By Legal Futures’ Associates ARAG
The unique pressures that 2021 is placing on businesses have made legal expenses or employment practices liability (EPL) cover indispensable for small and medium-sized companies, throughout the UK.
Leading legal protection provider ARAG saw record numbers of calls to its legal advice helpline in 2020, particularly during the first lockdown, and is warning that employment issues are likely to result in many more claims, as the furlough scheme draws to a close later in the year.
“The employment tribunal system has already seen a huge influx of claims, reaching levels not seen since before the introduction of tribunal fees, in 2013.” comments Head of Sales & Marketing, Andy Talbot, “Furlough may have stemmed the tide for now, but we’re likely to see another wave of redundancies in the third quarter, which will lead to even more claims.
“Huge backlogs have also built up in the tribunal service and courts, which will inevitably result in cases dragging on even longer, compounding the stresses on businesses and potentially increasing costs.”
ARAG has also highlighted commercial contracts as another area that is likely to see a surge in legal disputes between businesses.
“The number of contract disputes also looks set to rise further.” Continues Talbot. “Businesses are struggling, up and down supply chains, with commercial and practical pressures resulting from both the pandemic and Brexit, which will all create more friction and, unfortunately, more disputes.
“Whether or not the UK is technically in the second dip of a recession is fairly academic for most companies. Many are facing difficult decisions and unprecedented challenges as the economy opens back up, and even those operating in sectors that have thrived during the pandemic have a lot on their plates and will be exposed to new and increased risks.”
Rates in the EPL market were hardening before the pandemic and some non-specialist providers have already withdrawn entirely, though ARAG continues to seek new business.
“2020 has really proved a watershed for commercial LEI and EPL providers.” Concludes Talbot, “Usage and awareness have never been higher, which is great for specialists like ourselves, but has prompted some less experienced providers to pull out of the market altogether.”
