D&O and the Employment Rights Bill

Expected to be one of the most significant changes to UK employment law for a generation, the Employment Rights Bill will have big implications for employers. 

Businesses without in-house legal, compliance or risk management expertise are already facing increased exposure with legal and regulatory change in recent years. Stelios Miltiadou, underwriting manager for financial lines in digital trading at Allianz UK, advises that firms should be looking to prepare, and in particular review their Directors and Officers (D&O) insurance.  

D&O is a well-established area of cover, protecting directors against the potential costs of handling personal liability issues in the course of performing their role. Key cover may include directors & officers liability, company reimbursement, company entity liability, and non-executive director liability. D&O can also cover things like circumstance investigation, reputational costs (e.g. hiring a crisis communications specialist), and other legal services.  

What changes will the Employment Rights Bill make?

The Bill will make changes to the right to claim unfair dismissal, removing the two-year qualifying period of employment, end ‘fire and rehire’ practices, strengthen statutory sick pay and collective redundancy rights, and effect several other changes designed to improve equality at work, protection from harassment, and enhance family friendly rights.  

At the time of writing, the Bill was at the report stage in the House of Lords, and its provisions could feasibly start to be in place toward the end of 2025.  

How is D&O affected by the Employment Rights Bill?

It is the change around unfair dismissal that is most likely to impact D&O cover. By removing the two-year qualifying period of employment for a person to make the claim, there is a possibility of increased claims and thereby increased legal costs to employers. Employees will also have longer to make Employment Tribunal claims.  

Brokers should be looking to ensure that clients have suitable cover in place, and that any management liability package takes the upcoming changes into consideration. The right cover protects personal assets and helps leaders confidently navigate new risks, in an environment where directors and officers will face increased personal liability.  

“I would like to emphasize the critical importance for brokers to thoroughly review coverage parameters, particularly in light of recent changes affecting D&O insurance, especially Employment Practice Liability cover,” said  Miltiadou. “It is essential to ensure that clients are adequately protected against evolving risks in this area. Additionally, brokers should consider the importance of value-added services, especially for smaller businesses that may not have extensive in-house resources. Services such as legal helplines, employment practice helplines, access to online legal templates and legal document review services can help customers navigate complex legal landscapes more effectively.”