Employment Practices Liability Trends

In recent years, the employment practices liability (EPL) Insurance landscape has changed significantly. This evolving environment stems from a number of factors including legislative changes, workforce dynamics and a shift in attitude towards workplace conduct. As businesses increasingly recognise the importance of safeguarding themselves against employment related claims, EPL insurance can provide some financial protection against employment disputes brought by employees.

The following article highlights some key trends that are shaping the EPL insurance market.

Rise in EPL Claims

A notable trend in Australia is the uptick in employment dispute claims. The Fair Work Commission (FWC) received 40,188 applications for the 2023-24 financial year* and this was the highest annual figure since the Fair Work Act 2009 (Cth) was introduced. The FWC has reported an increase in unfair dismissal applications and other employment claims such as workplace bullying and sexual harassment. The increase can be attributed to several factors, including more robust employee rights, a heightened awareness of workplace issues, and a cultural shift toward demanding accountability from employers.

Legislative changes

Another significant trend impacting EPL Insurance in Australia is the evolving legislative landscape. The Australian Government accepted recommendations in the Respect@Work Report and has now amended the Sex Discrimination Act 1984 (Cth) to implement heightened obligations  concerning sex discrimination and harassment. Employers are now required to take proactive, reasonable, and proportionate measures to eliminate, as far as possible unlawful sex discrimination, sexual harassment, sex-based harassment, sexually hostile workplace environments, and victimisation in connection with such prohibited conduct.

Also, employees of non-small business employers now have the “right to disconnect”. This gives an employee the right to refuse to monitor, read or respond to contact, or attempted contact, from their employer or a third party outside of hours unless the refusal is considered to be unreasonable. For small business employers and their employees, the right to disconnect applies from 26 August 2025.

Mental Health and Wellbeing

The growing emphasis on mental health and workplace wellbeing is another trend impacting EPL claims. As the conversation around mental health is increasingly encouraged in our society, employees are feeling more confident to raise concerns about workplace environments that contribute to stress, anxiety, and mental health issues. Compensation claims related to psychological injury have become more prevalent especially in the area of sexual harassment and bullying in the workplace, prompting business to reassess their workplace cultures and implement strategies to provide a healthy and safe workplace

Remote Work and Flexible Arrangements

The COVID-19 pandemic accelerated the trend towards remote work and flexible working arrangements. As businesses look to stabilise their working arrangements back to pre-pandemic norms it is creating challenges between employees and their employers especially the requirement to return to working in the office.

Businesses mandating a return to the office may face employee pushback. Employers need to understand employees’ rights regarding flexible working arrangements and working from home.

EPL Insurance

These and other trends can contribute to an increase in EPL exposure for businesses. Brokers should consider the EPL exposure of each client and the cover required to manage the financial risk of this exposure. EPL insurance is designed to protect businesses against claims made by employees, including allegations of wrongful termination, discrimination, sexual harassment, and other employment-related issues.

There are a number of options brokers can recommend to their clients:

1. A stand-alone EPL insurance policy

• An EPL extension can be purchased as part of a D&O Insurance policy or Management Liability Insurance policy

Adapting to Current EPL Trends

The trends in employment-related claims under EPL Insurance reflect an evolving workplace landscape where legal, cultural and societal changes converge. As claims rise and legislation changes, businesses need to prioritise proactive measures to mitigate EPL risks. To this end, EPL Insurance can assist businesses to manage the financial risks of complex and dynamic modern employment practices. By adapting to current trends, employers can better navigate the challenges of employee relations while fostering a safe and equitable workplace for all.

*chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://web-prd.fwc.gov.au/documents/consultation/presidents-statement-performance-and-work-2024-08-14.pdf

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