Enterprise and the Regulatory Reform Act: changes to strict liability

Posted on 8 Oct 2013 by The Manufacturer

Peter Forshaw, head of the commercial insurance team at law firm Weightmans LLP on the implications for manufacturers of changes to business regulation which came into force on October 1.

Peter Forshaw, head of the commercial insurance team, Weightmans LLP

For years, manufacturers have been fixed with ‘strict’ (no fault) liability when their staff have brought employers’ liability claims for injuries sustained due to defective equipment.

Staff claimed breaches of statutory duty alongside allegations of negligence because the working environment in manufacturers’ premises involves circumstances governed by statutory health and safety regulation.

Many regarded strict liability as particularly unfair to manufacturers and a disincentive for them to adopt strong safety practices so its removal on 1 October seems like good news at first glance.

What’s changed?

Under section 69 of the Enterprise Act, in the instance of any accidents (or breaches), injured employees can no longer found a claim directly on the basis of breach of statutory duty in most cases.

This means the end of ‘no fault’ liability.

Injured employees now have to prove common law negligence.  Often this will mean that where employers can prove they had reasonable, documented systems of risk-assessment, inspection, maintenance, training etc in place. Therefore it will be possible, in theory, to mount a defence to more claims than in the past.

It is hoped that this will help to redress the balance between protecting the safety of employees during their working day on the one hand and fairness to the diligent employer on the other.

The requirement for the claimant to prove his case in negligence and the loss of an automatic entitlement to compensation in current strict liability cases could deter some claimants,particularly for more  spurious claims or where the injured person’s evidence is weak.

Any reduction in claims can only be a good thing for manufacturers and their insurers.

Future claims

Yet this legislative change does not close the door on the claimant community.  Manufacturers are still likely to face claims when one of their employees suffers an accident:

  • Breaches of statutory duty are still likely to be relied upon by employees in support of allegations of negligence.  The judiciary is still likely to be influenced by any such breaches when determining whether an employer has been negligent;
  • The amendments only relate to statutory duties relating to health and safety at work.  Breaches of statutory duty will still be directly pleaded in other contexts, most notably in respect of accidents by third parties.

These changes include a risk that costs will increase as claimants have to prove more, and it will be important for manufacturers and their insurers to bear pragmatism and cost in mind for any claims pursued.

It is essential that manufacturers continue to adopt stringent health and safety policies, and retain appropriate documentation recording their systems, to either prevent accidents in the first place or to enable their insurers to defend, where appropriate, any claims for common law negligence when they do.

So whilst in theory the reforms seem to help redress the balance for manufacturers, in the battleground of health and safety regulation, the benefit will not be as stark as it first appears. Manufacturers should continue to strive for the operation of diligent health and safety systems.