What is employment practices liability insurance in Australia?

Employment practices liability insurance, or EPL, may help with legal defence costs and some claim outcomes when a current employee, former employee, or job applicant alleges the business handled hiring, workplace conduct, performance management, or termination unfairly or unlawfully.

EPL is different from employers' liability. EPL is about employment decisions and workplace conduct. Employers liability usually relates to employee injury or illness claims connected to workers compensation or common law damages. For the full explanation, see what is employers liability insurance. EPL insurance follows the employment decision, not the physical injury.

At a glance

• EPL may help cover employment-related claims from current employees, former employees, or job applicants
• Common EPL claims include unfair dismissal, discrimination, bullying, harassment, sexual harassment, and wrongful termination
• It may help with legal defence costs and some settlements or compensation, subject to policy terms
• EPL is different from employers liability, which generally relates to workplace injury or illness
• EPL is also different from workers compensation, professional indemnity, and public liability
• EPL is commonly bundled as a section inside management liability for SMEs
• Unpaid wages, superannuation, redundancy, and employee entitlements are commonly excluded or limited
• upcover arranges employment practices liability insurance for eligible Australian businesses.

What is employment practices liability insurance?

EPL responds to allegations, not proven misconduct. A claim does not need to succeed for defence costs to accumulate. Even when an employer is cleared, the process can involve legal advice, document preparation, conferences, hearings, and management time.

Claims can come from current employees, former employees, prospective employees, and in some policies, contractors. The policy typically operates on a claims-made and notified basis. The policy in force when the claim is first made and notified is usually the one that may respond. Notification timing matters.

Why EPL matters for Australian businesses

The Fair Work Commission received 40,188 applications in the 2023-24 financial year. That was the highest annual figure since the Fair Work Act 2009 commenced. Unfair dismissal is the most common claim type, but harassment, discrimination, and adverse action claims are increasing.

The risk for employers is not only whether they ultimately win. It is the cost and disruption of responding to the claim at all. A cafe owner dismisses a barista after repeated lateness warnings. The barista lodges an unfair dismissal application. The cafe owner now needs legal advice, document preparation, and time to attend a conciliation conference. Even if the dismissal was reasonable, the process has a cost. EPL may help with those defence costs, subject to policy terms.

Recent workplace changes have increased employer focus on employment conduct. The positive duty under the Sex Discrimination Act requires employers to take steps to prevent workplace sexual harassment and related conduct as far as possible. Workplace health and safety regulators are placing greater emphasis on psychosocial hazards including bullying, harassment, and excessive workloads. From 26 August 2025, employees of small business employers have the right to refuse contact outside of working hours unless the refusal is unreasonable.

What EPL insurance may cover

Unfair dismissal and wrongful termination. An employee alleges they were terminated without valid reason or proper process under the Fair Work Act. Unfair dismissal is the most common Fair Work Commission lodgment type and a common EPL exposure.

Discrimination. An employee or job applicant alleges unfavourable treatment based on a protected attribute: race, sex, age, disability, pregnancy, marital status, religion, or sexual orientation. Claims can arise from hiring, pay, promotion, rostering, performance management, or termination decisions.

Sexual harassment. An employee alleges unwelcome conduct of a sexual nature. Following amendments to the Sex Discrimination Act, employers now have a positive duty to take reasonable and proportionate measures to prevent sexual harassment in the workplace.

Workplace bullying. An employee alleges repeated unreasonable behaviour that created a risk to health and safety. Bullying claims can be made to the Fair Work Commission or pursued as part of a broader employment dispute.

Adverse action and general protections. An employee alleges they were treated detrimentally because they exercised or proposed to exercise a workplace right, such as making a complaint, requesting flexible work, or taking leave. For example, an employee who raised a workplace safety concern and was later dismissed may allege the dismissal was an adverse action connected to that complaint.

Workplace defamation and reference claims. A current or former employee alleges that statements made by the employer or a manager damaged their reputation. This can include negative references or internal communications about the employee.

Failure to promote. An employee alleges they were passed over for promotion on improper grounds such as discrimination or retaliation.

Legal defence costs. EPL may cover legal defence costs even where the claim is later withdrawn, settled, or found to be groundless, subject to policy terms.

The employment claim map

What EPL insurance does not usually cover

• Unpaid wages, superannuation, or employee entitlements
• Redundancy or severance pay obligations
• Fines or penalties imposed by the Fair Work Ombudsman or other regulators
• Deliberate fraud, dishonesty, or criminal conduct once established
• Workers compensation claims for physical injury or illness
• Bodily injury or property damage
• Professional advice errors to clients (that is professional indemnity)
• Known prior claims or circumstances notified before the policy started
• Costs to reinstate an employee or change workplace practices
• Claims outside the notification period

EPL vs employers liability vs workers compensation

These three products respond to different risks:

• EPL: how the employee was treated. Unfair dismissal, harassment, discrimination, bullying, adverse action, defamation.
• Employers liability: employee injury or illness. Common law damages where the employer's negligence is alleged, often alongside or above the workers compensation scheme.
• Workers compensation: the statutory scheme covering work-related injury and illness. Mandatory for most Australian employers. A no-fault system in most states.

One way to think about it: if the claim is about a workplace decision or workplace conduct, that is EPL. If the claim is about a physical injury at work, that is workers compensation or employers liability. If the claim is about professional advice given to a client, that is professional indemnity.

For more on the distinction, see what is employers liability insurance and is workers compensation insurance compulsory.

How EPL sits inside management liability

In Australia, many SMEs access EPL as a section within management liability. Management liability typically bundles EPL with directors and officers cover, statutory liability, crime, and tax audit under one policy.

Standalone EPL may be available for larger organisations with higher employment exposure, but many small and mid-sized businesses access it through the management liability package.

The EPL section within management liability shares the overall policy limit. Defence costs may also erode the limit, depending on the policy wording. This means a large employment claim could reduce the amount available for other management liability claims. For a full guide on management liability, see what is management liability insurance.

Who may consider EPL insurance?

EPL exposure is not only about employee count. A small business can face an employment claim if it hires, manages, disciplines, or terminates staff. EPL may be worth reviewing for:

• Any business with employees
• Businesses hiring or terminating staff
• Businesses with contractors or casual workers
• Growing businesses without dedicated in-house HR
• Industries with high staff turnover: hospitality, retail, healthcare, construction
• Professional services and technology businesses with high-value staff disputes
• NFPs and community organisations with paid staff or volunteers

What affects EPL insurance cost?

• Number of employees
• Annual turnover
• Industry and workforce composition
• Claims history and recent disputes
• HR processes, policies, and training
• Use of casuals, contractors, or volunteers
• Employee turnover rate
• Recent redundancies, restructures, or terminations
• Selected limit and excess
• Standalone EPL vs management liability package

What you need for a quote

You are usually asked for your ABN, industry, annual turnover, number of employees, whether you use contractors or casuals, HR support arrangements, employee turnover, recent redundancies or terminations, claims or Fair Work matters, workplace policies and training, preferred limit, and whether you want standalone EPL or management liability.

upcover arranges employment practices liability insurance for eligible Australian businesses.

How upcover can help

upcover arranges employment practices liability insurance as part of management liability for eligible Australian businesses with selected insurers and underwriters. Depending on insurer and policy wording, cover may help with legal defence costs and some claim outcomes for claims involving unfair dismissal, discrimination, harassment, bullying, defamation, references, and other employment-related disputes.

• 70,000+ businesses covered across Australia.
• 4.9/5 customer rating.
• 80+ insurance partners.

For related guides, see what is employers liability insurance, what is management liability insurance, and what is D&O insurance.

upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Frequently asked questions

What is employment practices liability insurance?

EPL insurance may help cover legal defence costs and some claim outcomes when current employees, former employees, or job applicants make employment-related claims against a business.

What does EPL insurance cover?

It may cover claims involving unfair dismissal, discrimination, harassment, bullying, wrongful termination, defamation, and reference claims, depending on policy wording.

Is EPL the same as employers' liability?

No. EPL relates to employment decisions and workplace conduct such as dismissal, harassment, and discrimination. Employers liability generally relates to employee injury or illness claims connected to workers compensation or common law damages.

Is EPL the same as workers compensation?

No. Workers compensation covers work-related physical injury or illness. EPL covers workplace claims about how the employee was treated, such as unfair dismissal, bullying, or discrimination.

Is EPL included in management liability?

Often, yes. EPL is commonly included as a section within management liability, alongside D&O, statutory liability, crime, and tax audit.

Does EPL cover unfair dismissal?

It may cover defence costs and some claim outcomes for unfair dismissal or wrongful termination claims, subject to policy terms.

Does EPL cover harassment and bullying?

It may cover claims involving workplace bullying, harassment, or sexual harassment, depending on policy wording and the circumstances of the claim.

Does EPL cover discrimination claims?

It may cover claims where an employee or job applicant alleges discrimination based on a protected attribute, subject to policy terms.

Does EPL cover unpaid wages or superannuation?

Usually not. Employee entitlements such as wages, superannuation, redundancy, and benefits are commonly excluded or limited under EPL policies.

Who may need EPL insurance?

Businesses with employees, job applicants, or managers making employment decisions may consider EPL exposure. It can be especially relevant for businesses hiring, disciplining, or terminating staff without dedicated HR support.

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_{The information in this article is general in nature and provided for informational purposes only. It does not constitute personal insurance, financial, or legal advice. Employment law obligations, claim processes, and tribunal procedures are subject to change. Cover types, inclusions, exclusions, and policy structure vary between insurers and policies. Always read the relevant Product Disclosure Statement before purchasing. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions in the relevant PDS. Before deciding whether a product is right for you, consider your circumstances. upcover Pty Ltd ABN 17 628 197 437, CAR 1299211 of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.}