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EL reforms - what's changing?

1 October 2013

Section 69 of the Enterprise and Regulatory Reform Act 2013 (the 2013 Act) will come into effect from 1 October 2013, doing away with strict liability where it currently applies to Employers Liability (EL) claims and removing liability for breach of statutory duty under EL regulations.

Headlines connected with the Act have announced the undoing of 100 years of precedent and a return to Victorian workplace laws. It is expected that the reforms will affect around 80,000 claims per annum. In this update we attempt to separate fact from fiction to arrive at a view as to the practical changes we will see across this large segment of the personal injury market.

What is changing?

The amendment affects the wording of the Health and Safety at Work etc Act 1974 (the 1974 Act). It will exclude civil liability in relation to workplace health and safety regulations made under the 1974 act, which is currently the main basis of most EL claims.

Though the Government has a power to preserve a cause of action for breach of statutory duty, that power has not been exercised, and the Governments stated policy aim has been to leave EL claims a matter of common law negligence.

The practical effect is the end of employers liability claims based on breach of statutory duty, including those statutory duties which impose strict liability.

Why the change?

The amendment is one of the steps the Government is taking to implement the Loftstead Review which recommended modification of statutory duties that impose strict liability on employers, as these were perceived to be unfair. The Government has gone beyond this, however, and excluded claims for any statutory breach.

The reasoning is found in the Governments risk assessment carried out in June 2012. In essence, it was thought to be too onerous to review and amend all health and safety regulations simply to remove actionable strict liability provisions, and therefore the simpler option of removing the right of action in relation to all breaches of statutory duty was preferred.

At the time of introducing this provision into the draft bill, Matthew Hancock, MP explained that the Governments aim is to "address the unfair consequences of the existing health and safety system" and ensure that employers "who behave reasonably have no reason to fear health and safety legislation and that those who think carefully and responsibly about the businesses that they run will know that they are behaving not only reasonably, but lawfully."

When does the change come into effect?

The change applies where the breach of duty giving rise to the claim occurred on or after 1 October 2013.

For most EL claims, the date of accident will determine whether the claimant can rely on breach of statutory duty (if it was before 1 October 2013) or only negligence (if on or after that date), and it seems that this is the intention of the Act.

The Act is silent on the position where the employer breaches its statutory duty prior to 1 October 2013 (for example, by providing defective equipment to employees) but the accident happens at a later date. Its a technical argument to take, but one that may well arises, particularly if the interpretation affects the availability of strict liability.

We also expect disputes to arise in disease claims, where exposure may take place over an extended period, and it may be difficult to pin down the precise duration of exposure the date on which the defendant had sufficient knowledge to give rise to a breach of duty, and the date when an injury arose. It seems we will need to await caselaw to determine which date is of paramount importance in determining whether statutory duties apply.

The duty in negligence

Employers will continue to have a duty to take reasonable care for the safety of employees, and if breach of that duty leads to loss, the employee may claim damages. The key question will be "what standard of care would the reasonable man expect of an employer?"

It is likely that courts will take into account the state of knowledge in the employers sector, the nature of the employer/employee relationship and the control the employer has over equipment used and methods of working.

Courts will also consider the statutory health and safety duties that apply to employers, and HSE information and guidance on those duties. Courts may readily find that an employer who has disregarded his non-actionable duty under the regulations has also failed to meet the standards of a reasonable employer. High risk employments or tasks (such as working at height), which are the subject of particular attention under the regulations, will continue to result in a high standard of care on employers.

Finally, courts may place reliance on the recommendations of Loftstead and the response of the Government, which suggests that the primary reason for reform is to remove strict liability. That may support a view that no change is intended in respect of duties which do not impose strict liability.

Many of the existing statutory duties are couched in terms of reasonable measures or reasonable practicability and it would not be surprising if claims outcomes remain largely the same in negligence as they were under these duties.

There are very few EL claims for breach of statutory duty where the claimant is entirely reliant on a strict liability duty. For example, in relation to defective equipment, there may also be allegations in relation to suitability of the equipment, inspection regimes and training. These aspects of the claim will remain at least arguable.

Overall, claims outcomes under negligence may not be very different to those under the statutory regime. However, the extent of employers duties will remain uncertain until a body of caselaw develops which is sufficient to define the scope of an employers duty in negligence.

The EU Effect

Many of the UKs health and safety regulations derive from EU directives which are directly applicable to public bodies. Breach by a public body leading to injury by an employee can be pursued as a damages claim, despite the changes made by the 2013 Act.

In addition, because the courts are public bodies, they are expected to have regard to the EU directives when interpreting UK law, and to apply UK law consistently with the directives where possible. Given the broad scope for interpretation of the reasonableness test which underlies negligence, it will not be difficulty to do so.

Impact on claims and litigation

Irrespective of prospects of success, claims volumes may be affected if claimants or their solicitors feel that the uncertainty surrounding the reforms makes a case too risky to be worth pursuing. Risk to claimants is compounded by other reforms which prevent recovery of success fees and ATE premiums, leaving claimants with some exposure on costs.

There is scope for satellite litigation, which is a costs risk to defendants, but with fixed fast track costs now in place for EL claims, that risk should be controlled in many cases. Appeals, however, are not subject to fixed costs and so some disputed claims could become expensive.

An additional blow to defendants is that under the Governments reforms to litigation funding, Qualified One Way Costs Shifting (QOCS) will prevent recovery of costs, even where claims are successfully defended. Defendants may seek to get around this by strike out applications for claims which seem overly reliant on the old regime.

Responding to the change

Whether in the public or private sector, prudent employers may decide that, given their regulatory duties are unchanged, and in light of the uncertainty over the extent of their duty of case, they will be better served by a business as usual approach, adopting a cautious approach to health and safety.

The concern for insurers should be policyholders who assume a laissez faire approach to health and safety, assuming they are safe from claims. These policyholders will present an increased risk under the reformed health and safety regime.

In dealing with claims, defendants must still consider statutory duties and pre-reform caselaw in order to form a view as to how the court will apply the test of negligence. The costs implications of defending a claim must also be taken into account, particularly if a claimant seems intent on setting a precedent so that there are prospects of appeals.

Defendants should themselves be on the lookout for strong cases with which to set advantageous precedents, with a view to guiding the development of caselaw in this new area in a favourable direction.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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