You might not have been directly at fault. You most certainly didn’t intend to commit a wrongful act. But all of that might not matter one bit if you are the owner of a private company, a senior manager or officer and suffer the financial impact (professionally and personally) of legal proceedings…
Take this example: You dismiss an employee for misconduct relating to seven counts of misusing company cars. Your former employee then takes the matter to the Fair Work Commission which finds the misconduct has occurred but the penalty was too harsh so you are forced to not only re-instate them, but cover the expensive court costs too.
The reality is claims can be brought against directors and officers from every angle – disgruntled shareholders, customers, employees, competitors and creditors. There are a multitude of risks facing small and large businesses in Australia and new legislation is always on the horizon.
There are over 700 Commonwealth, State and Territory statutory provisions which expose private company directors and officers when their company is deemed to have broken the law:
- Workplace accidents – $15.5 million in fines issued for 2010/2011
- Employment disputes – 397 legal proceedings finalised in 2010/2011
- Employee theft/commercial disputes – $1.5 billion in losses a year. The Australian Federal Police advise 70% of all business fraud losses are from staff or former staff
It’s not just the company directors and officers who are exposed. Family members could be personally liable for expenses associated with settling a claim. Even when a court does rule in your favour, the cost of defending your position can be crippling.
It all sounds pretty scary but the truth is, to operate a business effectively, managers need the confidence and peace of mind of knowing they are personally protected and their business is adequately covered from a wide range of potential liabilities.
Management Liability is a product designed for private companies and covers them for wrongful acts (not criminal or intentional acts) that may occur while managing/running their businesses.
Management Liability insurance protects the business and its assets against large financial losses and even the directors and officers own personal assets depending on the claim or circumstance.
As a business owner, this is a crucially important topic so please, if you would like to know more, phone MGIB today.