Indemnity and Guarantee
Indemnity and Guarantee are a type of contingent contracts, which are governed by Contract
Law. Simply put, indemnity implies protection against loss, in terms of money to be paid for
loss. Indemnity is when one party promises to compensate the loss occurred to the other party,
due to the act of the promisor or any other party. On the other hand, the guarantee is when a
person assures the other party that he/she will perform the promise or fulfill the obligation of the
third party, in case he/she default.
Background:
BAAR Corp is a manufacturing company based in the United States that produces electronic components
for various industries, including automotive, healthcare, and telecommunications. The company has been
in business for over 30 years and has a workforce of over 1,000 employees. Recently, the company's
management decided to replace its existing indemnity and guarantee policies with new ones. This
decision created a significant impact on the employees' industrial relations.
CASE STUDY:
The previous indemnity and guarantee policies provided the employees with comprehensive
coverage against any workplace-related injuries, accidents, or illnesses. However, the new
policies offered limited coverage and required the employees to pay additional premiums to
receive full benefits. Moreover, the new policies also included several exclusions, such as preexisting medical conditions and non-work-related injuries. These changes led to increased
dissatisfaction and mistrust among the employees towards the management.
As a response to the employees' concerns, the company's management held several town hall
meetings to explain the rationale behind the policy changes and address the employees' questions
and feedback. They emphasized that the new policies were necessary to reduce the overall
operating costs of the company and stay competitive in the market. The management also
assured the employees that they would work with the insurance providers to negotiate better
coverage and lower premiums for the employees in the future.
Despite the management's efforts to communicate and explain the policy changes, many
employees remained dissatisfied and felt that their job security and welfare were at risk.
Some employees even organized protests and strikes, demanding the restoration of the previous
policies. As a result, the company's productivity and morale suffered, leading to delays in
production schedules and increased employee turnover.
QUESTIONS:
What was ABC Corp's previous indemnity and guarantee policy?
Answer: ABC Corp's previous indemnity and guarantee policy provided comprehensive
coverage to employees against workplace-related injuries, accidents, or illnesses.
2) What were the changes made to the indemnity and guarantee policies?
Answer: The new policies offered limited coverage and required the employees to pay
additional premiums to receive full benefits. Additionally, the policies included several
exclusions, such as pre-existing medical conditions and non-work-related injuries.
3) How did the management respond to the employees' concerns?
Answer: The management held town hall meetings to explain the rationale behind the policy
changes and addressed the employees' questions and feedback. They emphasized that the new
policies were necessary to reduce operating costs and stay competitive in the market. The
management also assured the employees that they would work with insurance providers to
negotiate better coverage and lower premiums for employees in the future.
4) What impact did the policy changes have on ABC Corp's productivity and morale?
Answer: Despite the management's efforts to communicate and explain the policy changes,
many employees remained dissatisfied and felt that their job security and welfare were at risk.
Some employees even organized protests and strikes, leading to delays in production schedules
and increased employee turnover.
REFERENCE
https://www.gordonsllp.com/whats-difference-indemnityguarantee/#:~:text=Indemnities%20and%20guarantees%20are%20often,loss%20incurred
%20by%20someone%20else.
http://bdlaws.minlaw.gov.bd/act-26/chapter-details-86.html?lang=bn