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September 2, 2013

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Fault through the filter

Kevin McLoughlin considers recent legislation that may have significantly altered the landscape in respect of compensation claims.

The Enterprise and Regulatory Reform Act: changing compensation cultureThe objective of the criminal law is to enforce adherence to the rules that society sets. 
In the health and safety arena, the focus of the criminal law is to ‘encourage’ conformity with the standards set out in statutes enacted by Parliament (and regulations made under them), by punishing those whose conduct falls below them. Such offenders are said to be ‘in breach of statutory duty’.
In the civil domain, the county courts adjudicate on compensation claims in which individuals have suffered injury, by declaring if the defendant has been negligent and, if so, determining the amount of compensation to be paid for the harm caused.
Thus, the criminal law and civil law are separate legal systems, with their own distinct objectives. They apply differing standards of proof and have their own rule books to govern their procedures.
Often, however, these different regimes are concerned with analysing the same event. After an accident, the Police or HSE may consider prosecution in the magistrates’ or Crown court, while the injured individual pursues a claim for compensation in the county court. The issue under scrutiny, here, is whether the injured claimant should be able to use the rules appertaining to safety standards enforced by the criminal courts as a foundation for his or her claim; in legal language, whether a breach of statutory duty creates a ’cause of action’ for the individual.

What the HSWA 1974 says

The 1974 Act stipulates that breaches of the general duties contained in sections 2 to 8 should not create a cause of action (section 47(1)). To complicate matters, however, section 47(2) states: “Breach of a duty imposed by health and safety regulations€ᆭ shall, so far as it causes damage, be actionable, except in so far as the regulations provide otherwise.” As you can imagine, this is just the sort of wavy line that keeps lawyers in work. Suffice it to say, for the most part, health and safety regulations have conferred a cause of action on injured claimants for 40 years, or more.

Causes of action

For a person injured in an incident at work, there have traditionally been two routes to claim compensation via an action in the county court. Firstly, an injured claimant has been entitled to rely on the defendant’s breach of a statutory duty, if the regulations applied but were not complied with (and the breach is not in the class excluded by section 47(2) of the 1974 Act). The standards imposed by statutory duties vary — some are said to involve strict liability, but others require compliance, only so far as is reasonably practicable.
The alternative route for the claimant is to allege negligence. This is a tortious remedy that has evolved in common law over centuries. The law recognises that certain relationships give rise to a duty of care: employer/employee and occupier/visitor are obvious examples. If such a duty is breached, causing damage, then the person harmed can bring an action in negligence. The key point to note is that the claimant must prove his or her case by satisfying the court, on the balance of probability, that a duty of care existed; secondly, it was breached; and, lastly, that the breach caused the claimant to suffer damage as a result.
In the years since the 1974 Act came into being, claimants have relied on breaches of statutory duty as the foremost basis for mounting personal-injury compensation claims. As a back-up, negligence is usually alleged in addition. Once a statutory duty has been proven to apply and non-conformance established, the defendant struggles to avoid a finding of primary liability. In such circumstances, the defendant’s case then shrinks to arguments concerning contributory negligence and the extent of the harm caused — generally referred to as ‘causation’.

A change in approach

On 25 April this year, the wide-ranging Enterprise and Regulatory Reform Act received Royal Assent and became law. The Act covers a host of matters — from copyright to employment tribunals and the regulation of cartels. As the Bill progressed through Parliament, a clause, which was added at the Report stage, provoked considerable debate and led to the eventual amendment of section 47 of the HSWA 1974. 
The clause was originally voted down in the House of Lords by the close margin of 225 to 223, but the House of Commons rejected the removal of the clause, with the result that it was returned to the Lords, whereupon it was approved, by a vote of 170 to 112. This provision has become section 69 of the Act, which, in simple terms, removes the right of injured claimants to rely on breaches of statutory duty as a foundation for compensation claims.
Remember, though, that the amendment only affects statutory duties arising under the HSWA 1974 and its subordinate regulations. An occupier’s liability, for example, remains unchanged, as it arises under a different statute. Specific statutes dealing with aspects of safety, such as the Defective Equipment Act 1969, are not affected. Disease litigation is also unaltered. Some cases, notably relating to the protection of pregnant women, have been excluded from the ambit of section 69, so a breach of statutory duty remains actionable.
The indicative timetable produced by the Department for Business Innovation and Skills (BIS) reveals that section 69 will come into force on 1 October. For incidents occurring after this date, any injured claimant will recover damages only if he or she can prove negligence.
Why has this change been introduced? After all, it can be argued that the HSWA 1974 has stood the test of time for nearly 40 years without significant amendment, with the result that the UK’s workplaces are safer than those in most other countries.
The policy statement published by the BIS in June this year attributes the motivation for the reform to a recommendation made by Professor Löfstedt, whose report in 2011 suggested that employers had been “over-complying” with regulations and, hence, incurring “unnecessary costs”.1
The change was justified in order to tackle the perception of unfairness arising when employers, subject to strict-liability regulations, are driven by “the fear of being sued”2 to settle claims, despite having done all that was reasonable to protect their employees. The policy statement seems to infer that the change is, in part, symbolic, for the vocabulary speaks of “perceptions” and “confidence”, with the aspiration of restoring “a sensible and practical approach to health and safety”.


The TUC strongly opposed the change, pointing out that even Professor Löfstedt, in his ‘Review of progress one year on’, commented: “The approach being taken [i.e. Section 69] is more far-reaching than I had anticipated in my recommendation.” The TUC explains that references to ‘unfairness’ do not consider the potential unfairness visited on an employee if he or she cannot recover compensation, despite being entirely blameless for an incident in which they were injured. The TUC argues, therefore, that the removal of strict liability “does nothing to remove unfairness, [but] merely moves it somewhere else”.3
Furthermore, at a time when the HSE’s resources to carry out proactive inspections or investigate incidents have been savagely depleted, it is open to question whether there will be any effective enforcement of regulatory standards in the coming years. This reasoning leads one to ask: if standards are not maintained under the criminal law, should the civil law not make an indirect contribution by awarding damages to an individual harmed by the failure to comply with a statutory duty? This is akin to the American model of tort law, which makes use of punitive damages on occasions to ‘persuade’ defendants to change their ways.

The likely implications

The change will ultimately make it more difficult for employees hurt at work to obtain compensation because they must now prove fault on the part of their employer. In workplace-injury cases, the employer initially holds all the evidential cards, for they are in possession of most, if not all, of the relevant documents. The witnesses are likely to be their employees and, hence, possibly reluctant to criticise management. More trials might be predicted if employers feel confident they have “taken all reasonable steps to protect their employees”.
It would, however, be a mistake to view this legislative change in isolation. Recent alterations to the way personal-injury litigation is funded include ‘one-way costs-shifting’, which means that employers may now have to shoulder their own legal costs in contesting personal-injury claims, irrespective of the outcome. This may influence employers to take a commercial view in response to claims.
Where an employer does decide to fight a claim through to trial, they must be in a position to call evidence to show that they had devised a system of work — for example, in relation to manual handling in their factory and, moreover, that it was adequate. This will probably involve expert evidence, with its associated expense. 
Suppose you are a judge hearing a personal-injury action based on allegations of negligence. How will you decide whether the employer has done enough to discharge his duty of care to the employee? Would you think it relevant to consider what standards prevailing regulations required to be achieved? Regulations are a potentially useful benchmark of foreseeable risks and prudent practice, so it would be a curious case in which they were not referred to by a judge.
Above all, employers still have an obligation to obey the law. If regulations demand that certain actions are taken, then a sensible employer must comply (even if not motivated by the moral imperative that it is the right thing to do), just in case the HSE did decide to inspect, or an incident triggered an investigation. 
In the age of corporate manslaughter and prosecutions against individual managers, it would be folly not to comply. Evidence of “over-complying” with safety regulations is scant to say the least, but if such a phenomenon does exist, is it motivated more by an employer’s fear of imprisonment or fines, rather than the unfairness generated by easy-to-pursue compensation claims?

The action list

The personal-injury playing field will be tilted slightly in favour of the employer after 1 October, in respect of any breaches of statutory duty occurring after that date.5 After 1 October, any health and safety professional investigating an incident should strive to enhance the prospects of a successful defence by assembling evidence tending to show that the employer had taken all reasonable steps to establish and maintain safe systems of work and equipment. The injured claimant must prove fault on the employer’s part and, hence, it will be to the employer’s advantage to be able to demonstrate that adequate systems of training, supervision and refresher training were in place. 
An effective investigation could make the difference between a sustainable defence and insurers having no option but to settle. As ever, to be admissible, statements must end with a Statement of Truth: “I believe that the facts stated in this statement are true”, and be signed by the witness.6


It would appear that we live in an age of legislative posturing. The politician’s urge to be seen to be tackling a perceived problem does not automatically mean that there is a problem or, indeed, that the chosen solution will achieve the desired result. In this situation, much will depend upon the reaction of the judges hearing personal-injury claims — both at first instance, in the county courts, and at the appellate level, when cases reach the Court of Appeal. 
Time will tell as to what the true impact will be, but the only certainty is that lawyers will make work out of any rule change. 
1 Löfstedt, R (2011): Reclaiming health and safety for all, DWP —
2 BIS (2013): Enterprise and Regulatory Reform Act 2013: A guide, p3 —
3 TUC (2012): Briefing to Affiliates, ‘Strict Liability in Health and Safety’ —
4 BIS (2013): Enterprise and Regulatory Reform Act 2013: Policy paper —
5 Section 69(10) stipulates that the amendment to section 47 of the HSWA 1974 does not apply to a breach of statutory duty occurring before 1 October 2013
6 Civil Procedure Rules, part 22.1(1)(c )
Kevin McLoughlin is a barrister specialising in health and safety, personal injury, and coroners law.

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