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November 26, 2013

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New territory: the Enterprise and Regulatory Reform Act


Changes to the Enterprise and Regulatory Reform Act place the obligation on claimants to prove negligence and mean that some claims will be easier to defend. However, Mark Paterson and Simon Denyer see this as no reason for employers to become complacent.
When it came into force in 1974, the Health and Safety at Work Act (HSWA) contained a presumption that regulations made under it would impose not only criminal liability, but also civil liability for any breach of those regulations. Section 47 of the act meant that civil liability would arise for breach of regulations unless the specific regulations themselves said otherwise.  
Over the years, the UK has been obliged to bring its own domestic law into compliance with European directives and in 1992 it did so through the Management of Health and Safety at Work Regulations, which became part of the ‘six pack regulations’ alongside the Provision and Use of Work Equipment Regulations 1998 (PUWER), Manual Handling Operations Regulations 1992, Workplace (Health, Safety and Welfare) Regulations 1992, Personal Protective Equipment at Work Regulations 1992 and Health and Safety (Display Screen Equipment) Regulations 1992. These regulations were made under authority provided by the HSWA. Today there are over 200 health and safety regulations, mostly made to meet the UK’s obligations to implement other EU directives; most do not exclude civil liability.
A time of reform
A few years ago the climate in which personal injury claims were being made and the resulting cost of these claims changed. One response to those changes was Lord Justice Jackson’s review of civil litigation costs, which has led to the current civil justice reforms.  
Another effect was the emergence of the view that the UK had developed a ‘compensation culture’, and that health and safety law itself needed reform. This view was primarily directed at workplace employers’ liability claims.     
Two reports directly led to the reform brought about by the Enterprise and Regulatory Reform Act (E&RRA). 
The first was Lord Young’s Common Sense — Common Safety report, which poured scorn on the view ‘if there is blame, there is a claim’ and criticised the pursuit of claims by aggressive ‘no win, no fee’ agreements between claimants and their lawyers.  
This view was then taken further by Professor Löfstedt’s report, which recommended that “regulatory provisions that impose strict liability be reviewed and either qualified where reasonably practicable, where strict liability is not absolutely necessary, or amended to prevent civil liability from attaching to a breach of those provisions”. The Government has opted for something close to the latter approach.
In 2000, the Court of Appeal’s judgement in Stark v the Post Office came under scrutiny during Löfstedt’s review. Mr Stark was injured when he was thrown from his bicycle as a result of a failed brake cable.
The court found that his employer was not negligent, as they had exercised reasonable care by implementing a programme of inspection and maintenance. 
However, the Post Office was found in breach of its statutory duty under the PUWER 1998 to maintain equipment in an efficient state and working order. Questions that would arise under the law of negligence such as foreseeability and reasonableness were irrelevant as the duty imposed was an absolute one.
The Government response
Section 69 of the E&RRA is now in force for accidents occurring on or after 1 October 2013. 
Section 47 of the HSWA has been reversed to mean that any breach of regulations will not be civilly actionable except where specifically stated. To date, the HSWA (Civil Liability) (Exceptions) Regulations 2013 only exclude certain provisions in the case of pregnant workers and new mothers.  
Debate is ongoing as to how the new law will work in practice. It will take some time before accidents happening after 1 October 2013 move towards litigation and a trial where the difficult issues remaining will have to be tested. 
Post 1 October 2013, an injured party cannot now solely base their claim on a breach of statutory duty resulting from post-1974 health and safety regulations (including the ‘six pack’). Civil claims for breaches of health and safety duties can now only be brought for negligence, based on the employer’s alleged breach of their common law duty of care. 
The regulations will remain key for criminal law, and employers who do not comply will be at risk of prosecution by the HSE.  
Evidence of negligence
It is important to remember that regulations will still be relevant. It was already a settled legal principle that the requirements of a statutory duty could be relied on as evidence of what a reasonable employer should do to satisfy its common law duty, for example, in relation to foreseeing particular risks or taking a specific precaution against them. 
The Government notably clarified the position as the act passed through parliament.  On 22 April 2013, Viscount Younger in the House of Lords said: “We acknowledge that this reform will involve changes in the way that health and safety-related claims for compensation are brought and run before the courts.  However, to be clear and to avoid any misunderstanding that may have arisen, this measure does not undermine core health and safety standards. 
“The Government are committed to maintaining and building on the UK’s strong health and safety record. The codified framework of requirements, responsibilities and duties placed on employers to protect their employees from harm are unchanged, and will remain relevant as evidence of the standards expected of employers in future civil claims for negligence.”
Another Conservative peer, Lord Faulks, said in the same debate: “A breach of regulation will be regarded as strong prima facie evidence of negligence. Judges will need some persuasion that the departure from a specific and well-targeted regulation does not give rise to a claim in negligence.”
Both statements make it clear the regulations are still of use in considering the extent of an employer’s common law duty of care. We should therefore still expect reference to the regulations within letters of claim and within particulars of claim, but with the argument that breaches of regulations should be seen as ‘clues’ to interpretation of the common law duty. However, it will not be possible to argue that where a strict liability duty arises under regulations, that the higher level of duty should be incorporated into the common law duty. This is because the common law duty is limited to one of ‘reasonableness’.  
Claimants may also argue that HSE publications such as approved codes of practice and guidance notes are materials the court should take into account when considering what was reasonable for the employer to have done. 
The often-quoted judgement in Stokes v GKN states that: “The overall test is still the conduct of the reasonable and prudent employer taking positive thought for the safety of his workers in the light of what he knows or ought to know; where there is a recognised and general practice which has been followed for a substantial period in similar circumstances without mishap, he is entitled to follow it, unless in the light of common sense or newer knowledge it is clearly bad; but where there is a developing knowledge, he must keep reasonably abreast of it and not be slow to apply it.”
Emanations of the state
In relation to civil liability, the E&RRA, does not sit well with the European directives from which the ‘six pack’ regulations derived. Section 69 of the 2013 act provides that the breach of health and safety regulations is not actionable, however EU directives will remain actionable against “emanations of the state”, including local authorities, government departments, police authorities and public health bodies.
In principle, this may entitle a public sector employee to sue his employer for breach of the appropriate European directive (even though he is prevented from suing that employer for breach of the domestic regulations brought in by virtue of those directives). This argument is likely to be tested.
New territory for claims
Organisations will now need to be prepared for allegations of a breach of the general duty on an employer to take reasonable care for the health and safety of its workers. Case law establishes that there are four main elements to that duty; these are to take reasonable care to provide safe plant, premises, fellow employees and system of work.  
Additionally, in common law, an employer will be vicariously liable for the negligence of his employees’ co-workers. The old case law that defendants and their insurers were used to dealing with before the ‘six pack’ was introduced in 1992 will need to be returned to. Pre-1992 there were a number of industry specific regulations alongside the Factories Act. 
Many of these regulations were revoked when the wide-ranging ‘six pack’ regulations were introduced and they still remain so today. This means that claimants will now need to look instead at the common law duty of care, supported by reference to the regulations and to other HSE material. With the many changes to the legal landscape, accidents involving machinery appear to be another situation where the proof of liability might not be so clear. Where it was once relatively easy to establish liability in both factory-based accidents under the Factories Act, and the broader application of the PUWER, claimants will now have to prove some fault in the employer’s maintenance and servicing of the machine or knowledge of 
a particular defect. 
In that context, it is worthwhile remembering that the Employer’s Liability (Defective Equipment) Act 1969 remains in force, meaning that where a defect in equipment provided for use at work causes injury and the defect is wholly or partly due to the fault of a third party other than the employer, then the injury is deemed to have been caused by the negligence of the employer. This will assist claimants where there is criticism to be made of the manufacturer of the machine, or any servicing of it carried out by contractors.
In machinery cases it is now likely that the disclosure of a variety of records in relation to the operation of the machine will be needed and there is the possibility that engineers will be called in to investigate accidents, this leads to the potential of additional costs being incurred for both the claimants and their insurers.
The E&RRA removes the concept of strict liability from employers’ liability claims thus achieving the Government’s main aim. The obligation has now been placed on claimants to prove negligence, which means that some claims will potentially be easier to defend. In the short term additional costs may be incurred across a range of employers’ liability claims as liability issues have to be investigated against the background of whether or not the employer had taken reasonable care.
While it appears we are entering a more relaxed regime, employers should not see this as an opportunity to become complacent.  While there may well be more scope to defend claims we must remember one basic tenet.  Morally speaking, employers are responsible for the welfare of their employees.  The legal environment, however this may change over time, is ultimately designed to enforce this.  Employers who keep this at the forefront of their mind will benefit in the long run.
Mark Paterson is risk manager at QBE European Operations and Simon Denyer is partner at DWF Manchester.

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