Is Employment Tribunal Cover Still Worth It?

Running a business is rewarding, but it’s rarely simple. Between juggling customers, cash flow, staff and admin, the last thing you want is to find yourself facing a legal claim. Yet even when you do everything by the book, an employee can still take you to an employment tribunal. It’s an unsettling thought for many SME owners, and it raises a pressing question: is employment tribunal cover still worth it?

What Employment Tribunals Actually Involve

Employment tribunals are there to settle disputes between employers and employees. They can cover a wide range of issues, but the most common are unfair dismissal, allegations of discrimination, redundancy disputes, disagreements over pay or holiday entitlements, and breaches of contract.

For large corporates with their own HR and legal teams, responding to a tribunal is part of the territory. But for smaller businesses, the process can feel intimidating and deeply disruptive. Often claims come as a shock, especially when they arise from long-standing employees you thought you had a good relationship with.

The Real Cost of a Tribunal

Many people think of tribunal costs in terms of legal fees, but the impact goes far wider. Of course, hiring legal representation is expensive, and compensation awards can be significant – particularly in discrimination cases where there’s no cap on potential payouts. But even if you win, you’ll have invested valuable time and energy preparing documents, attending hearings and supporting managers through the process. That’s time you can’t spend running your business.

There’s also the emotional toll to consider. A claim can knock team morale and create unease in the workplace. On top of that, a public dispute can damage your reputation in ways that are difficult to repair. Since tribunal fees for employees were scrapped in 2017, the number of claims being made has risen, which means the likelihood of facing one as a small employer has only increased.

What Tribunal Cover Promises

Tribunal cover, often included as part of employment practices insurance, is designed to cushion the blow. It typically pays for legal representation and can cover compensation or settlement costs. On paper, that sounds like a lifeline – and for many it is. Having that safety net offers peace of mind, knowing that if the worst happens you won’t face the financial burden alone.

But there are caveats. Not all claims are covered, and insurers often attach conditions. If you’ve taken disciplinary action without following proper advice or your policies aren’t up to date, your cover could be invalid. Premiums can also feel steep if you’ve never had a claim before. So while insurance can help, it isn’t a blank cheque and it certainly isn’t a substitute for good practice.

Is It Still Worth Having?

So, should you keep paying for tribunal cover? The short answer is that it depends on how you use it. On its own, insurance can feel like an expensive safety net that you hope never to touch. But when combined with ongoing HR advice and support, it becomes part of a wider strategy that protects your business both financially and practically.

The reality is that employment law grows more complex every year. Even the most conscientious employers can fall foul of the rules. Tribunal cover can still be valuable, but only if you’re confident you’re meeting the conditions that make a claim eligible. That usually means working closely with HR professionals who can help you follow the right processes from the outset.

Prevention Is Better Than Cure

Instead of viewing tribunal cover as the only line of defence, many SMEs find it more effective to focus on prevention. Clear policies, well-trained managers and fair, consistent processes make disputes less likely to escalate in the first place. Early conversations and mediation can often resolve an issue before it reaches the point of no return. Regular HR audits are also invaluable, helping you spot risks in your contracts and practices before they come back to bite you.

Some businesses also explore Employment Practices Liability Insurance (EPLI), which provides wider protection beyond tribunals. But again, the same rule applies: insurance is most effective when it goes hand in hand with proactive people management.

How The HR Dept Fits In

At The HR Dept, we know how unsettling tribunal claims can be. That’s why our retained services are designed to give you both peace of mind and practical, everyday support. With us, you don’t just have insurance sitting in the background. You have someone to call before you make a tricky decision, so you’re taking the right steps from the start.

Our retained clients have access to employment tribunal insurance, but also to so much more: an advice line for day-to-day queries, policy reviews and drafting, and hands-on support with grievances, disciplinaries and redundancies. We don’t just step in when something goes wrong – we work alongside you to reduce the chance of a claim happening in the first place.

What’s The Verdict?

So, is employment tribunal cover still worth it? For many SMEs, yes – but only as part of a bigger picture. Insurance alone won’t prevent claims, and it may not even pay out if you haven’t followed the right processes. But when paired with expert HR guidance, it can form a strong safety net that protects both your finances and your peace of mind.

If you’re unsure whether your current set-up is giving you the right protection, we’d love to help. Get in touch with your local HR Dept office and we can review your HR risk management strategy together – giving you the confidence that your business, your people and your reputation are in safe hands.