Employee and Public Liability Insurance - Case Study Example

Requirement of Employee and Public Liability Insurance The Employers’ Liability Compulsory Insurance Act of 1969 and subsequent regulations apply to ‘… every employer carrying on any business in Great Britain…’. This means that ‘one-person’ businesses that have been incorporated into limited companies have been subject to the legislation and the need to buy insurance. Section 5 of the Employers Liability (Compulsory Insurance) Act 1969 states that: "An employer who on any day is not insured in accordance with this Act when required to be so shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale; and where an offence under this Section committed by a corporation has been committed with the consent or connivance of, or facilitated by any neglect on the part of, any director, manager, secretary or other officer of the corporation, he, as well as the corporation shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly". Therefore, Betty is obligated by law to obtain insurance for liability to employees. Employers are responsible for the health and safety of their employees while they are at work. Employees may be injured at work, or they may become ill as a result of their work while in employment and might face claims for compensation in this regard. The Employers Liability (Compulsory Insurance) Act 1969 ensures that employers have at least a minimum level of insurance cover against any such claims. Public Liability Insurance is designed to cover businesses from the threat that they will be sued from a member of the public. The basic concept of public liability is, it will cover one’s business in the event that it causes injury or death to a third party, it will also cover the business in the event that it damages a third parties property. Public liability insurance is not compulsory in the UK and therefore, Betty does not require it, though it might be recommended to protect Betty from future liability from third parties. Liability for Injury to Jack Liability for land and premises differs depending on the question whether the injured person is a lawful visitor or a trespasser. While the former case is governed by the Occupiers’ Liability Act 1957, the latter is governed by the Occupiers’ Liability Act 1984. Under the Occupiers’ Liability Act 1957, an occupier must be prepared for children to be less careful than adults1 and where damage is caused to a visitor by a danger of which he had been warned by the occupier, the warning is not to be treated without more as absolving the occupier from liability, unless in all the circumstances it was enough to enable the visitor to be reasonably safe. However, Jack was no longer a lawful visitor when he crossed the door leading to the basement. In a hairdresser’s shop, visitors are authorized to enter to avail of the services provided in the shop. They have no authority to enter the basement without seeking permission of the occupier. If one does so, he shall be treated as a trespasser. When you invite a person into your house to use the staircase, you do not invite him to slide down the banisters.2 In Tomlinson v Congleton Borough Council3 the claimant, an 18 year old dived from a standing position into a lake to cool off despite a warning notice saying Dangerous water:  No swimming. It was held that although Tomlinson was a visitor whilst in the park and on the bank of the lake and owed the common duty of care under the Occupiers Liability Act 1957, when he exceeded his licence by diving into the lake he became a trespasser. Therefore, in the instant case Betty does not owe a common duty of care under the 1957 Act, but a more limited duty under the 1984 Act. Under the 1984 Act, “any duty owed by virtue of this section in respect of a risk may, in an appropriate case, be discharged by taking such steps as are reasonable in all the circumstances of the case to give warning of the danger concerned or to discourage persons from incurring the risk.” Betty clearly discharged the duty by putting a notice, “MIND THE STEP” nearby. Furthermore, Betty is entitled to assume that parents will exercise control over their children and not allow them to venture in potentially dangerous areas,4 especially when there is a notice. Since, Jack or for that matter any child, in a hair dresser’s shop would ordinarily come with their parents, who would be in a position to read the notice, Betty has not breached the duty owed by an occupier of premises. Liability to the Junior Employee The Senior employee failed to exercise the care required of a reasonable man under the circumstances. He should have foreseen that a broken bottle in the sink might be potentially dangerous especially to an inexperienced junior employee. For this act of negligence, Betty is vicariously liable. The common law doctrine of common employment has been abolished by the Law Reform (Personal Injuries) Act 1948 which provided that: “It shall not be a defence to an employer who is sued in respect of personal injuries caused by the negligence of a person employed by him, that the person was at the time the injuries were caused, in common employment with the person injured.” Lack of Ventilation Betty should immediately ensure proper ventilation at her shop. In common law, in Wilson & Clyde Coal Co. v. English,5 it was laid down by Lord Wright of the House of Lords that: “The whole course of authority consistently recognizes a duty which rests on the employer, and which is personal to the employer, to take reasonable care for the safety of his workmen, whether the employer be an individual, a firm or a company, and whether or not the employer takes any share in the conduct of the operations.” Therefore, if adequate ventilation is not provided, Betty might be sued for any loss or damage caused to the employees thereby. Furthermore, Health and Safety at Work Act (1974) imposes a duty upon Betty to ensure that her employees can work with safe equipment and materials, in a safe environment. Therefore, Betty might face criminal liability if she fails to provide adequate ventilation in her shop. Loss of a Career in Television In Chaplin v. Hicks,6 the plaintiff was a semifinalist in a beauty contest. The promoter of the event breached the contract by failing to notify the plaintiff of the time and place of the competition. The jury awarded damages in the amount of one fourth of the lowest prize. The court indicated the chance of winning had value which could be assessed by the law of averages. On the other hand, in Hotson v East Berkshire Health Authority7 the Claimant suffered an injury and was referred to hospital where a doctor negligently failed to diagnose his condition. The House of Lords rejected the Claimant’s claim because the avascular necrosis which developed was found to have been inevitable and there was nothing that could have been done even had the Defendant made a correct diagnosis. In a recent decision, Gregg v. Scott,8 the Court held that a mere loss of chance where the chance of obtaining a benefit itself was less than 50%, would not lead to a claim for compensation. Therefore, as it stands now, the circumstances in which a claimant can recover damages for the loss of a chance, assessed as a percentage of its full loss, are limited. Nevertheless, it is clear that damages can be recovered for breach of a contract to provide a chance, provided that the chance had some real value. In summary, the cases establish that in a loss of chance claim the claimant must first establish on the balance of probabilities that it would have sought to secure the advantage, the loss of which is the subject matter of the complaint. If this is established, and where the claim depends on the hypothetical acts of a third party (for example, whether the panel of selectors would have selected the claimant), the question for the court is whether the claimant has lost a real or substantial chance, as opposed to a speculative or fanciful chance. If so, the court must assess that chance. If the chance is meagre, the court would not award damages; if approaching certainty, a high percentage will be awarded. Imported Hair Care Products Betty as importer of the products is liable for the personal injury to the customer under section 2(1) of the Consumer Protection Act 1987 read with section 2(2)(c) of the Act which makes importers liable for any defect in the products. Under section 3(1) of the said Act, there is a defect in a product if the safety of the product is not such as persons are generally entitled to expect. Furthermore, it would need to be ascertained whether the product violated standards prevalent in UK. At the least persons are entitled to expect compliance with the safety regulations of the country.9 The importer faces criminal liability under the General Product Safety Regulations 2005. Under Regulation 2(b)(ii) of the said Regulations a producer would include an importer where the product is sold from outside European Union Member States. Hong Kong is not a member of the EU. Regulation 5 of the said Regulations provides that no producer shall place a product on the market unless the product is a safe product. Under regulation 20 contravention of regulation 5 is a criminal offense. Regulation 8 of the General Product Safety Regulations 2005 also imposes a duty on the distributor to act with due care in order to help ensure compliance with the applicable safety requirements and in particular a distributor shall not supply, a product to any person which he knows or should have presumed, on the basis of the information in his possession and as a professional, is a dangerous product. Contravention of the aforesaid regulation is a criminal offence under regulation 20. Betty would also require to show conformity with these guidelines. However, Betty might escape criminal liability under regulation 29 which provides that in proceedings against a person for an offence under these Regulations it shall be a defence for that person to show that he took all reasonable steps and exercised all due diligence to avoid committing the offence. Read More