Hiscox believes demands for flexible hours by thousands of new mothers returning to work will lead to a flood of employment disputes, which many companies do not have insurance for, revealed a report.
Fewer than 10% of companies have employment practices liability insurance to cover them for legal fees and damages payments resulting from an employment tribunal.
The prediction follows the Employment Act 2002, which came into effect on 6 April. It gave expectant mothers the right to 26 weeks paid maternity leave. It also gave parents with children under six the right to request flexible hours.
Mothers who gave birth after 6 April and took 26 week's leave have now begun to return to work.
According to the report, Hiscox said a significant proportion of returning mothers were likely to request flexible hours, but that many companies were unprepared for these requests.
Hiscox underwriter Angela Howe said: "The new procedures for handling requests for flexible working are very strict and risk catching employers out, particularly smaller companies that lack human resources capabilities to fully understand, process and implement these laws."
In the report Howe said she expected the new legislation to lead to an increase in employment tribunal cases, for which most employers are uninsured. "The vast majority of UK businesses are completely unprotected against any potentially huge legal costs that can arise from such claims."
More than 100,000 applications were made last year to employment tribunals. Of these, at least 25,000 progressed to a hearing with an estimated cost to employers of £140m, the report said.
