With this year seeing significant changes to employment law, and reforms being identified as one of the biggest perceived business liability risks in 2025, understanding the implications is critical.
Key updates to employment law
Set out to improve workers’ protections and modernise employment laws, the Employment Rights Bill has a number of key updates:
- Right to flexible work
New provisions mean employers can only refuse flexible work requests if they have a “reasonable” basis to do so. They must state the specific grounds for refusal and justify why it is reasonable.
- Zero-hour contracts
The bill proposes limits on zero-hours contracts, with employers required to offer guaranteed hours to zero-hours workers and those on “low” guaranteed hours but regularly work beyond them. Employers must guarantee minimum weekly hours, give reasonable notice for shifts and compensate for any last-minute cancellations.
- ‘Day one’ right against unfair dismissal
One of the most notable changes is that employees will be able to challenge unfair dismissal from day one without needing a qualifying period. These reforms will take effect no sooner than autumn 2026 to allow time for detailed rules to be established and for employers to prepare. Until then, the current two-year qualifying period will remain in place.
- Restrictions on ‘fire and rehire’
Under the reform it will be deemed automatically unfair to dismiss an employee if the employer sought to vary the contract without the employee’s consent, or if an employer re-engages an employee or hires someone else under a new contract to perform substantially the same duties.
- Workplace harassment
Liability for third party harassment on employers will be introduced and employers will be required to take all reasonable steps to prevent sexual harassment. What’s more, disclosures about sexual harassment will be classified as protected disclosures.
- Other day one rights
Other ‘day one’ rights include statutory sick pay, unpaid parental leave and paternity leave, bereavement leave and enhanced maternity protection. Understanding all of these changes is crucial to ensure the fair treatment of staff but also to safeguard your company and management teams.
Liability considerations
Traditionally known as directors and officers (D&O) insurance, management liability insurance (MLI) covers the cost of negligence claims made against company directors and other senior individuals. This is not to be confused with professional indemnity or employers’ liability insurance. While MLI relates to breaches that occur at an internal management level, professional indemnity addresses negligence related to advice or services provided and employers’ liability covers accidents, injuries, or illnesses that occur in the workplace.
Depending on the policy, MLI cover can extend to cover:
- First-party losses like cyber extortion and fraud and third-party losses such as privacy breaches
- Losses arising from employee theft of assets belonging to you or your clients
- Losses due to dishonest employees or contractors
- Business crisis management costs
- Penalties for regulatory breaches and the costs of tax audits.
An MLI, or D&O, policy protects its directors and officers in the event they face allegations of a wrongful act committed in their managerial capacity. However, given the specific changes to employment law, employment practices liability (EPL) may be more appropriate, as some EPL policies offer extras not generally found in D&O policies. EPL insurance can be purchased as a stand-alone solution or as part of a broader package of management liability insurances.
EPL protects against employment-related allegations, including be not limited to:
- Unfair or wrongful dismissal
- Discrimination
- Harassment
- Wrongful demotion or dismissal
- Promotion refusal
Choosing the right cover
Regardless of which route you opt for, an off-the-shelf policy could end up costing more time and money than having no cover at all. The first step is to understand specific business risks and working with a specialised insurance broker will help to tailor a policy.
You’ll need to know what events you aren’t covered for too because every insurance product comes with exclusions, things like anti-competitive behaviour, product liability, pollution, and wilful breaches of duty. Consider retroactive cover that offers coverage for claims arising from incidents that occurred before the policy start date too.
Moving forward, risks will evolve and therefore so will your liability requirements. Don’t set and forget. Regularly review cover to not only ensure you maintain the appropriate amount of cover, but to allow you to access a more competitive offering.
To discuss your insurance needs, please call 0121 803 3760 or email info@thebletchleygroup.com