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The truth about employment law protection products

May 25, 2011

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

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.

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 is 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. 

There is one product called Praesidium that is operated by a network of solicitors firms across the UK, and which provides an online resource of guidance and standard documentation (www.praesidiumemployment.co.uk). So you can effectively take all of your advice online and through email (with or without insurance), which seems quite apt in this technological age. They are not on Twitter or Facebook yet though.

Which one do you choose?

 

Which 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 a number of businesses, but do think twice before you enter into the contract. Consider the following in particular:

  • 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 any 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 suitable product 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 cost so as to tailor the service to meet your needs.

Value for money?

If you can, 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 will be subject to significant limitations.

Remember also that if you are simply looking to fix your regular legal spend, then most (progressive) law firms will be more than happy to explore fixed price options with you, even without insurance. Solicitors are not there to sell you insurance, but they will often arrange it for you if that is what you want and need.

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

What do you think of employment law protection, and what are you experiences (good or bad) of working with this type of arrangement? Please leave your comments.

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5 Comments
  1. A very interesting post – there are clearly many pro’s and con’s of this type of insurance, but it does provide a degree of certainty for employers. In my experience a lot of solicitors don’t offer this to clients because of all the hassle of even more regulation by being deemed to be insurance brokers. Yet another example of the near impossible position solicitors find themselves in these days !

    • Thanks David. You make a good point about the hassle and administrative burdon it places on solicitors, but there are still a number of solicitors who will do it. Interestingly, I have recently seen many more employers relying simply on an employment liabilities extension under their normal commercial insurance… Then negotiating a fixed price for the legal advice elsewhere. Makes a lot of sense. Matt.

  2. szwqanda permalink

    This is an excellent article clearly assessing the variety of employment law insurance products and HR support services available to businesses.
    We provide these very services and reading this post made me think about where we sit within the scale.
    Considering the pros and cons of so called ‘cheaper’ service providers, this blog post has served to confirm that we are offering a good service at the right price and on a reasonable contract length.
    I completely agree that what is required will depend on an individual business. Even amongst our own clients we see a huge difference in how they choose to use us.
    The point raised in the article about reaching a different call centre operative on every call is also very interesting. The quality of the advice provided in this way cannot compete with that provided by an experienced employment lawyer who has really got to know and understand your business.
    I’ll say again, a great article. Thank you.

    • Thanks szwqanda. I really appreciate the feedback, and agree with your comments. It is certainly a difficult question for solicitors to deal with, i.e. “how do we compete with the bulk/budget providers”? I prefer to think that it is better not to compete as such, as we are simply not comparing apples with apples. There are many clients who prefer the solicitor supported model. Matt

  3. very good post, i undoubtedly adore this exceptional internet site, carry on it

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