Australia: Do you have the right insurance policy to cover the workplace risks?

Last Updated: 28 December 2016
Article by Sara McRostie and Andrew Mansfield

In November 2015, the Productivity Commission reported that the average unfair dismissal claim costs employers $13,500. Claims for general protections, discrimination and bullying, as well as workplace health and safety prosecutions also represent a significant cost to employers in terms of legal defence costs and downtime.

Many employers take out insurance to cover workplace risks, without fully understanding the different types of policies on the market and the risks they cover. Some employers are not fully aware of their obligations under their policy when a claim is made and it is important that they understand how to maximise their cover.

Workplace risk insurance policies

Employment practices liability (EPL) insurance covers an employer—including its directors, officers, managers and employees —for claims made by employees, contractors and job applicants. The types of claims covered include unfair dismissal, general protections, failure to promote, bullying, harassment, discrimination and retaliation. The policy usually covers legal defence costs, settlement payments and other payments the employer may be ordered to pay.

Statutory liability insurance covers an employer and its employees for defence costs, fines and penalties imposed as a result of breaches of federal and state legislation. Workplace health and safety, and competition and consumer legislation are two examples.

Management liability insurance covers an employer and its employees for wrongful acts relating to the management of the business. It generally includes EPL and statutory liability as well as fidelity, directors' and officers' liability, cyber risk liability and corporate liability for activities such as audits conducted by the ATO.

Directors and officers (D&O) insurance covers an employer's directors and officers (and in some cases senior managers) to protect them from personal liability for claims arising from the discharge of their responsibilities and duties. If the employer incurs legal defence costs on behalf of a covered individual, it may claim reimbursement of those costs under the policy. Most D&O policies offer EPL as an extension of cover for payment of an additional premium.

Know your notification obligations

An employer must notify its insurer of a claim against it, including being subject to an investigation or prosecution, or any facts or circumstances that might reasonably be expected to give rise to a claim. The time frame in which notification must be given varies between policies. Some require immediate notification while others require it as soon as reasonably practical.

This requirement allows the insurer to investigate the claim or possible claim at an early stage. Evidence that might otherwise become unavailable over time (for example, security footage that is only retained for a short period) can be identified and preserved. Witnesses can be interviewed while the events are still fresh in their mind. Early notification can also allow a claim or possible claim to be resolved before loss or further loss is suffered, thereby reducing the cost of the claim.

Claims can go unnotified for various reasons. An employer may overlook that it has an EPL policy if, for example, it was offered as an extension of another insurance policy. Some employers do not understand what types of employment claims and losses are covered under their EPL policy.

An employer might also make a deliberate decision not to immediately notify their insurer of a claim or possible claim because they believe they can resolve the claim and avoid paying any excess under the policy.

Whatever the reason for late notification, the consequences for the employer can be severe. If the insurer has been prejudiced by the late notification it may reduce its payment under the policy or even decline cover completely, leaving the employer exposed for the full amount of the claim and its own legal defence costs.

Know what extras are available under the policy

Almost all policies offer extensions of cover, such as costs of engaging public relations or crisis management services in connection with a claim. This assistance can prove invaluable to employers in quickly minimising potential reputational damage to the business and its senior officers.

If a claim is made against an officer or employee who is covered by the policy, but has passed away or is incapable of managing his or her own affairs for reasons such as ill-health or bankruptcy, cover under the policy may be extended to that person's estate or legal representative.

An extension may also apply, extending cover under the policy to any subsidiary acquired or created during the policy period as well as any subsidiary that ceased to be so during the policy period.

What happens after a claim is notified?

Once a claim is notified and accepted by the insurer, it will generally take responsibility for defending the claim. This means the insurer will make strategic decisions about how the defence is run, including whether to settle or defend it. This is a standard term in most policies and reflects that the insurer bears the costs of defending the claim and payment of any settlement or court proceedings.

Under some statutory liability policies, the employer remains responsible for defending the claim but the insurer agrees to advance defence costs before the claim is resolved.

Insurers have appointed panels made up of law firms that are experienced in defending workplace claims. The insurer will decide which firm to appoint for a claim, but will generally agree to appoint the employer's preferred firm from the insurer's panel. Insurers will generally decline to appoint an off-panel law firm even if that firm is responsible for the employer's general day-to-day legal matters. It is important to be aware that if an employer incurs legal defence costs before it notifies its insurer of a claim, the employer may be unable to recoup those costs under the terms of its policy.

Once a claim is notified and a panel law firm is appointed, the employer needs to remain actively involved by responding to requests for information and documents without delay and keeping an open dialogue with the broker, insurer and appointed law firm. This will assist in resolving the claim with minimal disruption to the employer's business.

Next steps

To maximise insurance cover for workplace risks, employers should:

  • get the right risk cover for their business and industry
  • know what is covered under their policy
  • have sound internal processes so claims do not go unnotified
  • avoid incurring legal defence costs before notification
  • know which law firms the insurer uses and request a firm if the employer has a preference, and
  • remain actively involved in the strategic management of the claim.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Sara McRostie
Andrew Mansfield
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions