Man climbing a rope
Employee linking is a strategy that many companies adopt to protect themselves against any kind of severe financial loss as a result of actions taken by key employees. This is often managed by working with an insurance company or some sort of liaison agency to ensure what is known as a fidelity bond. In the event that an employee’s actions lead to some sort of verifiable financial loss for the company, and the circumstances are covered by the terms of the bond, the company can file a claim and use the proceeds to compensate for the loss.
Considered an important type of business insurance, employee bond can cover a number of different scenarios. Some of the more common types of events covered by an employee bond include protection against embezzlement by employees who have access to the company’s financial records and accounts. Property theft is also often covered under the terms of the bond, along with protection in the event that the employee’s actions cause harm to others in the employer’s workplace. There are even examples of employee engagement that have to do with providing some protection to the company in hiring individuals deemed to be candidates for high-risk jobs.
The overall purpose of employee tying is to protect employers from incurring losses when and if covered employees engage in actions that ultimately create financial problems for the company. There are typically limits to the amount of coverage that can be obtained for a single employee. The cost of bail will largely depend on the scope of coverage required for a particular employee. In addition, the grievance process will typically require the ability to identify the details of how the employee’s actions resulted in an actual financial loss. For example, an employee who is rude to a sales prospect may or may not be the reason the prospect signed with another supplier, and the insurer would likely not approve a loss claim in this instance. By contrast,
Employee bonding may or may not fully compensate for a loss, but compensating for this type of protection can often prevent any long-term damage to the business. For example, if an employee is found to have stolen equipment from the employer and it is impossible to recover it, the insurance company that issues the bond will provide funds that will fully or at least partially cover the cost of replacement. In this scenario, the bond helps the company to recover from the loss in a shorter period, replace the errant employee and focus on other matters.