The Enterprise and Regulatory Reform Act 2013

Size: px
Start display at page:

Download "The Enterprise and Regulatory Reform Act 2013"


1 QBE European Operations The Enterprise and Regulatory Reform Act 2013 Issues Forum


3 The Enterprise and Regulatory Reform Act 2013 Issues Forum Contents History 1 A time of reform 2 Strict liability 2 The Government response 3 How will it work? 3 Can the regulations still be used as evidence of negligence? 4 Emanations of the state 5 The new territory for claims 5 In conclusion 6 Disclaimer 7

4 1 QBE Issues Forum The Enterprise and Regulatory Reform Act 2013 Section 69 of the Enterprise and Regulatory Reform Act is now in force for accidents occurring on or after 1 October Section 47 of the Health and Safety at Work Act 1974 has been reversed to mean that any breach of regulations will not be civilly actionable except where specifically stated. This is a significant change as 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 ) and can now no longer argue strict liability where it has previously applied under these regulations. 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. History When it came into force in 1974, the Health and Safety at Work etc. 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 which it did in 1992 through the Management of Health and Safety at Work Regulations and what became known as the six pack regulations. 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.

5 QBE Issues Forum The Enterprise and Regulatory Reform Act A time of reform What changed a few years ago was the climate in which personal injury claims were being made and the resulting cost of these claims. 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. What directly led to the reform brought about by the Enterprise and Regulatory Reform Act (E&RRA) were two reports, firstly by Lord Young Common sense, common safety 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. Strict liability This view was then taken further by the report by Professor Ragnar Löfstedt, who recommended that regulatory provisions that impose strict liability be reviewed and either qualified with 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. The Court of Appeal s judgment in 2000 in Stark v The Post Office came under scrutiny during Lofstedt 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 their statutory duty under the Provision and Use of Work Regulations 1992 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.

6 3 QBE Issues Forum The Enterprise and Regulatory Reform Act 2013 The Government response Section 69 of the E&RRA is now in force for accidents occurring on or after 1 October 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 Health and Safety at Work etc. Act 1974 (Civil Liability) (Exceptions) Regulations 2013 only exclude certain provisions in the case of pregnant workers and new mothers. How will it work? Considerable debate is on-going 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. Quite simply, post 1st 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.

7 QBE Issues Forum The Enterprise and Regulatory Reform Act Can the regulations still be used as evidence of negligence? It is important to remember that regulations will still be of relevance. 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 position was notably clarified by the Government as the Act passed through Parliament. Viscount Younger in the House of Lords on 22 April 2013 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 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 judgment 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.

8 5 QBE Issues Forum The Enterprise and Regulatory Reform Act 2013 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 were 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. The 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, at 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 Provision and Use of Work Equipment Regulations, 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 of the claimants and their insurers.

9 QBE Issues Forum The Enterprise and Regulatory Reform Act In conclusion 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. Whilst some organisations might therefore take the view that certain claims will now potentially be easier to defend QBE would caution that given the requirements of the common law and the continuing importance of regulations in defining the standards for establishing negligence we will have to judge each case on it s individual merits. Moreover in the short term additional costs may be incurred across a range of employers liability claims as liability issues have to be investigated thoroughly against the background of whether or not the employer had taken reasonable care. While it may appear we are entering a more relaxed regime, employers should not see this as an opportunity to become complacent. There may be potential to rebut a proportion of previously indefensible claims however 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 front of mind, will benefit in the long run.

10 7 QBE Issues Forum The Enterprise and Regulatory Reform Act 2013 Authors Disclaimer This publication has been produced by QBE European Operations, a trading name of QBE Insurance (Europe) Ltd ( QIEL ). QIEL is a company member of the QBE Insurance Group ( QBE Group ). Readership of this publication does not create an insurer-client, or other business or legal relationship. This publication provides information about the law to help you to understand and manage risk within your organisation. Legal information is not the same as legal advice. This publication does not purport to provide a definitive statement of the law and is not intended to replace, nor may it be relied upon as a substitute for, specific legal or other professional advice. QIEL has acted in good faith to provide an accurate publication. However, QIEL and the QBE Group do not make any warranties or representations of any kind about the contents of this publication, the accuracy or timeliness of its contents, or the information or explanations given. QIEL and the QBE Group do not have any duty to you, whether in contract, tort, under statute or otherwise with respect to or in connection with this publication or the information contained within it. QIEL and the QBE Group have no obligation to update this report or any information contained within it. To the fullest extent permitted by law, QIEL and the QBE Group disclaim any responsibility or liability for any loss or damage suffered or cost incurred by you or by any other person arising out of or in connection with you or any other person s reliance on this publication or on the information contained within it and for any omissions or inaccuracies. Mark Paterson Risk Manager, QBE European Operations Mark joined QBE in 2007 having previously worked as a Liability Loss Adjuster in the Northwest of England. Mark has over 20 years Insurance experience handling a wide range of claims, predominantly Employers Liability and Public Liability claims. Mark has a wide range of claims experience including 10 years in Goods in Transit & Marine claims and over 12 years in Liability claims. In 2009 Mark was seconded onto the Springboard Program representing UK Casualty on the ClaimCenter development and deployment project, before joining the Casualty Risk Management Team in Mark holds the NEBOSH Certificate in Occupational Safety & Health and the Cert CII qualifications, is an Associate of The International Institute for Risk & Safety Management and also holds the Prince2 Practitioner qualification. Simon Denyer Partner, DWF Manchester Simon is Strategic Legal Development Partner within the Insurance Practice Group. This role involves anticipating and advising on changes affecting the claims handling landscape, and identifying how those changes impact both on DWF s insurance clients, and on our internal processes and products. He is also a partner within the Occupational Health and Casualty Team acting on behalf of insurers, adjusters and self insured s in the handling of employers liability and public liability claims for injuries caused by both accidents or diseases. Simon specialises in costs issues and represented the defendants in the leading case on the significance of costs estimates in the Court of Appeal, Leigh v. Michelin Tyre plc. which directly led to the strengthened provisions found in the Costs Practice Direction and was influential on the recent further costs reforms introduced by the Lord Justice Jackson s Review of Civil Litigation Costs.


12 QBE European Operations Plantation Place, 30 Fenchurch Street, London EC3M 3BD tel +44 (0) QBE European Operations is a trading name of QBE Insurance (Europe) Limited and QBE Underwriting Limited, both of which are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 4955/GC/THEENTERPRISE&REGULATORYREFORMSACT2013/JUNE2014