Managers, such as Directors or Officers of a business, have liabilities, statutory duties and responsibilities. Failure to meet your duties, such as tax regulations, employment practice issues or intervention by regulators (such as the Health and Safety Executive or the Care Quality Commission), could result in criminal and regulatory investigations against you. Worst case scenario could mean prosecution, prison sentences and being unable to practice. Sadly, it’s becoming a more and more litigious society with claims of wrongdoing on the rise.
Employment Tribunals increasing.
One potential area for claims and prosecution centres around employment practice. Claims of corporate legal liability are notoriously expensive and employees are much more aware of their rights, leading to employment tribunal cases increasing in numbers. After tribunal fees were abolished in 2017, the number of single claims to the Employment Tribunal more than doubled. Receipts are now averaging 3,314 single claims per month.1
Almost anybody can bring a claim against a director personally, including shareholders, employees, investors, other directors or officers and regulators. There has also been a shift in recent years from corporate responsibility towards personal responsibility, even when individuals have made decisions in the scope of their role within a company. This leaves more and more people exposed to claims of wrongful acts, and those with the highest risk are undoubtedly those occupying supervisory positions or leadership roles.
Should you be accused of wrongdoing or be under investigation, you may incur hefty defence costs, with legal proceedings costing hundreds of thousands, or even millions. If you or a senior member of staff become the target of a claim, legal proceedings might need to be funded personally. If you are found to be responsible, you will then have damages and awards and compensation costs to pay for.
Not just a financial impact
Individual directors, partners, officers, managers, and the Entity (a Ltd Company) can all be at risk from accusations, allegations, or investigations of wrongdoing. This can cause not only financial hardship, but also create anxiety and stress, and if upheld, you could face the loss of your business, personal assets such as your home, pension or investments, professional reputation, disqualification as a director, criminal prosecution and even a custodial sentence. That is why you should consider Management Liability cover to protect yourself rather than risk potentially bankrupting losses.
What cover is provided by a Management Liability insurance policy?
A management liability policy is a comprehensive form of insurance that exists to cover allegations of wrongdoing, directed at the company as a whole or its managers, directors, and officers. The key aspect of Management Liability insurance is the provision of specialist legal advice and access to legal helplines and advice. You won’t have to fund your own legal defence and potential damages and settlements.
A Management Liability insurance policy consists of 3 main towers of cover: Directors and Officers Liability, Company Legal Liability and Employment Practice Liability.
Management liability insurance provides you with peace of mind that your businesses and your management team are covered in the event of allegations of wrongdoing whilst performing your to day to day business and professional duties.
Call us on 01438 730210 to discuss the most suitable policy for you.
1 The Senior President of Tribunals: Annual Report 2019 (judiciary.uk), October 2019