Note : This chapter of the Guide is only intended as a guide to better understanding of your policy and of the actions that you must take in various situations. You must refer to your Policy wording and Schedule for precise details of your cover and all terms, conditions, limitations and exclusions applicable to it.
In addition to the liabilities for which cover is provided under the headings of Employers’ Liability and Public Liability which we have outlined in previous Chapters, the Board has many other legal obligations as an employer and manager.
These additional liabilities embrace, inter alia:
(a) allegations of breaches of duty / errors and omissions by the Board in the running of the School,
(b) allegations of libel or slander,
(c) allegations of breach of duty by Trustees of the School while acting as such,
(d) all aspects of employment legislation e.g. the wrongful dismissal of employees or discrimination in the workplace, etc
(e) disputes which may arise with pupils, parents and guardians, suppliers and contractors,
(f) misappropriation / embezzlement of School Money or Property.
Are we not already covered for these exposures under either the Property Damage, Money, Employers Liability or Public Liability Sections?
No, cover under the above Sections of the Policy is subject to the following:
1. Property Damage & Money
The Property Damage Section contains the following exclusions in this regard:-
Loss, Destruction or Damage
(a) of or to Money,
(b) caused by or resulting from dishonesty of employees, while the Money Section contains an exclusion in relation to loss of money caused by any fraudulent or dishonest act.
2. Employers Liability
Cover under the Employers Liability sub-section of the policy is provided for legal liability arising out bodily injury, illness or disease to employees. However claims not involving such injury, illness
or disease can arise out of or in connection with a contract of employment, for example:-
(a) unfair dismissal;
(b) discrimination in the workplace;
(c) employment related bullying or harassment;
(d) failure to offer equal terms of employment, none of which are covered by Employers Liability insurance.
3. Public Liability
Cover under the Public Liability sub-section applies in respect of accidental bodily injury or accidental damage to property. As such any legal liability for financial loss not resulting from injury or damage is not covered under Public Liability. Additionally, liability due to negligent advice or breach of duty owed in a professional capacity is excluded under the Public Liability Sub-Section.
What cover does the Policy provide?
The cover provided by the Indemnity to Management Section of the Custodian School Protection Policy is sub-divided into four sub-sections:-
(i) Professional Indemnity;
(ii) Trustees, Directors and Officers Liability
(iii) Employment Practices Liability;
(iv) Fidelity Guarantee.
These covers are particularly important in light of the high levels of claims consciousness that exist in society to day. The areas of Professional Indemnity and Employment Practices Liability insurance are giving rise to increasing numbers of claims notifications (Refer to Chapter 2 - What does the Allianz Custodian Protection Policy Cover? for more details of cover provided).
Does the Indemnity to Management cover apply to all members of the Board and teaching staff?
The protection provided by the policy applies to the members of the Board and the Patron / Trustees.
In addition, at the request of the Insured, Allianz will indemnify any parent teacher association, past pupil union, Employee (including teachers) or other person in respect of liability for which the Insured would have been indemnified under the policy if the claim had been made against the Insured.
So how can claims arise?
In the running of any enterprise involving employees, customers and suppliers, difficulties can arise which may lead to legal action being taken against management.
Let us look at some examples:
1. Professional Indemnity
(a) Breach of confidentiality due to failure to adequately secure confidential information, for example leaving confidential files in areas where they are accessible to others;
(b) Allegations of faulty or negligent advice;
(c) Libel and slander. Note however that cover in this regard is limited to any such act committed in good faith ie accidentally. There is no cover under the policy for deliberate or intentional libel or slander.
(d) A pupil has caused trouble in the school over a period of time and the Board finally expel the child.
2. Trustees, Directors & Officers Liability
(a) breach of duty in relation to compliance / conformance with the objectives of a Trust.
(b) provision of incorrect or misleading information to Employees in relation to entitlements.
3. Employment Practices Liability
(a) A female teacher applies for a position and is passed over in favour of a male candidate whom she feels is less qualified for the job.
(b) An applicant who does not meet the specified requirements is appointed to a position, even though one or more of the other candidates met all specified requirements.
(c) Claims for unfair dismissal by handymen, caretakers and housekeepers, even when employed on a part time basis;
4. Fidelity Guarantee
It may transpire that a member of staff has been misappropriating school funds. The theft takes place over a period of time and is discovered as a result of an audit. Consequently it is imperative that school books are always professionally audited at least annually in accordance with best accounting practices.
The Limit of Indemnity is €100,000 in any one Period of Insurance. Every effort must and will be made to recoup the loss from the guilty party.
How does liability arise under Employment Practices Liability?
Liability arises primarily under Employment related legislation. There are currently over 50 separate pieces of legislation, all of which have potential to impact on your liability to employees. These include the:
(i) Employment Equality Acts 1998 - 2004,
(ii) Equal Status Acts 2000 - 2004
(iii) Statutory instrument number 146 of 2000
Industrial Relations Act 1990 (Code of Practice on Grievance and Disciplinary
Procedures)(Declaration) Order 2000.
These pieces of legislation and many others present Boards with great challenges in ensuring that they not only treat their Employees (and prospective employees) fairly and honestly, but that they can demonstrate how they achieve such targets.
Various Codes of Practices have been drawn up between the representative bodies engaged in the Education Sector including management groups such as the JMB, CPSMA etc on behalf of Boards/Patrons and Unions such as the ASTI, INTO, TUI etc on behalf of Teachers.
In addition the Department of Education have issued many circulars on the subject of Employment Law and its application in the School environment all of which provide Boards with valuable guidance on the procedures that must be adopted in this complex field.
Must we comply with all such legislation, surely there are exemptions?
The legislation applies to all employers without exemption, no matter how big or small the employer.
How can we ensure compliance?
In order to ensure compliance with employment legislation, you should obtain appropriate legal advice in this regard and review all of your employment related procedures accordingly.
The policy contains a condition that you obtain and follow such legal advice in relation to any:
(a) proposed dismissal or suspension of any Employee
(b) change in the terms of employment or job specification of any Employee in addition to following current and standard procedures in relation to such actions.
Are there any other similar qualifications?
The Professional Indemnity Section contains a condition that in relation to any suspension or expulsion of or refusal to enrol any pupil you seek and follow established procedures and the advice of a solicitor well versed in the law and regulations relating to such actions.
Must we seek advice in every instance?
Not necessarily! As we have said earlier in Chapter 4 - Safety in the School, the adoption and utilisation of sets of appropriate procedures should be put in place by all schools. You should seek legal advice in relation to any such procedures to ensure that they are appropriate. Provided a particular set of circumstances is addressed by these procedures, then separate legal advice in such circumstance would not be necessary to comply with the policy provisions.
Separate legal advice would be necessary for any set of circumstances not addressed by the approved procedures. Furthermore, procedures should be reviewed and updated on a regular basis to take into consideration any changes in legislation etc. and legal advice should always be sought in this regard.
Why is cover so restricted?
If it were not so it would be possible that the Board could arbitrarily act without recourse to procedures or advice. Their action could be blatantly unfair and unwarranted, and any action brought against them would be indefensible. For this reason the insurance policy only provides protection against the reasonable action of the Board.
What about claims against the Board for assault by a teacher or member of staff?
The Board may be sued in respect of a criminal act committed by a member of staff or other employee. It must be remembered, however, that no insurance policy will cover the perpetrator of a criminal act and consequently no protection is afforded to the alleged perpetrator.
It can, undoubtedly, be argued that any assault is committed outside the scope of the employment of the perpetrator, but nevertheless an action could be taken against the Board, for example on the grounds that they had failed in their duty to employ suitable employees. The Board is only covered by the policy in such circumstances provided they had no knowledge of the misconduct or any grounds for believing that it was taking place.
Are there any qualifications in regard to Fidelity Guarantee cover?
Yes, the Insured is required to have all School books of account audited at least annually by a suitably qualified person or persons. There are others, have a look at the policy document for full details.
Does a suitably qualified person mean a qualified accountant?
No, anyone with an appropriate knowledge of book keeping procedures and practices, for example a retired bank manager, would be deemed a suitably qualified person.
What steps can we take to avoid claims?
Over the years Schools have suffered losses of significant amounts of money through embezzlement by both Employees and volunteers. The following measures should be considered as a form of good practice for the handling of School funds:-
(a) All expenditure should be approved by the Board;
(b) As part of any selection process, the veracity of references of persons who will handle money and financial records should be verified;
(c) Authority to sign cheques should always be by al least two approved signatories, one of whom must be the Chairperson of the Board, with the second signature being the Treasurer (preferably) or other approved person;
(d) Keep all money in a securely locked safe;
(e) Deposit all cheques and cash in a timely manner;
(f) Bank accounts should be reconciled on a monthly basis to ensure bank balances are in order.
(g) There should be a requirement that all requests for cheques to be signed be accompanied by a cheque requisition which details the following:
(i) the amount to be paid
(ii) who the cheque is payable to
(iii)inclusion of an invoice for the amount requested or full details of the purpose of the expenditure
(h) At each Board meeting, an income and expenditure account should be presented to the Board. This should include the following:
(i) payments made,
(ii) payments for approval,
(iii)latest bank statement, including reconciliation.
What is different about the Legal Expenses cover?
In other areas of insurances the cover provided may be regarded as reactive, in other words the injury or damage which is the subject of a claim has already occurred. With the provision of cover for Legal Expenses (Section 6), however, the cover could be said to be proactive, in other words the Board decide in many instances they will take the legal action.
The cover provided is for the legal costs which will be incurred in the pursuit of that legal action.
Surely that could enable the Board to take any action it wishes without regard for costs?
No. Firstly the costs are limited to €1,000,000, and secondly cover is only provided in certain
circumstances - viz
The Board of Management is required to seek permission from Allianz before it incurs costs which constitute a claim.
The fact remains that no insurance policy is going to fund a frivolous legal action and Allianz will only finance an action if legal advisors confirm that it has a reasonable prospect for success.
How can the Board reduce their exposure in this area?
As we have mentioned in Chapter 4 - Safety in the School the existence of appropriate procedures and written records will enhance the possibilities of successfully defending claims. It is therefore imperative that the Board give serious attention to the issue of procedures and record keeping
What are the main areas that you feel require particular attention?
(a)Employment Procedures
See comments earlier in this Chapter.
(b)Health & Safety Procedures
Chapter 5 - Safety, Health & Welfare at Work Act 2005 - details the various procedures that Boards must put in place in respect of the Health & Safety of Employees and others. The obligations imposed on Boards must be documented so that the Board can clearly demonstrate how they are meeting such obligations.
(c)Emergency Procedures
The Board’s obligations under the Fire Services Act 1981 as amended by the Licensing of Indoor
Events Act 2003 are set out in detail in Chapter 9 - Fire Safety in the School. In keeping with the comments made under Health & Safety above the importance of documentation in this area and the need to constantly communicate and review these procedures cannot be overstated.
(d)Code of Conduct
Section 23 of the Education (Welfare) Act 2000 requires the Board, after consultation with the
principal, teachers and parents and the educational welfare officer, to prepare a code of
behaviour in respect of the pupils. The code must specify at least the following:
(i) the standards of behaviour to be observed by each pupil attending the school;
(ii) the measures that may be taken when a pupil fails or refuses to observe those standards;
(iii) the procedures to be followed before a pupil may be suspended or expelled from the school concerned;
(iv) the grounds for removing a suspension imposed on a pupil;
(v) the procedures to be followed relating to notification of a pupil’s absence from school.
The code must be prepared in accordance with guidelines issued by the National Education Welfare Board. The principal, before enrolling a child, is also obliged to provide parents with a copy of the code of behaviour for that school and is empowered, as a condition of registration, to require the parents to confirm in writing that the code is acceptable to them and that they will make all reasonable efforts to ensure compliance by the child.
(e)School Admission Policy
The fairness of the admissions policy for pupils to schools is covered by the Equal Status Acts 2000-2004. Section 7(2) of the 2000 Act, as amended, prohibits discrimination under any of nine grounds in relation to admission of a pupil to an educational establishment. The nine grounds are:
(i) gender,
(ii) marital status,
(iii) family status,
(iv) sexual orientation,
(v) religion,
(vi) age,
(vii) disability,
(viii) race,
(ix) membership of the travelling community.
However, as a general rule in the context of admissions, the Equal Status Acts permit educational establishments to refuse admission to a particular candidate on the following grounds:
(i) Primary and secondary schools may admit pupils of one gender only;
(ii) Primary and secondary schools who wish to create an environment promoting certain religious values may discriminate on the religious ground. The school must show that any refusal of admission is essential to maintain the ethos of the school.
(f)Child Protection
The Child Care Act 1991 gave powers to health boards to care for children who were ill-treated, neglected or sexually abused. The Dept of Education have issued Child Protection Guidelines and Procedures to all Schools which are based on the national guidelines contained in Children First. The aim of the guidelines is to give direction and guidance to school management and staff in dealing with allegations or suspicions of child abuse, with the protection and well being of the child being the most important consideration.
All schools must have documented procedures on Child Protection which must strive to achieve “best practice” but as a minimum meet the guidelines set out in Children First.
(g)Internet Usage
Technology has brought welcome advances in Education and is becoming an ever increasing feature of School life at all levels, however when used in an inappropriate manner it can create exposures for the Board not previously envisaged (eg breach of copyright, cyber bullying, pornography etc).
All Schools should have an Internet Usage Policy which clearly sets out what is considered acceptable use and what is considered unacceptable. The Policy should also set out the disciplinary procedures that will be followed where unacceptable usage occurs. The Policy should be agreed with the Parents Council where possible and issued to all pupils and Parents annually.
(h)Data Protection
All schools should acquaint themselves with the provisions of the Data Protection Act 1988 as amended by the Data Protection (Amendment) Act 2003 which governs the storage and processing of data. This legislation is of particular relevance to the recruitment process, the maintenance of employee records and potential litigation as a result of grievance, discipline or dismissal.
As Data Controllers schools are required to comply with the principles set out in the Data Protection Acts which govern areas such as what data can be retained, how it should be
stored, the rights of the Data Subject (i.e. the person to whom the data relates) and the purposes for which the data can be used. As with all the areas mentioned in this Chapter it is important that the School have a clearly documented policy in this area which is communicated to all members of the Board and Employees.