Thursday, 25 April 2013

House of Lords votes to change Enterprise and Regulatory Reform Bill

The House Of Lords has voted to overhaul the law that makes employers liable to pay compensation to injured employees if they have breached statutory health and safety duties.  This overcomes the setback in October 2012.

The amendment to the Enterprise and Regulatory Reform Bill is intended to address the perception of a compensation culture and employers’ fear of being sued that this is said to generate.

Arguments for the amendment

Viscount Younger of Leckie said this fear “drives employers to overimplement the law, incurring unnecessary costs, and that undermines their confidence to grow and develop their businesses. It is not reasonable or fair that employers should be held liable to pay compensation when they have done nothing wrong and taken all reasonable steps to protect their employees. The reform does not undermine core health and safety standards”.

Arguments against the amendment
Lord Hardie stated that this would be to deprive some people of any remedy of injury caused to them, or their deceased relatives, with the financial burden transferred from insurance companies and on to “widowers, children, the permanently disabled and the state”.

He also argued that it is not correct to categorise a breach of a statutory duty as “doing nothing wrong” and that the majority of health and safety regulations present the employer with the opportunity to defend himself, and thereby avoid, liability to pay damages, by showing that he took all reasonably practicable steps to comply with regulations.


Background

The change will result in the removal of the 'strict liability' regime that makes companies automatically liable for some workplace injuries, regardless of fault. Once in force, individuals will have to be able to prove negligence on the part of the company before being able to pursue a claim. The Health and Safety at Work Act currently imposes civil liability for breaches of statutory duty in relation to health and safety regulations regardless of whether a business did anything to cause the breach or acted negligently.

In the Commons in October, Parliamentary Under-Secretary of State for Skills Matthew Hancock said: “Prof L√∂fstedt identified the unfairness that can arise when health and safety at work regulations impose a strict duty on employers that makes them liable to pay compensation to employees injured or made ill by their work, despite all reasonable steps having been taken to protect them from harm. Employers can, for example, be held liable for damages when an injury is caused by equipment failure, even when a rigorous examination would not have revealed the defect. The new clause is designed to address that and other unfair consequences of the existing health and safety system. The result of ensuring that employers who have taken all reasonable precautions cannot be sued for a technical breach will be to reduce the impression among many businesses, especially small firms, that they are liable to health and safety legislation in many cases when they are not”.

P Chambers comment
Whilst some have said that this is "a return to Victorian times", in principle it is to be welcomed. Whether or not there is actually a compensation culture, the perception is that it exists, and this drives some of the silly precautions that are takenTackling this problem will have far more of an effect than the recent pruning of 13 regulations. However, the devil will be in the detail of how this is implemented.


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