The short answer
Employment practices insurance covers claims from current, former or prospective employees alleging things like wrongful dismissal, discrimination, harassment or retaliation. It typically pays for defence and, within limits, settlements or awards. It does not replace workers' compensation, and some costs, such as statutory severance, may be excluded. A licensed broker explains what applies in your province.
- Employers with a team that is growing, changing or reorganizing
- Businesses that have had to terminate someone and want to know how a claim would be handled
- Owners of franchises, restaurants, clinics and retail shops with many part-time workers
- Organizations that already carry directors and officers insurance and want to know where employment claims sit
- Employers whose hiring involves interviews, background checks or temporary agencies
1 licensed broker in the network handles this. In Alberta, Canada, a request for employment practices insurance can be offered to up to three of them, chosen because they are licensed for this line and place. They are test brokers while we are in demo.
See the brokers → Outside Alberta, Canada you can prepare and save a request today; sending opens place by place. Brokers answer with their own quotes. Broker.insure does not quote, advise or take commission.
01 / What it covers
The parts worth understanding
Wrongful dismissal
Claims that a termination was without cause or without proper notice. The policy generally responds to defence and certain awards, but may exclude the statutory notice or severance an employer would owe anyway. Ask how that line is drawn.
Discrimination and harassment
Allegations of unfair treatment because of a protected ground, such as age, disability or sex, or of bullying and sexual harassment. Complaints are often filed with a human rights body or a labour tribunal rather than in court, so ask whether those proceedings are included.
Retaliation and constructive dismissal
Claims that someone was penalized for raising a concern, or that a change in role, pay or conditions amounted to a dismissal. These can arise without any termination meeting having been held.
Third-party claims
Allegations by customers, vendors or clients of harassment or discrimination by an employee. Some policies include this, others do not.
Defence and advice
Some insurers give access to a hotline or a lawyer before a claim exists, for example to review a termination plan. Ask whether that service is included and whether use triggers a notice.
What is typically excluded
Wage and hour disputes, workers' compensation, pension and benefits claims, bodily injury and criminal acts are commonly outside the cover or offered only with a sub-limit. Read the exclusions with your own practices in mind.
02 / Get ready
Bring this, and expect these questions
Gather
- The number of employees, contractors and part-time workers, and the provinces where they work
- Whether any are unionized or covered by a collective agreement
- Copies of the employee handbook, written policies on harassment and discrimination, and a sample employment contract
- How hiring, performance review and termination decisions are made and documented
- The number of terminations or resignations over the past few years, and whether any led to a complaint or claim
- Any pending complaints, demand letters, tribunal filings or lawyer correspondence
- Training provided to managers on respectful workplaces and on handling complaints
- Whether you use staffing agencies or independent contractors in roles that look like employees
- Any existing cover, such as a directors and officers or small business policy, that mentions employment claims
A broker will ask
- How many people work for you, in which provinces, and in what roles?
- Do you have written employment contracts, a handbook and a harassment policy, and are they used in practice?
- Who makes termination decisions, and is legal or HR advice sought before one is made?
- Has the business had any complaint, human rights filing or demand letter about how an employee was treated?
- Are there layoffs, a restructuring or a sale in prospect?
- Do you use contractors or agency staff, and who manages them day to day?
- Is anyone in the business covered by a collective agreement?
- Does a customer contract or an investor ask you to carry this cover?
Not sure of an answer? Leave it. "Not known yet" is a fine answer, and a broker will help you fill it in.
03 / Build your request
Answer a few questions. Get your own list.
Pick what fits. Your answers shape the list beside them, and they are saved to your request as plain facts a broker can read. "Not sure yet" is always a fine answer.
04 / Three situations
See which one sounds like yours
A restaurant owner letting a long-serving cook go
The owner of a restaurant in Victoria is about to dismiss a cook who has worked there for nine years, after repeated disagreements with the kitchen manager. There is no written contract and the owner is worried about what the cook might claim.
First steps. Pause the decision long enough to talk to the broker and a lawyer, and gather any notes about performance issues, the employee's start date and pay history. Ask how a wrongful dismissal claim is handled, what is excluded for statutory entitlements, and whether early advice is available.
A clinic dealing with a harassment complaint
A medical clinic in Regina has received a complaint from a receptionist alleging repeated inappropriate comments by one of the doctors. The clinic manager has begun an internal review and is wondering whether the matter should be reported to the insurer.
First steps. Keep a record of the complaint and what has been done, and read the policy for its notice conditions. Ask the broker whether reporting a circumstance now preserves cover later, and how an investigation by an external party fits within the policy.
A growing company hiring across several provinces
A software company in Calgary has grown from eight to forty employees in two years, adding remote staff in Ontario and British Columbia. It uses a generic contract template and has no formal harassment policy.
First steps. Collect the template, the list of employees by province and any policies that exist. Ask the broker how insurers view the gap between a growing staff and thin written policies, and whether an employment lawyer should review the template alongside the insurance conversation.
05 / Words you will hear
The jargon, in plain words
- Wrongful dismissal
- A claim that someone was let go without good reason or enough notice. Cover can help with defence costs, while notice pay required by law is often outside it.
- Constructive dismissal
- A situation where an employer changes pay, duties or conditions so much that the worker treats the job as ended, even though no one was formally fired.
- Human rights complaint
- A formal claim, usually filed with a tribunal rather than a court, that someone was treated unfairly on a protected ground like age, disability or gender.
- Third-party claim
- An allegation from a customer, supplier or visitor, not a worker, that an employee harassed or discriminated against them. Some policies include it and some do not.
- Notice of circumstances
- A heads-up to the insurer about a situation that could turn into a claim. Many policies allow it, and some set time limits that are easy to miss.
06 / Common mistakes
What trips people up
- Assuming workers' compensation or general liability handles claims of dismissal, discrimination or harassment.
- Treating a complaint as an internal matter and not reporting it to the insurer within the time the policy requires.
- Having a handbook that no one follows, which can be worse than none.
- Using the same contract template in every province without checking local rules.
- Dismissing someone first and asking about cover afterward, when the policy may require advance consultation.
- Treating a long-term contractor as a non-employee without considering how a tribunal might see the relationship.
Ready when you are
Turn this into one clear request.
Save it, add what you know, and choose when to send it. A licensed broker who handles employment practices insurance takes it from there.
07 / Questions people ask
Straight answers
What does employment practices insurance cover?
It covers claims by current, former or prospective employees alleging wrongful dismissal, discrimination, harassment or retaliation. It typically pays legal defence and, within limits, settlements or awards. It does not usually cover wage disputes, workers' compensation or statutory entitlements. A licensed broker can show you the wording that applies in your province.
Does this cover wrongful dismissal claims?
Generally yes, for defence and for certain awards, but an employer's duty to pay notice or severance required by law is often not insurable. The policy may help with the cost of fighting or settling the dispute over additional claims. Ask the broker exactly where the policy draws that line.
Do I need employment practices insurance if I have only a few employees?
Claims can arise from a single dismissal, and legal costs do not depend on the size of the business. Smaller employers often have fewer HR resources, so a dispute can be harder to manage. Whether cover is worth arranging is a business decision; a broker can explain the options and what insurers expect.
What is the difference between employment practices and workers' compensation?
Workers' compensation is a provincial system that pays for workplace injuries and illnesses regardless of fault. Employment practices insurance deals with allegations about how an employer treated someone, such as a discriminatory dismissal. They respond to different events, and one does not replace the other.
Should I tell my insurer about a complaint before it becomes a claim?
Many policies allow, or require, you to report circumstances that could lead to a claim, which can protect your cover later. The policy sets the notice rules, and a missed deadline can cause problems. Speak to your broker as soon as you know of a complaint, a demand letter or a threatened filing.
Does employment practices insurance cover claims by independent contractors?
Sometimes. Some policies define covered claimants to include contractors or temporary agency staff, while others limit it to employees. If someone you call a contractor argues they were really an employee, the outcome depends on the facts. Tell your broker how you engage contractors so the wording can be checked.
General information, not insurance advice. Broker.insure is a directory and request service: it is not an insurer and does not quote, bind or advise. Policy terms, availability and what is required where you live depend on your situation and on licensed professionals. Updated 2026-10-31.