January 30, 2018 by Greg Meckbach, Associate Editor
By asking if a business client has a human resources department, a broker can quickly find out about that client’s liability exposure.
If a client’s business has an HR person or a legal advisor, that “tends to really decrease liability for individual corporations and individual people,” Toronto employment lawyer Andrew Monkhouse said in an interview.
“From an underwriter’s perspective, having an HR department suggests that a set of rules likely exist and are followed,” added Denis Panariti, CNA Canada’s underwriting manager of management liability and financial institutions. This would help underwriters get comfortable with an insured’s legal exposure.
An HR professional would know about legal requirements and what written policies, such as pay and vacation, a workplace should have. For example, Ontario Bill 148, passed into law in November 2017, is omnibus legislation that raises minimum wage and increases the length of leave, among other things. It is just one example of a law of which employers should be aware, Panariti said.
Monkhouse added that HR staff can help employers draft harassment and workplace violence policies, which every employer must have.
Some employers have been successfully sued by workers who were fired for sexual harassment, Monkhouse said. In this type of scenario, it’s possible that an employer may have to terminate the worker without cause and therefore pay severance. So that leads to two forms of liability, because not only does the employer have to pay the perpetrator who was fired, but the employer also risks being sued by the victim of the workplace harassment.
HR departments can help draft employment contracts, which, among other things, stipulate the notice periods for terminating employment.
A company with roughly 50 employees may decide it is not big enough to hire two or three employees dedicated to HR, Panariti told Canadian Underwriter. In such a case, the employer might outsource some HR functions to a consulting firm so the employer can stay up to speed on new regulations.
Brokers placing liability insurance can differentiate themselves by providing insurance products that not only provide for risk transfer but also risk control and risk mitigation, Panariti said.
In some situations, the insurer may partner with outside law firms or consulting firms that provide services to the insured at no cost; this may help an organization comply with the most recent regulations and major changes the company is planning. If an employer wants to downsize or close an office, for example, “it’s especially important to the underwriters that those situations are handled properly,” Panariti said.
In a situation like that, an underwriter would want to know that someone in the company who is familiar with labour laws conducted an “impact analysis” to determine what employees would be affected. Would they know, for instance, if the employer is offering severance packages available to all these employees?