COVID-19 litigation surge awaits UK companies

A surge in contract disputes and employment-related litigation may be about to hit UK companies, according to Insurance broker Gallagher.  Possible allegations include workplace-related safety violations and negligence, as well as unfair dismissal and discrimination following job losses.

The survey, which was conducted last month by 3Gem on behalf of Gallagher, featured responses from 200 claims management companies (CMCs), 1,000 senior business decision-makers, and 2,000 UK workers.  It found that “Even though the vast majority of the claims management companies contacted had already seen claims, of those that hadn’t yet, three-quarters (76%) said they were expecting an increase over the coming months.”

40% rise in litigation

The press release issued by Gallagher noted that “Seven in 10 (70%) have already had claims registered and predict claims will cause a 40% rise in litigation compared to previous years, with the real impact likely to be felt from spring 2021 and continue into summer.”

Many disputes involve lawsuits directly related to the pandemic, such as contracting COVID-19 whilst on the company premises.  Others are being brought by employees against wrongful dismissal and discrimination.  Complaints about injury, illness or stress as a result of work have already been rising since 2016 and are likely to increase further in the wake of coronavirus.

Just as the COVID-19 pandemic has impacted society and business in wide-ranging ways, the wave of litigation believed to be on its way is not confined to a single issue.  Many claims relate to medical negligence or poor working conditions – including a lack of suitable PPE.  Others concern treatment for other illnesses being delayed.  Employment-related litigation and redundancy claims are expected to rise once the UK government’s furlough scheme ends on September 30, as employers begin making staffing cuts that the furlough scheme has enabled them to defer.

All data taken from research conducted by 3Gem

A variety of risks

Neil Hodgson, risk management managing director at Gallagher UK, in a statement accompanying the press release, said that “Organisations operating during COVID-19 face a variety of risks, and organisations could find themselves with claims from employees, customers, and third parties in the event they were put at risk or contracted COVID-19 on their premises and it can be proved they haven’t followed government guidelines as closely as possible.”

“Businesses could also face claims that they have mismanaged the situation generally, which has damaged the value of the firm or cost individuals their jobs, and these types of claims can be particularly costly.”  Businesses anxiety over litigation will only be increased by the online data that backs up the likelihood of a surge.  December saw record high Google search traffic[1] around terms such as “Covid lawyer” – which hit 54% higher than its previous search traffic peak in 2020 – and “Sue for Covid”.

In addition to employment issues, some companies have struggled to meet their contractual obligations or had supply chain issues due to Covid-19.  The report found that almost 60 per cent of businesses took legal action or threatened litigation against another business last year because money was owed or there was an alleged contractual breach or because intellectual property was infringed.

How do businesses prepare for this surge?

In Hodgson’s words, “Organisations that can prove they have kept abreast of advice and can show they have interpreted it carefully, taking into account the particular characteristics of the business and workforce, should be well-placed to defend claims. However this doesn’t mean that attempts won’t be made”.

If you have any concerns over COVID-19 litigation or would like to ensure your businesses adherence to requirements and advice is documented and demonstrable, please feel free to contact Briars.

[1] According to Google Trend analysis UK searches for “Covid lawsuit” reached record highs for 2020 between 6 Dec and 12 Dec – 54% higher than the previous peak on 28 Jun – 4 Jul, (Google search index = 100 vs 65). Searches for “sue for Covid” also hit a peak between 20 and 26 Dec 2020, 15% up on the previous pre-December peak on 2-8 Aug 2020, (Google search index = 100 vs 87).