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Workforce Woes

Workforce Woes

Employers are under the microscope. From AI-bias to hybrid working and new employment law employers are navigating a complex and volatile risk landscape. Are employers’ greatest asset becoming their biggest threat?

Employers need to balance an array of competing employee challenges. The rising risks include; managing flexible working practices, handling multigenerational expectations, while attracting and retaining talent, incorporating diversity, equity and inclusion (DEI), and adhering to ever changing employer regulations. Every business, in every sector, globally, is affected.

Our Risk & Resilience research1 reflects this tricky environment. Employer risk concern is growing year on year, and this year almost a quarter of the global executives we surveyed ranked employer risk as their top boardroom concern. At the same time a similar percentage feel unprepared to manage employer risk.

Claims Focus Group Leaders discuss rising EPL risks and concerns on both sides of the Atlantic.

Letoyia Horton, Claims Focus Group Leader – EPL Claims

Kamal Chhibber, Claims Focus Group Leader – Financial Lines Claims (EPL)

All for one – and one for all

DEI policies are intended to promote a workplace that is inclusive and fair for all employees. In the war for talent, DEI initiatives can deepen the recruitment pool. The focus on DEI also shines a light on perceived inequality, driving a growing trend of group employment tribunal claims being filed.

In August this year, Next – a UK retailer – lost an employment tribunal case, brought by 3,540 of its shop floor consultants claiming equal pay in line with the firm’s warehouse operatives. Following this landmark case a number of other UK retailers are facing similar claims.4
Many employers are taking action, and 26% of our survey respondents are planning to review their hiring and retention policies to boost diversity and inclusion in their workforce this year.

These trends are playing out in the courtrooms with social inflation increasingly commonplace5 in the US, as jurors, swayed by social media driven anti-corporate sentiment, levy large awards. This phenomenon is also starting to play out in the UK, where there has been an uptick in the number, and cost, of tribunal claims in recent years.6

AI anxiety

Our research reveals that a quarter of firms surveyed are planning to invest in new technologies such as generative artificial intelligence (AI) this year, and 68% agree that AI will lead to jobs being replaced in their company. So, how do employers manage the transition in a fair and ethical manner? With AI increasingly being used in HR-based systems, concerns over bias in AI- decision making systems are likely to result in discrimination claims.
“Many governments are currently taking action to address the range of ethical and social risks posed by AI and businesses should ensure this is considered as part of ongoing risk management. As a starter, businesses must avoid using AI which exacerbates social harms such as discrimination, bias and misinformation. In addition, there needs to be an acknowledgement of the increased employer risk, as AI can contribute to displacement of workers.”

Letoyia Horton
Claims Focus Group Leader, Employment Practices Liability

Rulebook risks

Many firms are struggling to keep up with increasingly complex employment laws and standards. This is particularly pronounced for firms operating in multiple regions, as regional regulatory inconsistencies create huge challenges, particularly for responsible firms trying to treat all their employees consistently.

In addition, changes to workplace safety standards, employee rights, and other environmental, social and governance requirements (ESG) rules are adding pressure to firms already trying to balance evolving needs with operational efficiency and profitability.

Staying ahead of the regulators demands constant monitoring, policy and procedure updates and adaptations to prevent costly missteps.

Speaking up

Whistleblowing poses a threat to employers’ reputation, putting pressure on them to ensure that their policies and procedures encourage ethical, legal and safe practices. As we explored in our 2023 Business Risk report, the tone from the top is vital, and firms need to foster a culture of transparency, supported by clear procedures and policies.

Employees should be encouraged to raise concerns without fear of retaliation or retribution, and compliance and HR systems should be in place to support employees, investigate, manage and mitigate any issues raised in an appropriate manner.

Building resilience

Building resilience to today’s evolving employer risks requires proactive risk management. Regular risk assessments need to be undertaken, and risk mitigation strategies adapted accordingly. Strong employee communication is also essential to foster a culture of openness and help to identify and deal with problems early and build employee trust.
As business leaders look to strike the right balance, it’s important they implement diversity policies, ensure they have the latest HR and management systems in place and that they check for and avoid AI-bias. In addition, encouraging and supporting an environment where managers listen and act on staff feedback is essential. As is partnering with quality insurance partners which can provide risk insight, access to expert legal advice and provide appropriate coverage, and support and advice if claims are brought.

“Employers are under constant scrutiny. Defining issues such as remote working, DEI policies and AI adoption are all under the polarised microscope of public opinion. With employment tribunals becoming increasingly common, businesses must ensure they have adequate protections in place to defend themselves.”

Kamal Chhibber
Claims Focus Group Leader - International Financial Lines

All for one – and one for all

Employer risk under the microscope

AI anxiety

Rulebook risks

Speaking up

Speaking up

Whistleblowing poses a threat to employers’ reputation, putting pressure on them to ensure that their policies and procedures encourage ethical, legal and safe practices. As we explored in our 2023 Business Risk report, the tone from the top is vital, and firms need to foster a culture of transparency, supported by clear procedures and policies.

Employees should be encouraged to raise concerns without fear of retaliation or retribution, and compliance and HR systems should be in place to support employees, investigate, manage and mitigate any issues raised in an appropriate manner.

Building resilience

Building resilience to today’s evolving employer risks requires proactive risk management. Regular risk assessments need to be undertaken, and risk mitigation strategies adapted accordingly. Strong employee communication is also essential to foster a culture of openness and help to identify and deal with problems early and build employee trust.
As business leaders look to strike the right balance, it’s important they implement diversity policies, ensure they have the latest HR and management systems in place and that they check for and avoid AI-bias. In addition, encouraging and supporting an environment where managers listen and act on staff feedback is essential. As is partnering with quality insurance partners which can provide risk insight, access to expert legal advice and provide appropriate coverage, and support and advice if claims are brought.

“Employers are under constant scrutiny. Defining issues such as remote working, DEI policies and AI adoption are all under the polarised microscope of public opinion. With employment tribunals becoming increasingly common, businesses must ensure they have adequate protections in place to defend themselves.”

Kamal Chhibber
Claims Focus Group Leader - International Financial Lines

Claims Focus Group Leaders discuss rising EPL risks and concerns on both sides of the Atlantic.

All for one – and one for all

AI anxiety

Rulebook risks

Speaking up

Building resilience

All for one – and one for all

AI anxiety

Rulebook risks

Speaking up

Building resilience

Related Articles

AI Bias: the impact of AI on the workplace and recruitment

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