Health and Safety
Executive / Commission
Regulatory Impact Assessments: Management
1. The proposals arise from correspondence between the European Commission (EC) and the UK Government over the "civil liability exclusion" in the Management of Health and Safety at Work Regulations 1999 (MHSWRegs) in the context of the UK's implementation of the Framework Directive (89/391/EEC). In light of this correspondence the UK undertook to remove the exclusion - both from MHSWRegs and from the Fire Precautions (Workplace) Regulations 1997 (FPWRegs) - for breach of statutory duty towards employees, and to con-sult on proposals to this end.
2. Comments from consultees centred on the effect that the removal of the civil liability exclusion would have on the volume of compensation claims by employees. Three responses to the consultation were received from trade associations stating that the removal of the exclusion would result in an absolute increase in the volume of claims. Reasons cited for this increase included the rise of no-win no-fee actions, the increasingly litigious environment and the reduced burden of proof under civil law. The responses also raised the concern that any increase in claims would result in a consequent increase in employer's liability insurance premiums.
3. Balanced against these assertions were responses received from the Federation of Insurance Lawyers and a major law firm. These responses supported the view in the RIA that the proposals would not lead to a significant increase in the volume of compensation claims. In their experience injured/ill employees often already cite any breach of the MHSWRegs as evidence of negligence in support of a civil claim under the common law. Although the burden of proof is lower in civil action than in prosecutions by enforcing authorities (where it must be proved beyond reasonable doubt), the responses state that the most important issue for claimants to prove is that of causation. In the context of a claim under MHSWRegs, it would have to be proven on a balance of probabilities that an inadequate/unsuitable risk as-sessment was of material causative relevance to the injury/illness.
4. In the light of the conflicting responses received during the consultation the conclusions of the RIA have not been revised. HSE expects that the increase in total claims as a result of these proposals - if any - to be small.
5. These proposals do not address health and safety issues directly, rather the methods for compensating employees when health and safety measures fail.
6. The proposals intend to amend the civil liability provisions in MHSWRegs and the FPWRegs to the satisfaction of Ministers and the EC. To this end the proposals will provide the means whereby an employee can bring a claim for damages against their employer, for injury or illness they have suffered as a result of their employer's failure to comply with MHSWRegs or the FPWRegs.
Approaches considered
7. The UK is bound to amend MHSWRegs and the FPWRegs in line with its undertakings at paragraph 1 above. However, this undertaking requires only that the UK amend MHSWRegs and the FPWRegs so that an employer's own employees have a right of action in civil proceedings. There is an alternative possibility, namely that this right of action also be extended to workers not employed by the employer - be they another employer's employees or members of the public - at least as far as the MHSWRegs are concerned. HSC has considered all these options for change but considers that, at this time, the priority must be to adhere to the changes sought by the European Commission rather than go beyond them. HSC is therefore consulted only on extending the right of action to an employer's own employees.
Issues of equity and fairness
8. The proposals represent a transfer of funds within the private sector (ie, from employer to claimant (employee)) in the first instance. Since the organisations affected are commercial concerns, we might expect any additional costs to be passed through to consumers. However, the effects will be dissipated by the availability to such organisations of employers' liability insurance (under the Employers' Liability (Compulsory Insurance) Act 1969) which covers employers for the cost of such claims. The actual number of potential claims, as discussed below, is expected to be very small.
9. The financial issues surrounding the proposals have been examined by HSE. There are no other significant economic impacts.
10. The proposals do not address health and safety issues directly.
11. The financial implications of the proposals are discussed below. There are no other associated cost-savings.
12. All business sectors are potentially affected, although which and how many individual businesses are affected in practice will depend entirely on how many employees bring com-pensation claims as a result of the changes to MHSWRegs and the FPWRegs.
Management of Health and Safety at Work Regulations
13. The act of removing the civil liability exemption is likely to highlight the potential for claims. However, non-compliance with a statutory duty is only relevant if the injury in question was of a type the regulations were passed to prevent.
14. In practice, the law of negligence (under common law) together with any "targeted" regulations aimed specifically at the situation causing the injury would generally form the basis of a claim of damages by a worker against his employer. If, in addition, the employer had failed to undertake a risk assessment, and a claim was also bought under the MHSWRegs, then the claimant would need to show that the absence of a risk assessment contributed materially to the injury. Given that it is often easier to demonstrate failure to comply with the tar-geted regulation (which may often be prescriptive), then a further claim under MHSWRegs would not usually significantly improve the prospects of success at trial.
15. However, there are two circumstances where a worker may look to the MHSWRegs as a basis for a claim:
a Cases in which there has been no breach of targeted regulations, or any other common law duty, or where there may be difficulties in proving either;
b Cases in which the case on causation is complex, and the worker wishes to supplement his claim by relying on MHSWRegs.
16. It is thought that there would not be a significant number of cases in which a claim in negligence would fail but one under MHSWRegs would succeed. Many important provisions in MHSWRegs are qualified (for example by the word "appropriate"), in an analogous way to how a court would normally interpret the common law duty of care. Some duties in MHSWRegs are absolute. However it is thought unlikely that claims would arise from breaches of these specific requirements alone. An exception may be the duty under MHSWRegs to provide comprehensible and relevant health and safety information. The claimant would only have to prove that the lack of information contributed to the loss, whereas common law rules - particularly where there are competing causes of loss - would be generally less onerous than the absolute requirement.
17. More complex cases would proceed in any case, and the employer would usually already be facing a claim under other regulations or common law. Additional cases would only arise where MHSWRegs provided the main basis for a complex claim.
18. Finally, there is the possibility that a breach of MHSWRegs would be actionable without proof of damage, which may lead to a court case. However, faced with this prospect (ie a letter of action), we believe most employers would agree to comply with the regulations.
Fire Precaution Regulations
19. These regulations apply to the safety of an employer's staff. Under these regulations, an employer would be expected to have in place general fire precautions necessary for the safety of his or her staff, and others, in case of fire.
20. The amendment to the FPWRegs would have a similar practical effect as we have outlined for the MHSWR, in other words in the vast majority of cases, civil action would already be taking place.
Management of Health and Safety at Work Regulations
21. We would expect the overall increase in claims - if any - to be small for the reasons described above. Some indication of the relative frequency of offences under various regulations can be obtained from actions bought by HSE. In 1999-00, HSE proceeded with 2,253 prosecutions, of which 124 were under MHSWRegs, or 5% of the total. This can be seen to put an upper bound on the increase in civil claims, if the trend in civil action broadly follows that of action by prosecuting authorities. Given the practical effect of removing the exemption discussed above, this suggests that the vast majority of claims would continue to take place under targeted regulation.
22. Moreover, it is likely that the propensity for workers to take civil action under MHSWRegs will be less than HSE's propensity to take action under these regulations. Since the MHSWRegs are seen as an important part of HSE policy to ensure that employers have safe systems of work in place, HSE inspectors would be more likely to take action regardless of whether an incident had occurred (the emphasis being on preventing future incidents). Inspectors may also have operational reasons for emphasising these recent, high profile and wide-ranging regulations.
23. In addition, the most widespread and significant compensation claims have historically been associated with ill-health. Much of this relates to harm predating the MHSWRegs. With respect to current health risk, much targeted regulation is in existence dealing specifi-cally with the health risks that have lead to compensation claims in the past.
24. We might expect claims for compensation to accompany instances where HSE or another enforcing authority has already taken successful prosecution action. However, we have advised that searches of court records would be unable to ascertain whether a compensation action would have been preceded by a prosecution. It is also not easy to identify duty of care compensation claims of which breaches of MHSWRegs would have formed part of the argument, without expenditure of significant resource by the court authorities.
25. Research conducted on behalf of HSE, "Analysis of compensation claims related to health and safety issues", published in 2003, revealed average costs of claims across a range of industries of £1.7k for exposure to noise, to £4.2k for slips, trips and falls, to £4.3k for manual handling. If we assume that 10% of prosecutions for breach of the MHSWRegs are accompanied by a civil claim, where there is no overlapping claim, some 12 additional cases would result per annum at a cost in the range of £20-40k.
Fire Precautions Regulations
26. There are typically very few prosecutions under the fire precautions regulations each year (two or three in 1999). Because of this, and the arguments above, we are expecting very few, if any, compensation actions to be initiated by these changes.
27. In terms of resource costs, any organisations affected will incur administrative costs in dealing with the paperwork associated with compensation claims, and in the costs of both their own personnel and that of any legal representation in defending an action. We are unable to estimate the numbers of future compensation claims initiated by these changes, but expect them to be very small.
28. Following any successful claims, companies will also incur costs in compensation payments. These are not resource costs to society, since they represent a transfer of funds from one party to another. The scale of these transfer payments would be case specific, and widely variable.
29. This would be widely variable. Only a very small number of businesses would be affected.
30. There may well be a disproportionate impact on those small businesses subject to new claims, as the cost of defending a claim would be proportionately greater than for large companies. Again, we believe the numbers of businesses affected will be very small, and the effect on any business found liable to pay compensation may well be taken account of in awards by the court.
31. None, other than a very small administrative cost in developing these proposals.
32. None.
33. There are no environmental impacts associated with these proposals.
34. There are very little resource costs and benefits associated with these changes.
35. These are uncertain, but the resource costs will be very small. Any compensation awards, which represent transfer payments, will be decided by the courts.
36. As detailed in the text.
37. HSC/E intends to monitor how/whether the amendments impact on the number of compensation claims, and to encourage industry to develop systems for identifying "unmeritorious" claims.
HSE Economic Advisers Unit
July 2003
Contact:
Neal Stone
Policy Group, HSE
Rose Court
2 Southwark Bridge
London SE1 9HS
Tel : 020 7717 6484
e-mail : neal.stone@hse.gsi.gov.uk