How EPLI Can Protect Employers From Wrongful Termination Claims
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The COVID-19 pandemic has cost 81 million people their jobs in the Asia Pacific region. During this period of uncertainty, there is an uptick of former and current employees taking action against their employers for wrongful termination, discrimination and more.
The Human Resources Development Fund (HRDF) offers employers a form of protection and a one-time opportunity during the pandemic.
Employment Practice Liability Insurance (EPLI)
The EPLI is an insurance program designed to protect employers from litigation, summons, or mediation brought by former and current employees against the employer for wrongful dismissal.
This program is for employers who have registered with HRDF only.
The HRDF acts as the facilitator to deduct the levy to pay the premium to the insurers. Through a third party, HRDF will render assistance in the claim process. Meanwhile, the third party provides in-house insurance advisors, claim advisors and IR consultants to assist employers.
EPLI protection
The EPLI policy covers up to RM200,00 for each employer and up to RM100,00 for each claim, and excess of RM5,000.
- Total coverage for each employer is RM200,000
- Legal fees of up to RM20,000
- Mediation claim of up to RM20,000
The scheme protects employers from litigation, summons, or mediation costs brought by former or current employees against the employer for wrongful dismissal at the Industrial Relations Department, Industrial Court or Labour Court.
The policy insurers are QBE, Tune and Tokio Marine. The policy lead insurer is Syarikat Takaful Malaysia.
The advantages of EPLI. Source: HRDF Twitter
EPLI excess and exclusion
There is 5% of RM5,000 of excess, whichever is higher for every claim. For instance, if the employer can claim RM100,00, there will be RM5,000 deductible by the insurance company, and the balance of RM95,000 will be paid to the employer.
As for exclusion, these are the cases for which the insurance does not provide coverage, such as:
- Dishonesty
- Bodily injury
- Property damage
- Pollution
- Prior and pending claims
- Radioactive
- War and terrorism
- Communicable disease
- Sanction limitation
- Insolvency exclusion
- Retrenchment, redundancy and separation scheme
EPLI premium
The EPLI premium costs:
- RM4.10 per day
- RM125 per month
- RM1,500 per year
A premium of RM1,500 will be deductible from the employer's levy, a one-off payment.
Claims process
A scenario:
- A former employee has filed a complaint against the employer in the Industrial Relations (IR) Department.
- The Industrial Relations Department serves the notice of the wrongful termination complaint to the employer. The EPLI policy will provide the employer with free IR advice.
- During the IR mediation, the IR Department decided that the employer must pay six months of salary to the employee (subject to the documentation given by both parties). Under EPLI, the policy will pay up to RM20,000.
- If the claim has been referred to the Industrial Court and requires the appointment of an attorney, the EPLI can cover legal costs of up to RM20,000.
- After six months, the Industrial Court judge decided to award 24 months salary to the claimant. Under the EPLI policy, it will cover up to RM100,00 per settlement and RM200,00 per year.
FAQ
1. Does the EPLI policy cover retrenchment, Voluntary Separation Scheme (VSS) and Mutual Separation Scheme (MSS)?
The EPLI does not cover retrenchment, VSS or MSS.
2. What if the employer applies for cessation or deregistration with HRDF while within the validity period of EPLI?
The EPLI policy is still active and protects the employer until the end of the validity period.
3. Will the policy still cover an employer who does not have any case within the 12-month period?
No. The policy will only cover for one year or 12 months.
4. Can the employer appoint any lawyer or legal firm to manage their case?
Yes, the employer can appoint any lawyer or legal firm to represent them.
5. If the employer has an outstanding HRDF levy or arrears, will it affect their EPLI subscription?
It is subject to the justification provided by the employer upon subscription.
If you would like to learn more about EPLI, please visit the EPLI|HRDF website.
Source: HRDF
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