New employment rights bill enhances attractiveness of management liability insurance

Management Liability insurance policies have already significantly assisted employers facing employment tribunals. The advent of the new Employment Rights Bill throws even greater focus on the value of MLP protection. The Bill, which is currently with the House of Lords for further scrutiny, has been described as the “biggest upgrade in employment rights for a generation.” Introduced in October 2024, it presents 28 reforms to employment law.

This includes providing unfair dismissal rights to employees from day one of their employment, rather than after a two-year qualifying period. With a variety of new employment laws, from the tightening of fire and rehire rules to the ending of zero-hour contracts, there are new pitfalls for employers to avoid. Add to this an accompanying three-month extension of the time limit in which a claim can be submitted to an employment tribunal (from three to six months), and employers need to be alert.

Tribunal figures

In 2023/24, 97,000 tribunal claims were filed, which constituted an increase of 13%. Currently, in 2025, businesses are facing up to the realities of a tough economy and various new employment cost pressures, such as the increased Living Wage and higher Employer National Insurance contributions. Some employers have already started reducing their hiring efforts.

The other financial hit that can accompany a tribunal is any settlement resulting from it. The most significant employment tribunal award made in the figures from 2023/24 was £995,128 for a sex discrimination case. The highest number of cases reaching settlement involved unfair dismissal, however, and the largest average award payment was for age discrimination (£102,891).

That constituted a rise of 624% on the average payouts for age discrimination cases from the year. However, it includes 50,000 short-term immigrants (those in the UK for 1 to 12 months) and 22,000 short-term immigrants working abroad. Since these individuals are not part of the resident UK population, short-term migrants have been excluded from this analysis.

Discrimination

Age discrimination tends to fall under the radar, compared to the other protected characteristics under the Equality Act 2010. With an ageing workforce, such discrimination is something on which employers should keep a keen eye. By 2050, one-in-four workers will be aged over 65.

Other ‘protected characteristics‘ under discrimination law, alongside age, are gender reassignment, being married or in a civil partnership, being pregnant or on maternity leave, disability, race (including colour, nationality, ethnic or national origin), religion or belief, and sex and sexual orientation.

In an eye-opening case for which judgement was given on March 13, 2024, almost £4.6m was awarded in a disability discrimination case with its roots in the Grenfell Tower tragedy. This judgement came after a long six-year legal battle.

Employer obligations regarding discrimination law are very complex. Four aspects of discrimination could result in a tribunal hearing: direct discrimination, indirect discrimination, harassment, and victimisation. Tribunals are not just costly affairs but long processes, taking managers out of the business and diverting their attention from core business tasks. They can also cause reputational damage and lower the morale of other employees.

How MLP policies assist with employment liability scenarios

The best way to avoid a tribunal is to ensure you are abreast of all current legislation and can access the best legal advice and resources around the clock. With a Management Liability Policy, you can do this very easily, building your work practices in compliant ways that should help you avoid trouble. If an allegation should arise, you can ring the crisis line at any time, 24/7 and get the right help you need, so you know how to proceed.

With the proper legal support, you may well be able to avoid a tribunal, either by successfully refuting the allegation or settling the dispute before a formal hearing. Should that not be possible, your policy may cover your right through to final judgement and should cover the cost of the award made to the employee, if you are found to be at fault.

Having this employment back-up has probably never been as necessary, in the context of the Employment Rights Bill and all of the new employee rights it imparts. To avoid suffering a significant financial loss, which can happen to those with even the best intentions, get your MLP cover quickly. With its all-year-round support, instant access to legal advice and its capacity to cover your legal costs, it is a tremendous asset to have in your employment risk management locker.