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Charity insurance
Charity employment practices liability insurance is cover for claims by staff alleging unfair dismissal, discrimination, harassment or whistleblowing detriment. It matters because restructures, funding cuts and new employment law can all increase claims exposure.
Part of: Charity insurance
In short
Employment practices liability (EPL) insurance covers a charity's defence costs and, subject to the wording, awards and settlements for employment claims such as unfair dismissal, discrimination and whistleblowing. It is not compulsory and is separate from employers' liability. Charities face particular exposure when contracts end and services are restructured. The Employment Rights Act 2025 extends tribunal time limits from October 2026 and, from January 2027, cuts the unfair dismissal qualifying period to six months and removes the compensatory award cap. Check how EPL interacts with trustee indemnity and D&O.
Most charities with a sizeable paid workforce should at least consider it. Employment practices liability insurance (EPL) responds to claims by employees and, depending on the wording, workers and job applicants, alleging unfair dismissal, discrimination, harassment, whistleblowing detriment and similar employment wrongs. It usually pays defence costs and, subject to the policy terms, awards and agreed settlements.
Employers' liability insurance is compulsory but covers injury and disease, not employment disputes. The Charity Commission guidance on charities and insurance (CC49) notes that legal expenses insurance can cover the costs of an employment dispute and may include specified compensation, but it does not make EPL compulsory. For a charity with hundreds of staff, several services and funding that can change at short notice, the decision is about whether reserves could absorb a run of defended tribunal claims, and trustees should be able to show they weighed it.
Charity employment disputes often follow the funding cycle. When a contract or grant ends, services close or are re-tendered, and restructures, redundancies and transfers of staff under TUPE follow quickly. Process shortcuts made under time pressure can lead to claims.
Whistleblowing is a particular charity exposure. Staff in safeguarding, care and advice roles regularly raise concerns, and under section 103A of the Employment Rights Act 1996 dismissal for making a protected disclosure is automatically unfair. Discrimination claims carry no statutory cap: compensation under section 124 of the Equality Act 2010 follows the county court measure of damages.
Volunteers sit in a grey area. In X v Mid Sussex Citizens Advice Bureau [2012] UKSC 59 the Supreme Court held that a volunteer without a binding contract was not protected by the employment provisions of the discrimination law then in force. Status depends on the facts, though, and a volunteer who receives more than expenses or works under an obligation may be a worker. Check whether your EPL wording names volunteers and workers; see volunteer insurance for charities.
The Employment Rights Act 2025 is being brought in stages. The government's implementation timeline (last updated 5 November 2026) gives these dates. The first four are now in force; the government says future dates remain subject to parliamentary processes:
| Change | Date | Why it matters for EPL |
|---|---|---|
| Whistleblowing protection for disclosures about sexual harassment | 6 April 2026 | Wider range of protected disclosures |
| Maximum protective award period for collective redundancy doubled | 6 April 2026 | Higher cost of consultation failures, often excluded by EPL |
| Employment tribunal time limit extended from 3 to 6 months | 1 October 2026 | Claims arrive later and in greater number |
| Employers must not permit harassment of employees by third parties | 30 October 2026 | Harassment by service users or the public becomes a clearer exposure |
| Unfair dismissal qualifying period cut from 2 years to 6 months | 1 January 2027 | More staff able to bring claims |
| Cap on unfair dismissal compensatory awards removed | 1 January 2027 | Larger potential awards |
The unfair dismissal guidance for employers confirms that the two January 2027 changes apply in England, Scotland and Wales but not Northern Ireland. Limits bought when awards were capped deserve a fresh look.
EPL is one of several policies that touch employment risk. The table shows where a charity's main exposures usually land, subject to the policy terms.
| Exposure | Cover that usually responds | Usually excluded or limited |
|---|---|---|
| Unfair dismissal, discrimination, harassment claim against the charity | EPL | Contractual pay, notice and statutory redundancy pay |
| Claim naming a trustee or CEO personally | EPL or charity D&O, depending on structure | Fines and penalties |
| Collective redundancy consultation failure | Rarely EPL | Protective awards are commonly excluded |
| Liabilities inherited on a TUPE transfer | Depends on wording | Acts before the transfer, prior known matters |
| Injury or stress-related illness at work | Employers' liability | Not an EPL matter |
| Smaller disputes and advice line | Legal expenses insurance | Prospects of success test, lower limits |
Larger charities commonly buy EPL as one section of a charity management liability package alongside D&O and crime. That is efficient, but sections sometimes share one aggregate limit, so a large employment claim can erode the cover left for trustees. See the shared limit trap.
Standalone trustee indemnity insurance, bought under section 189 of the Charities Act 2011, protects trustees personally. Many trustee indemnity policies exclude or sub-limit employment claims against the charity itself, which is why EPL matters. Check trustee indemnity exclusions before assuming you are covered.
Two practical points often surprise boards. First, EPL insurers usually expect to be told early and to control or approve settlement, so a quiet settlement agreement signed without consent may not be reimbursed. Second, cover is usually written on a claims made basis, so a grievance raised before inception and disclosed later may fall outside the policy.
These examples are illustrative only and do not describe real claims.
A local authority contract ends and a charity makes 18 support workers redundant in four weeks. Two allege their selection was discriminatory. EPL may meet defence costs and any award, subject to the wording, but statutory redundancy pay is the charity's own cost.
A project manager reports concerns about a partner organisation and is later dismissed for performance. She alleges whistleblowing dismissal. EPL commonly responds; the strength of the defence depends on the performance record made before the disclosure.
Underwriters commonly look for an up-to-date staff handbook, HR advice or an HR professional, documented disciplinary and grievance procedures, a whistleblowing policy reported to the board, management training on discrimination and harassment, and a record of past tribunal claims and settlements.
Common mistakes include relying on employers' liability for employment disputes, assuming trustee indemnity covers claims against the charity, signing settlement agreements without insurer consent, and leaving limits unchanged as compensatory awards are uncapped.
Trustees should review EPL before any restructure, re-tender or merger, when headcount or the number of sites changes materially, when a TUPE transfer in or out is planned, and ahead of the January 2027 unfair dismissal changes. Our charity insurance programme review, the broader insurance programme review and the charity insurance broker guide explain how a second opinion works. Apex arranges employment practices liability for charities and social enterprises; a broker reads every enquiry.
Leave a name and number and a broker who works with charities will call you back, usually the same working day. Or ask for a free second opinion on your charity’s insurance.
Or email your schedules and renewal date to info@apexinsurancebrokers.co.uk, or call 0117 325 0027.
No. Employers' liability insurance is compulsory for charities that employ staff, but it covers injury and disease rather than employment disputes. EPL is optional. Trustees of charities with a large paid workforce usually consider it because tribunal defence costs and uncapped discrimination awards can be significant, especially during restructures.
Not reliably. Trustee indemnity protects trustees personally for breach of trust or duty. Many policies exclude or sub-limit employment claims brought against the charity as employer. Larger charities often add an EPL section to their D&O or management liability policy. Check the wording and whether the sections share a limit.
It depends on the policy definitions. Volunteers without a binding contract are generally not employees, but a volunteer may be treated as a worker if paid more than expenses or obliged to work. Some EPL wordings include volunteers and workers as potential claimants or insured persons; others do not. Ask your broker to confirm.
Usually not. EPL typically excludes contractual and statutory payments the charity would owe anyway, such as notice pay and statutory redundancy pay, and commonly excludes protective awards for failing to consult collectively. It may defend and pay awards for claims alleging the redundancy was unfair or discriminatory, subject to the policy terms.
From 1 October 2026 most tribunal claims have a six month time limit, and from 1 January 2027 the unfair dismissal qualifying period falls to six months and the compensatory award cap is removed, according to the government timeline. More staff can claim and awards may be larger, so limits and retentions are worth reviewing.
Send us your current schedules, policy wordings and renewal date. We will review the whole programme and give you a one-page summary for your board: what to keep, what is missing and what to change. No fee and no obligation. Or call 0117 325 0027.
Get a second opinion Get a quoteApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
