Employment Practices Liability Insurance

Employment Practices Liability Insurance (EPLI) protects businesses against claims made by employees, former employees, or job applicants alleging wrongful employment practices. This includes claims for:

• Unfair dismissal or wrongful termination
• Discrimination based on age, gender, race, disability, or other protected attributes
• Sexual harassment or workplace bullying
• Breach of employment contract
• Failure to promote or provide equal opportunities
• Retaliation against whistleblowers

EPLI covers defence costs even if the claim is ultimately unsuccessful, which is critical given that defending employment claims typically costs $30,000–$100,000+ in Australia.

EPLI is often included as one section within a broader Management Liability insurance package. Management Liability typically bundles:

• Directors & Officers (D&O) – protects directors personally
• Employment Practices Liability (EPL) – employee-related claims
• Statutory Liability – fines and penalties for regulatory breaches
• Crime/Fidelity – employee theft or fraud

For most SMEs, a Management Liability package is more cost-effective. However, larger businesses or those with significant employee numbers may benefit from standalone EPLI with higher limits.

Standard EPLI policies cover claims from employees. However, the line between employees and contractors is increasingly blurred in Australia, and misclassification disputes are common. Some policies extend to cover claims from contractors who allege they were actually employees (sham contracting). If you rely heavily on contractors, this extension is worth discussing with your broker.

EPLI policies typically exclude:

• Intentional wrongdoing – deliberate illegal acts by management
• Criminal fines and penalties – though Statutory Liability cover may help here
• Workers compensation claims – these require separate workers compensation insurance
• Bodily injury claims – covered by Public Liability insurance
• Professional negligence – covered by Professional Indemnity insurance
• Known claims or circumstances not disclosed when taking out the policy

EPLI premiums depend on several factors:

• Number of employees – more employees = higher premium
• Industry – high-turnover industries cost more
• Claims history – previous claims increase cost
• HR practices – documented policies can reduce premiums
• Limit of indemnity – higher limits cost more

As a rough guide, EPLI within a Management Liability package for a small business (under 20 employees) typically starts from $1,500–$3,000 annually. Larger businesses or standalone EPLI policies will cost more. We compare the market to find competitive terms.

Yes. EPLI covers the legal costs of defending claims lodged through Fair Work Australia, including unfair dismissal applications, general protections claims, and adverse action disputes. Given that even a straightforward unfair dismissal defence can cost $15,000–$30,000 in legal fees, this coverage is valuable for any business with employees.

Employment claims can come from any business with even one employee. In fact, smaller businesses are often more vulnerable because they typically lack formal HR policies and documentation. A single unfair dismissal claim can cost $50,000+ to defend and settle – enough to seriously impact a small business. EPLI provides a safety net regardless of business size.