44% of Private Companies Expect to be the Target of Employment Litigation

June, 2005 – Employment Practices Liability risks are increasingly becoming a ‘hot button’ for lawyers and a going concern for employers.

In a 2004 survey of private companies, one in four respondents had been a target of an employee lawsuit. This survey further suggests 44% of private companies expect to be a target of employment litigation. Employees may have legitimate reasons to pursue legal action against their employer. However, litigation can also be triggered from a common business dispute or even an employee grievance with the corporation.


  • Actual or constructive wrongful dismissal

  • Sexual or workplace harassment

  • Discrimination

  • Employment-related misrepresentation, libel, slander, humiliation, invasion of privacy

  • Wrongful failure to employ, promote, depravation of career opportunity or demotion

  • Negligent employee evaluation or defamatory statement in a reference

  • Violation of employee’s rights under the Charter of Rights and Freedoms

EMPLOYMENT PRACTICES LIABILITY INSURANCE: This form of insurance protects the manager(s) and organization named in a suit. The policy provides specialized legal counsel and finances your defence and any possible settlements or court awards.

POST INCIDENCE PROCEDURES: Management needs to provide employees affected by workplace harassment or substance abuse with remedial assistance.


DOCUMENTATION: Each employee should have a file documenting job performance as well as a record of any incidents that may impact the employer. It is extremely important to have written documentation to support a legal defence.

MANAGEMENT AWARENESS: Management has a duty to be aware of matters that occur in all their departments and consistently enforce HR policies. They must also keep apprised of new legislation, such as the Privacy Act and how it affects the employer—employee relationship.

The work environment can be extremely complex and things that were acceptable in the past are no longer tolerated. A well developed HR policy coupled with the appropriate insurance policy will be an employer’s best defence.

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