Professional indemnity insurance (BAV) for an HR consultant
As a self-employed HR consultant you do not only advise. You write the letter, hold the meeting and sometimes sign on the client's behalf. That shifts the risk to you.
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In brief
Interim HR work sits close to implementation, and that is where the mistakes with the harshest consequences arise. A settlement agreement without the statutory cooling-off period in Article 7:670b of the Dutch Civil Code, a notice of non-renewal that goes out too late so that compensation becomes payable under Article 7:668 of the Dutch Civil Code, an extension that breaches the chain rule in Article 7:668a DCC, a non-competition clause not agreed again on a new contract. Each of those mistakes costs your client money without anything being broken: pure financial loss.
Sickness absence and return to work form a category of their own. If the file under the Dutch Gatekeeper Improvement Act (Wet verbetering poortwachter) is not in order, the UWV (the Dutch employee insurance agency) can extend the obligation to continue paying wages. Such a wage sanction is formally not an administrative fine but an extension of a statutory obligation, and insurers assess those claims differently. Ask about it expressly when you take out cover, instead of assuming it is included.
If you work under a power of attorney, for instance to sign on the client's behalf, Article 3:70 of the Dutch Civil Codeapplies: anyone acting as an authorised representative warrants to the other party the existence and the scope of that authority. Record in writing what you may and may not do on your client's behalf. For injury or damage to property on site you also need public and employers' liability insurance needed.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
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What to look out for
Four points that set the risk of an interim HR consultant apart from that of a consultancy working at a distance.
The Gatekeeper Act and the wage sanction
Missing evaluations, a second-track programme started too late or an action plan that has not been updated: the UWV tests the file at the end of the second year of sickness. If you provide that support, record at each step what you advised and what the employer decided. Without that overview it cannot be established whose omissions are in the file.
Documents you draw up yourself
A settlement agreement, a notice letter or a termination proposal is your product. A wrong end date can have consequences for the employee's entitlement to unemployment benefit, and that loss then reaches the employer and after that you. Work with a fixed checklist for deadlines, dates and references to the collective agreement.
Acting on your client's behalf
If you hold the meetings yourself and sign the documents, you are visible in the employee's file. Arrange the power of attorney in writing and stay within its limits. Acting without sufficient authority touches Article 3:70 of the Dutch Civil Code and produces a liability separate from whether your HR advice was correct in substance.
What is excluded
Not covered are intent and wilful recklessness (Article 7:952 of the Dutch Civil Code), fines and penalty payments imposed by regulators, redoing your own work and refunding your rate, liability arising from a a guarantee or indemnity, and advice on pensions or insured terms of employment for which a Wft licence is needed.
What does your premium depend on?
- Annual turnover or hourly rate: the basis for calculating the premium
- Share of interim and implementation work: carrying the work out yourself weighs more heavily than advising at a distance
- Sickness absence and return-to-work work: gatekeeper files increase the exposure
- Size of your clients: reorganisations affect several employees at once
- Run-off period: employment cases often come to light years later
- Sum insured and excess: per claim and capped per insurance year
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| You send the notice on an expiring one-year contract too late and your client owes compensation | No | Yes |
| The settlement agreement you drew up lacks the cooling-off period and the employee goes back on his signature | No | Yes |
| The UWV extends the obligation to continue paying wages because the return-to-work file is not in order | No | Provided that |
| You knock a monitor off the desk at your client's office | Yes | No |
| You sign a termination proposal on your client's behalf without having authority to do so | No | No |
| Your client sets your hourly rate off against the cost of proceedings that were lost | No | No |
Whether a wage sanction from the UWV counts as an insured loss differs from insurer to insurer; ask about it before you sign.
Frequently asked questions
This is what people ask us most.
Is a wage sanction imposed on my client by the UWV insured?
That differs from insurer to insurer. A wage sanction is not a fine but an extension of the obligation to continue paying wages, which means it can be seen as a loss sooner than an administrative fine. Even so, some policies exclude or limit these claims. Ask about this in writing before you take out cover. For interim HR it is one of the largest items.
I hold dismissal meetings myself. Does that change my cover?
It changes what has to be stated in your professional capacity. Advising and implementing are two different activities and not every policy covers both. Have it recorded that you also carry out implementing HR tasks, including holding meetings and drawing up termination documents. What is not stated is not covered when a claim arrives.
My client deliberately departs from my advice. What does that mean?
The cause then shifts to him, provided you can show that you warned him. Confirm such moments by email, with the reason and the risk you see. If both parties contributed to the outcome, Article 6:101 of the Dutch Civil Code apportions the loss according to each party's share. Without written confirmation only your own duty of care remains in view and your position is weak.
What happens if I close my business?
Claims keep coming in for years afterwards, while the policy works on a claims-made basis: the moment of notification is decisive. Without run-off cover you face them yourself. Arrange the run-off period before you cancel, because afterwards it is often no longer available. Report current circumstances before the end date, so that they fall in the last insurance year.
Every situation is different. For these situations we have a separate page.
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