Why Employment Practices Liability insurance is essential for sports clubs and social clubs
Employment practices lability is a key aspect of the insurance portfolio provided by Club Insure. The cover is included within an employer’s liability policy and a directors & officers liability policy. Employment practices insurance protects the employees, managers or directors of a sports clubs and social clubs from a workplace misconduct claim.
With major changes to the employment rights act, never before has conduct within the workplace been more scrutinised. Across 2024 to 2025, over 42,000 claims were filed with the employment tribunal, says Rebox HR. This is a 23% increase from the prior year, showing a growing trend. The cost of these claims on businesses vary greatly, ranging from several thousand pounds, to hundreds of thousands. The new statutory cap for unfair dismissals is £123,543, or 52 weeks’ gross pay – however this cap is set to be removed in January 2027.
The Employment Practices Liability limit is most regularly set at £500,000 for any one claim. Sports and Social clubs should check with their broker that they have Employment Practices Insurance in place, and be certain they understand what the policy covers.
What is covered by Employment Practices Liability?
The insurer will pay the defence costs and losses arising from a claim made against an insured for an employment practice violation. Employment practices violations include discrimination, harassment, bullying, unfair dismissal, wrongful internet activity, or negligence.
Discrimination claims – Discrimination is when an individual suffers under an employee or director’s bias surrounding on protected characteristics. Protected characteristics include genre, race, religion, sexual orientation and disabilities.
Harassment and bullying claims – Pervasive conduct between employees or from employees which creates a hostile environment, leading to a claim.
Unfair dismissal claims – Where an employee is dismissed without cause or substation reasoning. Failure to show fair procedure is deemed automatically unfair and can be fought in court.
Negligence – Directors or offices of the club found to be abusing their power, or mismanaging, to the detriment of the organisation or to individuals and members. Negligence claims will involve performance appraisals, complaints, and evidence of improper conduct.
Third Party Violations – Defence costs and losses arising from claims made due to a third party violation are also covered.
Wrongful Internet Activity – Wrongful internet activity of an employee leading to losses will be covered by Employment practices insurance.
Legal fees – Legal defence costs including lawyer fees and court fees will often be covered by the insurer.
Compensation costs – Judgments made by the court will likely require a compensation payout to the successful party, furthermore settlements outside of court may result in a compensation agreement which will be covered by the insurer.
What is excluded from Employment Practices Liability?
Certain actions or claims are excluded under employment practices insurance, mostly because they are covered by a different policy, such as employer’s liability insurance. This includes conduct resulting in financial gain, dishonest or fraudulent acts, bodily injury and property damage.
The gain of any profit or financial advantage without legal entitlement, or deliberately dishonest and fraudulent acts, are excluded upon formal admission. Any actual or alleged injury, sickness, disease, emotional distress or death shall also be excluded – unless the claim directly points to an employment practice. Damage or destruction of tangible property will also be excluded. As well as any wrongful acts or situation which has been subject to written notice before the inception of the policy.
Is Employment Practices Liability insurance mandatory?
While employment practice liability cover is not legally required, it is important for sports clubs and social clubs to remain properly protected. Include in Club Insure insurance portfolios as standard, employment practice liability protect against a costly risk which we have extensive experience handling.
At Club Insure, we include employment practice liability alongside our Management Liability policy and our Directors and Officers policy. For businesses such as sports clubs and social clubs with numerous staff members and many managers and officers, we believe employment practice liability protection is mandatory.
What’s the different between Employment Practices Liability and Employer’s Liability?
These are two completely different types of business insurance. Employer’s liability insurance is required by law and protects against injury and illness claims from employees. Whereas employment practices liability insurance surrounds practices or actions – it’s typically non-physical and protects against misconduct on the behalf of an employee or manager.
While Club Insure will provide employment practices liability insurance within our comprehensive Management Liability cover and Directors and Officers cover, many other brokers may not. Please check your insurance documentation – or contact Club Insure for a confidential review. We have over 25 years experience insuring clubs just like yours, and it’s our mission to keep community clubs and small businesses full protected against the most imposing risks.