Management liability insurance covers the personal liability of the Directors and Officers of the business for their responsibilities relating to; company management, corporate governance and statutory compliance.

The insurance policy covers the business for employment-related actions such as wrongful dismissal or workplace harassment.  It covers (most) statutory fines and penalties the business may incur as a result of breaching legislation or regulation.

Management Liability policies vary in the benefits they provide but typically cover (as per the policy terms and conditions):

  • Employment Practices Liability – covers employment breaches such as wrongful dismissal, harassment or discrimination
  • Directors’ and Officers’ Liability – protects directors and officers against claims of wrongful acts including breach of fiduciary duty
  • Statutory Liability – protects the company, its directors and officers against fines and penalties imposed following a breach of legislation
  • Crime – protects your business against employee or third party fraud

What is the Employment Practices Liability (EPL)section of a Management Liability policy?

EPL is designed to assist employers to reduce the cost exposure and business stress associated with employees taking action against them for claims such as alleged discrimination, harassment and unfair dismissal.

What types of claims commonly arise on a Management Liability policy?

Harassment claims are the most frequent with sexual harassment topping the list.  Unfair dismissal and discrimination claims are also common.

What types of claims commonly arise against the directors or officers?

Regulatory authorities may hold directors and officers personally liable for breaches of legislation.

Who else may make a claim on the insurance policy? 

Creditors may allege that the director or officer allowed the company to trade whilst knowing it could not pay its debts.

Case Study

An employee was caught accessing inappropriate websites and sending inappropriate emails during office hours. The employee was dismissed for breaching the company’s internet policy. Fair Work Australia found that the decision to dismiss was unfair. They took into account the employee’s previous good behaviour and the fact that the internet policy was regularly breached by other employees without consequence. They also found the employee was not given the opportunity to respond to the allegations before the dismissal. The company was ordered to pay $50,000 compensation and had legal bills amounting to $40,000.

Staff Profile

Cos Cirocco

National Business Manager - State Manager SA

Kylie McGrath

State Manager - WA

Marie Bailey

Account Manager - QLD/NT

Simon Gray

State Manager - NSW/ACT