For business that offer specialist services or advice, professional indemnity (PI) insurance is a lifesaver. It covers claims made against you by people who allege a problem in your work has cost them money. As well as compensating the unhappy individual, your PI insurance will also cover any legal fees.
Sounds simple enough but to many businesses, making a professional indemnity insurance claim is a murky subject. Here’s what you need to know.
Anyone. But it’ll mostly be your clients. This is usually because they’re genuinely unhappy with your work, you’ve made a mistake or you’ve not done something you said you would do and it’s cost them money (or they claim it has).
It’s less common, but unrelated third parties can also make claims against you. These are most likely for things such as intellectual property theft or defamation – things that are in the public domain.
Whenever someone alleges you’ve been negligent or haven’t done what you agreed to.
Claims take many forms. Specifically, you might be accused of: defamation; intellectual property theft; loss of documents; breach of contract or; negligent misrepresentation.
For example, a client may blame you if a project you worked on is unsuccessful and refuse to pay you. Or a competitor might allege you’ve copied their business model or website and make a claim against you. In both examples, your PI insurance will cover you whether the allegations are true or not.
A claim form or snarky letter from your client or their solicitor is usually all the heads up you’ll need, and a strong sign you’ll need to get in touch with your broker or insurer. But not all circumstances are as clear-cut and claims can creep up on the unwary. Subtle warning signs to look out for include refusal to pay bills, increasing tension in the working relationship with your client and unjustified criticism or complaints about your work.
As soon as possible. Not doing so can seriously harm the chances of your claim being paid. Insurers don’t like surprises and they want to know as soon as you do that there might be a problem. This way, they can prepare and do their best to bat away spurious claims before they escalate.
Late notification is a common reason for claims not being paid. If your insurer thinks their position has been compromised because you’ve not got them involved early enough, they have every right to refuse to pay all or part of your claim. If you’re unsure whether you should contact your broker or insurer, it’s always best to err on the side of caution and do it anyway. You won’t be criticised for being too cautious.
If you notify your broker about several potential claims but they’re never paid, this shouldn’t affect your insurance. Your careful approach to business will likely reassure your insurer that you’re risk aware and that they won’t face any nasty surprises.
However, if your insurer has to pay out multiple times, this could increase both your premium and your excess. In extreme cases, your insurer might eventually withdraw cover altogether.
Remember, if you do have a claim, a broker is on your side – not your insurer’s.
That means they’re ready to offer help and advice at any time, whether you’re looking at a business-threatening claim or you just need someone to answer a quick question.
Believe it or not, a will is extremely important. If you have not written one yet, here is why you should do so as soon as possible.
If you die without a writing a will you are considered to have died “intestate”. This means the law decides how your estate is passed on – even though it may not be what you wanted.
If you pass away before your spouse and children your personal possessions and all assets valued up to £250K goes to your surviving spouse or registered civil partner and everything else is split equally between your spouse and your children. However, your spouse’s half will belong to him/her under lifetime interest. This means your spouse cannot sell or spend the assets, but he/she can draw income from it. If your spouse dies, your children will receive the full benefit of the life interest.
If you pass away before your spouse, but you have no children, everything under £450K will go to your spouse and the remaining money will be shared amongst your parents and your spouse.
If you succeeded your spouse, but you have no children or parents your estate will go to you your spouse.
If you have no spouse or children your assets will go to your parents. If they are dead, your assets will go to any of your other living relatives. If none of these relatives can be found, all your wealth will go to the Crown.
If the above has convinced you to make a will, follow these pointers when drawing up your will.
Due to the intestacy rules outlined above, you won’t be able to decide who benefits from your will. If you have stepchildren or family friends that you would like to leave something behind for, draw up a will so that you can ensure this.
You can make certain instructions in your will so that no one in your family can dispute your will.
If you frequently donate money to charities and would like to leave money behind to a charity of your choice, you can leave a note in your will stating this. Also, if you donate 10% or more of your estate, it reduces any Inheritance Tax to 36% instead of the usual 40%.
Inheritance tax is payable on estates worth more than £325K. Only married couples or registered civil partners can avoid paying inheritance tax if their will gives everything to their spouse. The £325K that has not been used is then rolled over to be used if the surviving spouse were to die. If that spouse dies, they have the benefit of £650K being exempt from tax.
Life is filled with the unexpected, so if you and your spouse die at the same time, your family may have no idea what your wishes were, so they won’t be able to honour them. Therefore, having a will ensures that your wishes are written in black and white and that your loved ones benefit in the way you want them to.
A lasting power of attorney is a separate document and it is not mentioned within your will. Therefore, in addition to drawing up a will, consider having a lasting power of attorney prepared. This gives you the opportunity to appoint someone (called the “attorney”) who will manage your property and financial affairs, or your health and welfare if you lose mental capacity to make your own decisions.
The person you choose to handle your will and make sure that everything goes according to your plan is called the “executor”. Make sure you appoint someone who will be able to fulfill this role. You can have more than one person, if you like.
It’s not too late, or too early to write a will. The sooner you do it the better – and the more certain you will be that the ones you care about are looked after.
© Sable Group. The Sable Group manages financial, immigration and legal needs.
Last month, the UK government was trumpeting its role in disrupting the GOZeuS malware, which has affected over 15,000 UK computers.
Computer users were told this work gave them a two-week window to identify weaknesses in their own systems and purge infected machines of malware.
Overall, it’s believed GOZeuS — together with its accompanying malware Crytolocker — was responsible for emptying bank accounts of £60m, worldwide. Russian hacker, Evgeniy Bogachev, is thought to be the brains behind the operation.
The malware itself is unknowingly distributed via email attachments or links that appear to be genuine. The software then monitors the files on your computer and — if you sign into online banking — can even access your financial accounts.
Sometimes, the malware will lock your computer and ask for a ransom to release your data. It’s extortion on an enormous, international scale.
David Cook, specialist in cybercrime at Pannone Solicitors, warns that although these pieces of malware may be tricky for law enforcement to control, the law around implementing malware is very clear:
“Sections 1 and 3 of the Computer Misuse Act 1990 criminalise unauthorised access to and modification of computer data. There is also clearly a blackmail offence involved as well.“
“The computer misuse offence carries a maximum sentence of ten years’ imprisonment and the maximum for the blackmail offence is a custodial sentence of fourteen years”.
However, Bogachev’s whereabouts is reportedly unknown, so will he — or anyone — ever be held accountable for these crimes?
Well, the government is pledging to invest more cash into taking down malware and pursuing cyber-criminals across the globe. But with more than 10 million pieces of malware out there, tracing and prosecuting everyone involved is quite a task.
Many of us will have worked with a grumpy colleague or employee, people who are best avoided some or even most of the time. Some of us may even be those very people, of course. Having to share oxygen with grouchy, cantankerous, huffy, prickly, churlish, sniffy, waspish workplace Victor Meldrew types, who function as ‘drains’ rather than ‘radiators’, is energy-sapping. But the good news for employers is grumpy staff are more productive.
That’s according to a study carried out by the universities of Illinois and Pennsylvania, as published recently in the journal Social Psychology (and reported by Mail Online). Such employees (tagged ‘Haters’ by the researchers) usually become better at their jobs because they’re more focused on work and concentrate on fewer tasks, which enables them to hone their skills and be more productive.
More popular workplace ‘Likers’ (ie bonhomous types who radiate positivity) usually spread themselves more thinly, which makes them less productive, according to the research. They struggle to restrict their attention to one task, because they perceive “many interesting opportunities in their environment”. Consequently, they only develop skills to a certain level, albeit more widely.
Some employers might be perfectly willing to leave otherwise productive employees to their grumpiness, but what if a staff member’s simmering anger, moodiness and general attitude problem become intolerable? This could become a big problem for your business – especially if they come into contact with your customers.
As any seasoned people manager knows, you must address unacceptable staff behaviour as soon as it arises, otherwise it can send out the wrong message that it’s tolerated within your business. Employers are advised to take grumpy employees to one side for a private word. You should explain the effects your employee’s belligerent, curmudgeonly ways are having on their colleagues and/or other aspects of your business (in the worst cases, it can seriously damage team morale and sales).
According to the Acas guide Discipline and grievance at work: “Cases of minor misconduct or unsatisfactory performance are usually best dealt with informally. A quiet word is often all that is required to improve an employee’s conduct or performance.”
If the employee’s anger is work-related and valid, it should be addressed. If it’s related to a personal issue, you can offer support (although employees should know that personal matters should not be allowed to affect their work if possible). Having a written policy or code of conduct describing acceptable behaviour and attitude can be enormously helpful.
A quiet word might be all that it takes to ensure that the employee mends their ways (or at least treats others in a more acceptable manner). They might even be grateful for being able to get something off their chest.
But as the Acas guide concedes: “There will be situations where matters are more serious or where an informal approach has been tried but is not working. If informal action does not bring about an improvement, employers should provide employees with a clear signal of their dissatisfaction, by taking formal action.”
As a business using social media, it is important to remember the following:
Protecting reputation is a primary concern for businesses. In this country, the predominant area of law used by individuals and organisations to protect their reputation is the law of defamation. This area of law was recently subject to new legislation and the Defamation Act 2013 came into force in January 2014.
Section 1(1) of the Act has introduced a new test of actual or likely serious harm. For claimants that trade for profit, section 1(2) says that harm to reputation is not serious unless it has caused, or is likely to cause, serious financial loss.
These serious harm and serious financial loss tests are designed to discourage trivial claims.
For a claimant to successfully sue a defendant for defamation, section 1 has added a new layer to the existing law. A claimant will be required to demonstrate that the words complained of:
For businesses, the serious harm requirement is subject to section 1(2), which states: “harm…is not ‘serious harm’ unless it has caused or is likely to cause the body serious financial loss”.
This is likely to mean that businesses will need to specify in their particulars of claim: (i) that the statement has caused or is likely to cause serious financial loss; (ii) particulars of the loss incurred, and how this has been caused by the defamatory statement(s); and (iii) why the loss incurred is serious.
During consultation, the Ministry of Justice suggested that a statement is not defamatory unless it caused “substantial harm” to the claimant’s reputation. According to the Lord Chancellor, the serious harm test has been drafted to allow the court to consider all the relevant circumstances of the case.
The Act is as vague with regard to serious financial loss. In pre-Act Parliamentary debates, there was discussion about whether a fall in share price could demonstrate serious harm or if this could only cover a company’s profit, loss and sales, not variations in share value. At the moment, nobody knows. This will have to be interpreted by the courts in due course.
A business will need to establish causation by demonstrating that the defamatory statement caused, or is likely to cause, serious financial loss. Difficulty arises when a loss has been caused by several statements, of which only one is actually defamatory.
In order to establish causation, the claimant would have to prove that this statement caused, or is likely to cause, a serious financial loss. This is compounded by the difficulty of quantifying the loss. It may prove impossible for a company to separate what loss is linked to the defamatory statement and what is linked to other, legitimate damage to its reputation.
Arguably a business’s reputation could be damaged without it suffering financial loss per se. Thus, a business could suffer serious reputational loss and vindicating its reputation could prove to be difficult, prolonged and expensive.
Satisfying the serious financial loss requirement in these circumstances may only be achieved by establishing a link between the statement and its consequences — an inability to recruit suitably talented employees, for instance. Evidentially this would be hugely challenging. Protracted claims of this type also give rise to another problem: the existence of the claim may expose the business to more negative publicity, resulting in further reputational damage. In other words, the claim itself could make the situation worse.
There is no doubt that the legislation will impact on the ability of businesses to vindicate their reputation effectively, whether it has been attacked through social media or by other means. However, because the Act has only just come into force, we’ll have to wait and see as to how the Act will be interpreted by the courts.
Peter Coe is a senior lecturer in Law at Buckinghamshire New University and a Barrister at East Anglian Chambers.
If one of your employees is diagnosed with a serious illness, you need to understand your legal responsibilities regarding the support you are legally obliged to provide, as well the employee’s legal obligations.
Technically, if an employee is diagnosed with a long-term illness such as cancer, they are defined in law as disabled, and once under the Disability Discrimination Act (DDA) employers must make changes to accommodate the employee’s needs at work.
If you have any kind of long-term, serious illness it could be defined as a disability in law. Impairments must be long-term and substantial to count as a disability and they can be physical or mental. They must affect you for 12 months and significantly impact your daily life (eg it may take you much longer to get dressed in the mornings than if you didn’t have the impairment).
Progressive conditions, such as motor neurone disease or muscular dystrophy, also count, although these are assessed case by case. You automatically meet the “disability” criteria if you are diagnosed with HIV, cancer or multiple sclerosis. Generally, it is the effect of your impairment on your daily life that is considered when disability is defined legally. An underlying condition is not assessed; its consequences are. Technically, a person who is terminally ill is also defined as disabled.
There are certain impairments that are medically defined as mental illnesses that aren’t defined as a disability (eg kleptomania, addiction and pyromania).
If you’re employee meets the definition of disabled you must be aware of the Equality Act 2010, the most relevant aspects concern protecting your employee from any discrimination because of their disability. As an employer you must make “reasonable adjustments” to aid your employee in the workplace. This might be simple things like moving their desk or it could be allowing them to work from home for some time or allowing more time for doctor’s appointments, etc. You should show that you are doing your best to work with your employee and everything reasonable to enable them to continue to work.
The same obligations apply if your employee has a terminal illness. You might assume that an employee will want to stop working, but a lot of people want to continue working despite their illness to retain a sense of normality.
An employer must take into account a serious illness in every instance. You can’t reprimand an employee for taking too much time off for doctor’s appointments if they have cancer, for example. Also, you can’t give them an unfavourable appraisal because they haven’t met objectives as a result of their illness, without taking the illness into consideration.
There’s no fixed description, but adjustments are dependent on cost, how much they will help you, how practical it is to make them and whether the adjustment will affect the business, service or financial situation. Cancer support charity Macmillan lists examples of reasonable adjustments for employees with cancer (but these also apply to other illnesses):
You must pay statutory sick pay (SSP) to your employee if they have to have long periods of time off. You’ll only have to pay this for a maximum of 28 weeks. If your employee is off for a chunk of time you must leave their position open for them to return to. It is absolutely illegal to dismiss them.
Once the 28 weeks is up you do not have to pay SSP and your employee should move on to Employment and Support Allowance if they are still unable to work.
Blog provided by Simpson, Sissons & Brooke Solicitors.