow in popularity. With the developments in artificial intelligence, machine learning and robotic process automation we can expect to see the development of sophisticated and effective employment law support services that are almost entirely automated – just don’t expect any creative or commercial advice just yet.

Which one do you choose?

Which (if any) is best for you will depend upon the needs of your business, including the level of your HR sophistication; whether you have in house lawyers; what your budget is; and your past record of dealing with employment law issues.

The budget end of the market will certainly appeal to many businesses, but do think twice before you enter into the contract. Consider the following:

  • Is the product going to provide you with the level of service that you really need? If you are an experienced HR professional, or have some understanding of employment law, you are unlikely to be told anything you don’t already know.
  • The advice that you receive is likely to be ultra-cautious. You are most likely to find that you will be told what you cannot or should not do, but you are very unlikely to be offered many (if any) real solutions.
  • You may well speak to a different person every time you call the help line, so you may feel like you need to go over the same ground time and again.
  • The standard documentation you receive may not be suitable for your business, but you may be obliged to use it to benefit from the insurance.
  • The contract length may be for 3 of 5 years. If you find that you are unhappy with the product it may turn out to be a false economy as you take further advice from elsewhere on top of the cost of the insurance product… and that advice from elsewhere will not be covered by the insurance.

If some of those points concern you, but you still want the insurance, then the answer is to pay more for a more comprehensive service provided by a firm of solicitors. Most solicitors who offer these arrangements will have a standard offering, but it is always open to you to negotiate over what is and is not included within the arrangement to tailor the service to your needs.

Value for money? Do you even need it?

If you can, you should think about value for money rather than price when you are looking to enter into a contract like this. Insurance is not cheap, and if it looks like you are going to save money by swapping to an insurance based scheme, then that is probably because a) you are getting very little else on top of the insurance; and b) the insurance is subject to significant limitations.

Remember also that if you are simply looking to fix your regular legal spend, then most modern law firms will be more than happy to explore fixed price options with you, without insurance. Solicitors are not there to sell you insurance, but they will often help to arrange it for you if that is what you want and need. You may also find that you already have employment protection insurance under your main commercial insurance policy.

If you are expecting to get your normal level of service and advice, but you want additional insurance as well, then you should expect to pay more. Sorry.

If you have any views or experiences of employment law protection arrangements, please share them by leaving your comments.


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