Mark Nicholls - My answer, from the practical side, is that the biggest increase in risk is having the wrong sort of manager (dinosaurs) who need to micromanage the inputs (bums on seats, time on job etc.) to feel in control. Migrating these managers to what I see as the only way to manage remote teams - targeting, reviewing, and rewarding on outputs - is going to be very difficult and a big potential risk.
Nick McGarey - There are several key risks which have increased due to most employees working remotely, the first is under the general banner of health & Safety. You must ensure people working from home have a safe and appropriate working environment and the potential increased sense of isolation is mitigated through the implementation of robust engagement policies to ensure the remote workforce maintain good levels of mental health and the overall ethos of the company is not diluted or lost. A review of corporate governance policies and procedures may well be required, to ensure checks, balances and monitoring are still appropriate, when a workforce is predominately remote.
Sandy Gilchrist - Managing a business remotely is fraught with risks, such as not being able to 'eyeball' operations physically. A recent survey has suggested that businesses are expecting working from home to be the new normal going forward at least 50% of the time. What is likely to happen is that businesses will implement monitoring capabilities - this introduces an enormous data protection risk and appropriate safeguards need to be in place. Not least because many such organisations providing these capabilities may be based in 3rd countries (i.e. not the UK), which attracts further data protection risks that require, for example, extra contractual considerations.
Gary Gallen – There will be certain circumstances in which an employer will need to record which workers have has been vaccinated and which have not. This will let safety measures be implemented. As this will be personal data, consideration must be given to the processing of that data before collection takes place. Vaccination records count as data concerning the health of an individual and are classed as ‘special category personal data’ under Article 9 of the GDPR, which means that there are additional processing considerations for the employer as the data controller.
They must ensure that an appropriate assessment of data processing activities is carried out before any processing takes place and that the processing is always done in accordance with the GDPR. The method by which that decision was reached must be documented. It is advisable to carry out a Data Protection Impact Assessment (DPIA) which would formally set out the justifications. This would provide an employer with best protection should the processing ever be questioned or in the event that any complaints are made to the Information Commissioner’s Office. Under Article 5 of the GDPR, any data relating to vaccination status should only be held for as long as is required to comply with the purposes for which it is collected; once that purpose is no longer applicable, the data should be deleted.
Nick McGarey - The pipeline of cases held by litigation funders in the UK is reported to be steadily increasing. Funders tend to look for new areas of litigation to become involved in. Disputes arising out of insolvencies following the pandemic may well present them with such opportunity. Litigation by alleged victims of data breaches has been cited as another possible area of interest. Litigation funders have so far not been very active in Continental Europe. The European Parliament recently (March 2021) published a study concerning Responsible Private Funding of Litigation. The study concluded that in order to provide fair access to justice for claimants and reasonable compensation when necessary, while allowing businesses to continue thriving and innovating, the current EU regulatory framework would need to be upgraded and updated. Watch this space!
Christopher Lennon – No, the companies limited liability status offers no protection to individuals where named in actions and your personal liability is unlimited.
Nick McGarey - Whilst Management Liability rates are increasing to reflect the increased frequency of claims, I still think probability for this business is uncertain, as insurers increase reserves to cover the uptick in claims activity.
Gary Gallen - As a starting point, Directors would not be personally liable for claims and/or litigation, as a Limited Company is its own separate entity in law. The law does not allow a third party to look to Directors to satisfy claims against the Limited Company, save for circumstances where the Directors are considered to have breached their duties to the Limited Company, or - in the event of insolvency - provisions within the Insolvency Act relating to wrongful trading, misfeasance et al. This is applicable to Directors as registered at Companies House, but also anyone acting as a Shadow Director (i.e., someone who conducts the business as a Director without being named as one at Companies House), and in respect of the Insolvency Act any person exerting control over the Company can be liable if an offence has been committed. The Insolvency Act recently widened the net in this regard in response to previously disqualified Directors putting ‘patsies’ in place and continuing to run businesses improperly. With this in mind, it is crucial to understand your responsibilities to the Limited Company to ensure you are protected from personal liability.
Christopher Lennon - It is common in the event of personal injury claims, in employment disputes and increasingly in health & safety prosecutions for the nominated personal responsible to be named as second defendants in any actions.
Nick McGarey - We are seeing an increase in directors getting named in litigation, alongside the entity, to maximise the chances of a successful claim.
Christopher Lennon - Despite the name, a limited liability partnership is not a type of partnership and partnership law does not generally apply to LLPs. An LLP is a type of body corporate. Whilst an LLP is a separate legal entity from its members. As such, members of an LLP will not be liable for the debts and obligations of the LLP itself, subject to certain statutory qualifications in the event of the LLP becoming insolvent. A member may still be personally liable for his actions in certain circumstances. There are two principal areas for this: (a) members will owe common law or equitable duties to the LLP in certain circumstances, including if they participate on a management board or committee of the LLP and (b) a member may assume, or be deemed to assume, personal liability to a customer/client of the LLP in relation to his own actions. In addition, the Employment Practices type exposures are common for Directors & Officers as they are for Members
Christopher Lennon - Whilst the entity is vicariously liable for actions of individuals, this will be where the entity is named in action, this does not prevent a claimant naming an individual in any action. It is for this reason that the personal wealth of individuals is at stake, the most cost-effective way for the individuals to be protected is for the business to arrange a D&O/Management Liability policy which will provide indemnity in respect of costs and awards
Chris - The majority of claims emanate from employment law disputes and allegations of bullying, harassment and discrimination of varying descriptions
Nick - While Employment Practices Liability related issues continue to drive a significant proportion of claims, we see a diverse array of triggers including directors breach of duty, regulatory, fraud / dishonesty, breach of contract.
Christopher Lennon - Anyone in a managerial or supervisory role or anyone in a perceived equivalent role could be considered an Officer.
While D&O premiums have seen a substantial increase over the past 12 / 18 months, as a reflection of the increased claims environment, they are still far below the average cost of a claim, which regularly run in to tens and often hundreds of thousands of pounds, when you factor in the investigation and legal costs associated even with a relatively minor / simple claim.
Nick - Of course it depends on the size and scope of the claim, but often it is the legal and investigation costs that are a greater portion of the overall claim compared to the awards and penalties.
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