PACS Frequently Asked Questions - Palmers Solicitors

PACS Frequently Asked Questions

What is “PACS ?”

It is made up of our specialist employment law compliance service and helpline together an insurance product that provides businesses with protection against claims arising out of employment.

Why might a Business need it ?

The number of claims lodged with the employment tribunals in 2009/2010 has increased by 56% since 2008/2009. This, combined with an ever increasing amount of new Employment Legislation, means your Company’s chances of being involved in an employment dispute are potentially greater than ever.

With the maximum compensation award for unfair dismissal at £72,300 and awards in relation to discrimination being unlimited, and faced with potential legal fees anywhere between £10,000 to £20,000 then your Business faces potentially extremely serious financial losses should it become embroiled in a successful Tribunal claim against it.

Businesses readily Insure serious loss from fire or theft so why not against Employment Tribunal claims.

Ok, but does that really apply to smaller businesses?

Put quite simply, yes. Employment law applies equally to all Employers regardless of their size. With smaller organisations, there is often a lack of time or resources to make sure it is up to-date/compliant with Employment law requirements. Having to pay out for a claim (which could have been avoided) could even put a smaller business at serious risk.

So, in that case, how likely is that an employee will bring a claim against my business?

Basically, it has never been easier and employees now have a far greater awareness of their rights and how to play the system. With detailed information on the internet, solicitors offering “no win, no fee” agreements and organisations willing to offer free advice, e.g. the Citizens Advice Bureaux (alongside many other free advisory services), Employees can very easily issue a Tribunal claim with minimal expense or effort.

What will an employment dispute cost even if the employee is just trying their luck and I have done nothing wrong?

Even though you think you have acted fairly you can still lose a claim if you incorrectly handle or fail to follow the correct/necessary procedure. Once
a claim is presented, the cost of getting a solicitor to prepare a response can be between £500 to £2,000 and if the case progresses towards tribunal another £10,000 can easily be spent on Legal costs.

If the case does reach tribunal then the average cost of just one day in tribunal is £2,000. So, even a simple case resulting in 1 day at Tribunal can cost £15,000.

This cost does not take into account the wasted management time, business disruption, staff moral issues and bad publicity that could result from a dispute.

Well, what if someone is just “trying it on” and lose their claim. Won’t they have to pay our costs once it has been proven their claim is unfounded?

Basically, Employment Tribunals do not work in the same way as other types of Tribunal or Court. Employees can have their case heard at the Tribunal at no cost but your representation/legal costs are normally not recoverable even if you win.

How does Palmers PACS scheme work ?

Palmers “PACS” scheme works by providing your Business with security and protection against the cost of employment disputes and also by reducing the risk of successful Tribunal claims against you.

Our specialist Employment Law Solicitors are here to provide you with expert advice and guidance, which you will need to follow, the purpose of which is to protect your business

PACS works in two parts:

(i) Guidance and practical advice on preparing; Contracts of Employment, Employee Handbooks, correct Policies and Procedures, help with drafting Letters & documents and by ensuring you have continuously updated documents.
(ii) A dedicated Help-Line to respond to all Employment queries and concerns in an effective and practical manner.

2. An Insurance policy to cover the costs of Tribunal awards and/or the cost of settlements agreed as a result of conciliation proceedings arising in respect of a dispute with a previous, existing or prospective worker. It also covers the legal fees incurred by us in handling an employment dispute, any third party costs or disbursements incurred. Please note that not all employment awards are covered by the policy. The level of cover is chosen by you at the time of purchase and will be stipulated in your insurance cover note. This will include the applicable excess and limit of indemnity (usually up to £250,000) in respect of each and every claim. It is a strict condition of the insurance that you follow our advice. A full policy wording showing terms and condition is available if requested.

How much does PACS cost?

It depends on the size of your business but a lot less than you think – just consider the cost of defending your business, funding not budgeted compensatory awards and the disruption to your business. We are confident that you will find the cost of this essential protection excellent value.
Remember, Directors can personally be at risk for failing to implement compliant procedures that protect employees’ rights – can you afford not to talk to the experts?

For a formal quotation, please contact our specialist Employment Team.

Why shouldn’t I just buy the employment disputes legal expenses insurance policy rather than the full package ?

Nearly all polices exclude claims if there are no reasonable prospects mounting a satisfactory defence (this is determined by your insurer). If you do not operate with the correct employment practices you will be very lucky to have your claim covered and you will only this find out after it is too late!

Unless you apply risk management in these areas, the insurance you are buying will not be effective.In addition if you take any action that could harm the defence (again in the opinion of your insurer), you will negate your policy cover.

For this reason it is essential to have access to qualified advice on your day to day employment matters.

Your reactionary insurance may cover the consequence of a financial loss but it will not cover:
▪ business disruption
▪ wasted management time
▪ bad publicity
▪ damage to staff relations

These can be very substantial costs to a business that only early professional advice and adequate risk management will avoid. Your insurer may offer a help line but remember they are not instructed to act in your best interests and the objective of their advice is to prevent them having to pay out on the insurance policy.

Without an adequate advice line such as that provided by our PACS scheme how can you be sure:
▪ that you receive independent advice on consequences of business decisions relating to your employees – it is easier for insurers to advise you to take no action rather than expose their policy and this can be restrictive;
▪ exactly how your insurance cover will be affected prior to taking any action;
▪ you do not negate your insurance protection unwittingly when an incident arises;
▪ what you knew last year is the same this year, as employment legislation is constantly being introduced, amended and interpreted in different ways.

I already purchased a similar service through an HR company – why is PACS better?

We are confident that because we are local experienced specialist employment law solicitors we feel we are better placed to look after your business. Also, the Insurance company behind PACS have authorised us to handle any claims on your behalf meaning a trouble free method of dealing with risk management and insurance protection that you can depend on.

If you give such good advice and I have all the right employment contracts and procedures, why should I need insurance?

Often, making the right decisions as an employer are not enough to prevent claims arising, whether it is as a result of the actions of rogue managers, or just disgruntled employees.

Unfortunately some employees are becoming experts at “playing” the system and nuisance claims can still incur substantial legal fees. Often, these require settlement as the most cost/effective method of avoiding a costly legal dispute.

Also, it is important to note that under discrimination legislation employers can be liable for discriminatory acts carried out by their employees whether done with or without their knowledge. Awards for discrimination are unlimited.

For these reasons PACS provides insurance and also to protect your business from unforeseen legal costs, settlement payments and possible awards of compensation that are not budgeted for.

Contact our specialist Employment team on 01268 240 000.