Claims From Staff (Employment practice liability)

Personal claims against individual directors and officers can be brought by staff who may allege discrimination on the grounds of age, gender, religion etc or that they have had their employment terminated unfairly. 

A marine and transport services company made the difficult decision to reduce the numbers of its staff. Business volume had declined and this was the only way forward. Upon receiving notice from the company, several members of staff consulted an employment lawyer, and they began a legal action against the company and the individual directors responsible for their dismissal. 

At the same time, a different member of staff who had also been dismissed began a separate legal action. Her allegation was that one particular director had always discriminated against her on grounds of her being female and of a different religious faith. She considered that this was why she had been made redundant. 

D&O underwriters were approached and lawyers appointed to defend the allegations against the individual directors. An allocation of costs was agreed for the defence of the company (not itself insured under a D&O policy) and the defence costs for the “insured persons” i.e. directors. At the subsequent employment tribunal, the individual directors were cleared of any wrongdoing and the company reached a settlement with the former employees. D&O defence costs for the individual directors were significant.