Birmingham law firm Mills & Reeve has launched a new service which enables employers to insure their organisation against employee claims or disputes.

Martin Brewer, a partner in the employment team, said the firm had introduced its Employment Protection Scheme against a backdrop of rising unfair dismissal claims.

According to the ACAS annual report, more than 100,000 tribunal claims were made against employers in 2003/04, including 42,550 unfair dismissal claims, with 48 per cent (20,297) of those settled out of court, 26 per cent (11,013) withdrawn and 22 per cent (9,625) going to an employment tribunal.

Mr Brewer said: "For many employers, the likelihood of a dispute with an employee is considerably higher than the risk of their premises being affected by fire and theft.

"Yet while most businesses don't think twice about insuring their assets against fire, flood or theft, the opportunity to insure against the risk of an employment tribunal claim from your employees is rarely considered."

The cost of the cover depends on the size of the organisation, the number of employees and its previous claims history. Cover can be adapted to suit individual needs. For example, it could include legal fees, claims and access to a helpline.

Mr Brewer said: "In the last few years, we have seen an increase in both the threshold and levels of awards. In cases of unfair dismissal awards can now exceed £50,000, while there is no limit in the case of discrimination claims.

"If a company is forced to find such a sum from their regular cash flow, it could be crippling and may even threaten its very existence. An insurance policy means that whilst employers can't ring fence their liability, at least they can contain their costs."