Section 69 of the Enterprise and Regulatory Reform Act 2013 (the "2013 Act") came into effect on 1 October 2013, and is seen by many as the biggest change to the law on employers' liability for twenty years.
This is nothing new but we do well to remind ourselves of the anticipated impact.
It is a key part of the current government's drive to counter the perceived "compensation culture" and to remove some of the red tape and associated costs faced by businesses complying with their health and safety obligations.
What has changed?
Under the old law, employees who suffered injury at work could claim against their employers for breach of any of the many statutory duties imposed on businesses by health and safety regulations, unless the regulation in question expressly said that they could not. None of the main so-called "six pack" regulations said this, leaving employers open to claims in relation to all of these statutory duties.
The position has now been effectively turned on its head. Thanks to the 2013 Act, employees will not be able to claim for breach of statutory duty unless the regulation expressly says that they can. The only regulations that did expressly provide for civil liability have now been amended, so that unless further changes are made there will be no room for employees to claim under the regulations.
This means that employers will now only be liable to compensate employees where it can be shown that the employer was negligent. The aim is to redress the balance in favour of employers by removing the concept of "strict liability". As a result, employers will no longer be vulnerable to compensation claims where they have done everything reasonable to protect their workers from injury in the workplace.
A case often used to demonstrate the unfairness of the current system is Stark v Post Office 2000 I.C.R 1013. In that case, the Post Office was held to liable for the injuries of a postman who fell off a company bicycle when the stirrup broke due to metal fatigue or an unknown manufacturing defect, even though a reasonable system of inspection and maintenance had been used.
When did the changes take effect?
The key date will be when the alleged breach of duty took place. The new regime will apply where this was on or after 1 October 2013. Where the alleged breach took place before that date, the old rules will still apply, even where, for example, symptoms of illnesses with a long latency period do not appear until many years from now.
Impact of the changes
The precise impact of the reforms, particularly in the short term, is uncertain. What is not in doubt, though, is the significance of the changes:
- In the short term at least, there is likely to be some delay and increased litigation cost related to employers' liability claims. There are bound to be fewer amicable settlements, which were encouraged by the certainty offered by the old system, and the uncertainty caused by the changes will need to play out in the courts. This does, though, also provide an opportunity for insurers to look to achieve more favourable decisions from the courts going forward.
- One area that is particularly unclear is the effect of the reforms on public bodies. It is possible that employees of such bodies, which it has been held can include nationalised corporations and private water companies as well as government departments and the like, will seek to bring direct civil claims under the regulations as before under EU law. This would create a disparity between the rights of public and private sector workers which has not yet been properly addressed.
- In the longer term, the changes may well favour employers and insurers, as a certain proportion of claims, especially those relying on strict liability, become defendable by employers, and employees face up to the difficulties of proving that businesses have been negligent. This does need to be balanced, however, against the additional costs both parties will need to incur to investigate liability at an early stage in proceedings
- Employers should not actually be changing their approach to health and safety to any great extent. An employer's duty as stated by the courts remains to take "positive thought for the safety of his workers in the light of what he knows or ought to know", and whilst employees will no longer be claiming directly for breach of the regulations, those regulations are sure to be used by claimants and accepted by the courts as a good indication of whether an employer has acted reasonably. Businesses also still face the risk of prosecution by the HSE for any breach of health and safety regulations.
- Insurers may find that businesses do begin to take more of a relaxed attitude to health and safety, and that this in fact leads to more accidents and more notifications. However, this still means increased difficulty faced by workers in bringing claims, which comes on top of other recent defendant-friendly reforms relating to the recoverability of success fees and ATE premiums.