"HR on HR": High Risks Regarding Human Resources

What threats do European companies actually face today in employment-related litigation?

When discussing the insurability of corporate risks linked to discrimination, harassment or wrongful dismissal, people often refer only to Anglo‑Saxon exposures in general and North American ones in particular. It is true that the record amounts reached across the Atlantic—both in terms of the number of plaintiffs in a single class action (up to $1.5 million in the lawsuit against Walmart) and in terms of damages awarded ($250 million imposed on Novartis)—tend to focus fears on the United States.

Without seeking to downplay this major exposure in the U.S. (and particularly in California), it would nevertheless be very unwise to conclude that a company based in Europe is therefore immune to this type of litigation. Consideration of social issues and the concept of workplace well‑being are no longer abstract principles of managerial benevolence but strict directives that must guide HR policies in preventing, identifying and addressing any deviations from—or violations of—these values.

Reversal of the burden of proof in pay discrimination cases (the employer must demonstrate that a pay gap observed between two employees of comparable profiles is not the result of discrimination), publication of gender‑parity indices whose insufficient scores can, beyond financial penalties, disqualify a company from participating in public procurement bids, and increased activism by trade unions and advocacy groups in bringing collective actions—these are the trends we observe in our markets.

Also keep in mind the tightening of sanctions for abusive renewals of fixed‑term contracts (CDD), inappropriate use of permanent contracts (CDI), or the sometimes improper use of mutual termination agreements where grievances had previously been raised. The line between stress and moral harassment has become extremely fragile and uncertain because of the sensitivity of individual perceptions and the weakening separation between work and private life, the increasing digitization of work tools, the rise of social media and the geographical encroachment of teleworking into private spheres.

Current events have given names to new ailments: after burn‑out (occupational exhaustion) came bore‑out (demotivation through boredom, being sidelined) and then brown‑out (loss of meaning at work, disconnection from personal values). Labor inspectors and judges no longer hesitate to recognize that certain abuses are criminally punishable, and have gone as far as prosecuting and convicting executives or companies as legal persons (in cases of managerial or institutional harassment) on the basis of involuntary manslaughter charges.

The duty to ensure safety combines with the duty of vigilance to require those responsible to anticipate all risks of human‑rights violations by updating risk‑assessment documents (including psychosocial risks) and implementing vigilance/due‑diligence plans for subsidiaries, subcontractors and suppliers with whom the company has established commercial relationships.

The scope of employees’ freedom of expression and personal‑data protection varies greatly between countries, which makes centralizing HR procedures potentially perilous if local legal constraints are not taken into account. The subjectivity of claimed harms (such as anxiety damage from having been exposed to a potentially harmful substance) also makes harmful impacts difficult to measure at a time when the precautionary principle demands great caution.

The right to disconnect (enforceable via IT logs on corporate servers) and the protection afforded to whistleblowers complement the legal tools available to regulators to detect any breach of balance. Growing pressure to increase testing campaigns to normalize anonymous CVs echoes the multiplication of discrimination cases recognized in the United States and gradually introduced in Europe (for example, discrimination based on a candidate’s place of residence).

The delicate management of religious issues in the workplace has also become a pressing concern for employers who must find the right balance between employees’ freedom of worship and the neutrality of the workplace. Given both the financial and reputational consequences of heavy sanctions in this area, taking out an insurance policy dedicated to employment‑related claims (for example, employment practices liability insurance) is entirely justified. The specialized expertise of insurers and their dedicated law firms, together with outsourcing—off the company’s books—of the handling of such litigation can significantly reduce the intensity of this highly evolving risk while ensuring the required confidentiality.

As the saying goes, to govern is to foresee. In this context, failing to protect yourself against this type of exposure when specific insurance products are available is tantamount to becoming accountable, and potentially personally liable, for what may occur in a field where threats remain as omnipresent as they are complex to anticipate and eradicate.