The added value of an MLP policy

If your business is only protected through legally required employers’ liability insurance (necessary as soon as you become an employer) or optional public liability insurance, it has a gap in its insurance protection that could be costly.

Employer’s liability insurance does not protect against any claims which allege that your company or its managers have breached an element of employment law. To access legal support and gain financial protection from any awards made by an employment tribunal, you need an employment practices liability policy – one of the three components of MLP insurance.

The issue with public liability insurance is that it only offers the policyholder financial protection after a claim-resulting incident has taken place. However, legal cases – and subsequent costs and losses – can also result from hazardous situations that have not yet led to injury or damage. Such dangers could be observed by members of the public and reported to the Health and Safety Executive (HSE). Or, HSE might spot breaches in health and safety compliance itself. In either case, it could act on this and start a process that culminates in significant costs for the company responsible for the situation under investigation.

The scope and cost of HSE investigations

HSE, in the year April 1, 2023 to March 31, 2024, carried out over 14,700 inspections. In the woodworking sector alone, it completed over 1,900. Action resulting from an HSE inspection frequently takes the form of an official notice being issued, to stipulate that certain actions and improvements are required. During this period, HSE issued 7,000 notices in total, 5,200 of which were improvement notices. A further 1,800 notices were prohibition notices, preventing work continuing until the unsatisfactory health and safety scenario was addressed. Furthermore, HSE brought 248 criminal prosecutions, achieving a 92% conviction rate.

Having a situation investigated by HSE can be hugely expensive. This regulator has a range of charges, according to what type of investigation is required, but its standard Fee for Intervention (FFI) (2025) is based on an hourly rate of £183 per hour. FFI charges apply where there is a contravention of health and safety law, or where the inspector believes that to be the case, and where the real or believed material breach warrants the inspector issuing a notification of contravention (NoC).

The total charge applying in such a situation will be the sum of the time HSE spends on site, writing reports, getting specialist advice, talking to workers and to the managers concerned, and carrying out the full investigation. This time will be multiplied by the FFI daily rate.

The requirement for expert legal advice in regulator investigations

Having HSE state an intention to investigate should raise deep concerns and lead to a company immediately seeking legal support and representation. However, if a business has no access to legal expertise through an MLP policy, they may attempt to tackle things alone. That can be a big mistake, leading a business down a path that compounds the original issue.

In one case, HSE became aware that a contractor had dug a 2.5-metre-deep excavation, at a property with unsecured access. With nothing to stabilise the surrounding earthworks, workers were at risk of earth falling on top of them. A Prohibition Notice was served, to prevent work continuing until the situation was addressed.

Two improvement notices were also served by HSE, which wanted the contractor to fully secure the site, get advice on workers’ risks and implement a safe system of work. Rather than comply, the contractor carried on working and also failed to both gain risk advice and introduce safe working. It was found guilty of breaching two sections of the Health and Safety at Work Act 1974, fined £40,000 and ordered to pay nearly £6,000 in costs. If an MLP policy were in place, it would have covered the legal costs and charges involved. Public liability insurance would not.

An HSE investigation explores all aspects of health and safety management, so the legal support provided by an MLP policy is required the minute an investigation is announced. An experienced legal representative can then support any manager or director interviewed under HSE caution. If a case progresses to a Magistrates or Crown Court, a public inquiry or a coroner’s inquest, the policy can provide legal representation there too.

Why management liability policies have more value than legal expenses cover

Such support is typically not available through a Legal Expenses policy. Legal Expenses policies are not intended to offer clients advice and representation throughout a regulator’s intervention in the way MLP policies do. Additionally, they may not indemnify the client if the insurer’s legal advice is not sought and followed.

Other ways in which Legal Expenses policies may disappoint come through their inclusion of a 51% prospect of success clause for civil claims. If a case’s likelihood of success is not over that threshold, the policy will not step in to assist.

Legal Expenses policies require the same likelihood of success in employment tribunal claims and expect the insured to have followed the advice of the insurer’s legal helpline or that of the Advisory, Conciliation and Arbitration Service (ACAS). If not, they will not cover the legal costs involved in fighting the case. They also offer neither employee dishonesty cover, nor third party fraud cover, and also exclude cover for libel and slander. MLP offers protection in all of these scenarios.

The conclusion is that there is much added value in an MLP policy. To cover all gaps currently existing within your legal liabilities risk management, talk to L Wood Insurance Brokers and get the right MLP protection for your business in place, as soon as possible.