Employer Liability in Relation to Employees Injury Under Common Law and Statute - Coursework Example

work Essay and Contents PART 3 Employer liability in relation to employee’s personal injury under common law and statute 3 Claims that can be defended 5 PART 2 7 The characteristics and features of a company 7 Separate legal entity 7 Statutory liability 7 Management 7 Registration 8 Limited liability 8 Perpetual succession 8 Transferability of equity 8 Common seal 9 Separate property 9 Capacity to sue or be sued 9 Social objective 9 Separate management 9 Voting rights 10 The main differences between a company and partnership form of businesses 10 Structure 10 Startup costs 11 Liabilities 11 Taxation 12 Management 12 Recommendation as to which structure to adopt 12 References 14 Case laws 14 Journals 14 PART 1 Employer liability in relation to employee’s personal injury under common law and statute Employees’ safety and health at common law is covered by the law of contract in common law. The employer can be sued under the principle of vicarious liability for negligence of the duty of care or for breach of the contract of tort. If an employee suffers injury due to employers’ failure to discharge duties of care, the employer incurs civil liability to the employee for damages suffered. In this regard, the common law ensures that the employee who suffers injuries is compensated. Ideally, the responsibility of employers over their employees while on duty should be primarily to ensure they are secure failure to which they become liable for criminal liability. Employers are made liable by offences committed by their employees while acting in the course of their duty. As a result, the employer is held liable to employees injured by the negligence of their workmates. Basically, it is worth noted that employees are considered to be acting on behalf of their employer only when performing those duties which they have been employed to do by their employer. However, undertaking these duties in a manner that is not authorized or else a in a prohibited manner does not exclude them from the course of their actions. In Century Insurance Co v NIRTB (1942), a driver of a tanker who lit a cigarette while transporting petro to the underground storage tank and threw a live match which later caused an explosion and huge damages was ruled to have acted negligently while carrying out his responsibilities. The court held that he was acting In the course of his employment even though acting in unauthorized manner. Focusing on Limpus v London General Omnibus Co (1862) a bus driver competing with another driver from a rival bus company trying to reach the next bus stop first to collect passengers who were waiting for a bus from his company ran into the bus queue injuring many passengers. It was held that the bus company was vicariously liable to the injured passengers since the driver was acting in his line of duty despite performing his duty in unauthorized manner. Similarly, in Rose v Plenty (1976), a milkman who was cautioned to not allow children on to his milk float to assist him with his deliveries and defied the instructions by going ahead to employ a child as an aid was held liable for the child injuries. It was ruled that the child employee was doing what was employed to do, even though the law posited that the milkman should not employ a child assistant. Under common law, employers are liable to take reasonable care for the workers. This duty is owed in contract and also in tort. It is therefore a non-delegable duty meaning that an employer remains liable even if such duties are delegated to someone else. Nevertheless, such duty entails taking reasonable care and not absolute care to ensure safety of employees. As such, the employers should balance the risk of occurrence of accidents against inconveniences and costs of preventing or reducing the opportunities of such prevalent risks. This therefore requires an employer to provide employees with a safe place of work, competent fellow employees, safe system of work and safe plant and equipments. On the same line, a breach of statutory responsibility for safety and health will result to a criminal liability. The courts also treat breach of statutory duty as a tort in its own right. An employee can institute legal proceeding against the employer in the event of breach of such statutory duties. Health and safety legislation not only makes employers liable for the safety of employees, but also other people working in the organization. For instance, a contractor may lay a claim for breach of statutory duty in circumstances where no duty of care is guaranteed in common law. An employee must therefore prove liability on the part of the employer in the situation under consideration. Nevertheless, an employer will only be liable if it can be proved beyond reasonable doubt that he is breach of statutory duty and such breach caused an injury to the employee. For an employee to succeed in instigating legal claims for injuries, the laws states that such an employee must demonstrate that he belongs to a class of persons that benefit from the statutory duty. In Hartley v Mayoh & Co (1954), a fireman was killed through electrocution in the process of fighting fire at the defendants’ factory. The wife to the fireman filed a law suit against the factory for breach of statutory duty as wiring done at the factory was faulty. The court held that, the claim could not succeed since the fireman was not an employee of the company and did not fall within that class of persons who should benefit from the statutory duty as provided in the law. Claims that can be defended In an event where an employee performs duties that are unconnected with the duties delegated by the employer, when a tort arises, it is said to be “on the frolic of his own” due to acting outside his employment. In such a case, the employer will defend himself against any liability. Taking an example, of Daniels v Whetstone Entertainments Ltd (1962) where a night club bouncer forcefully ejected Mr. Daniels from a building after being embroiled in a disturbance, the bouncer once outside the building assaulted him. The court held that the bouncer was liable for injuries suffered by Mr. Daniels outside the building. In Hilton v Thomas Burton (Rhodes) Ltd (1961), Hilton an employee of a building company went to a pub together with fellow workers in a company van. On their way back, the van crashed as a result of driver’s negligence and Hilton was killed. Hilton’s wife later sued the building company on the basis that they were liable for the van’s driver negligence. The court ruled that the company was not liable since Hilton and his colleagues had been on “a frolic of their own” on happening of the accident and as such not acting within the course of their employment. Therefore, in any event where the employee performs his duties, he continues to be acting in the course of employment irrespective of whether carrying out his responsibilities in unauthorized manner. However, in some occasion, an employee may perform his duties in a manner that can be considered to be outside his employment and hence an opportunity for the employer to defend himself. For instance, in General Engineering Services Ltd v Kingston & St Andrews Corporation (1989), firemen in Jamaica went into a ‘go-slow’ in protest of a pay claim. This resulted in taking too long to reach a fire site and many building burnt to the ground and many people suffered injuries by the time of arrivals. In this particular case, they were sued by individuals who had suffered huge damages and injuries and the firemen argued that their employer was liable for the losses and injuries suffered as they arose while they were in their line of duty. The court held that the employer was not liable since the fire men actions were so heinous that they performed their duties outside their employment. In addition, the injury suffered should be of a kind that the statute seeks to prevent. In Close v Steel Company of Wales (1962), the plaintiff suffered injuries from a flying metal when a part of a machine on which he was working flew out on him. The employer was found to be in breach of section 14 of the Factories Act. The court ruled that the claim could not succeed since the object of section 14 of the Factory’s Act was to safeguard workers from getting too close to dangerous parts of the machinery, but not to stop dangerous parts of machinery from flying off from the machinery. The injury suffered by the plaintiff was therefore not one which the statute sought to prevent. PART 2 The characteristics and features of a company Separate legal entity A company is a separate legal entity under incorporation laws compared to its members. This means that a company is distinct from its members in the face of the law. Ideally, it has its own name and seal different from that of its members. In addition, it owns its assets and liabilities separate from those of members(Jakuntaviciute, 2011). Essentially, a company has the capacity to own property, engage other trading entities for business, incurring debts and being sued as a separate person. Even though a company has no fundamental rights, as has the potential of challenging a law that goes against citizens fundamental rights. Statutory liability A limited company must comply with a number of statutory obligations regarding management such as maintaining proper books of accounts, preparing annual financial statements and getting them audited as provided in company law. A company must also file annual returns including tax returns that provide details of its annual operations. Further, a company unlike sole proprietorship and partnership must old annual general meeting for its shareholders. Management Company law provides that a company must have a board of directors and a managing director as part of management. These managers are selected in a way consistent with memorandum and articles of association. As such, company shareholders are not authorized to engage whatsoever in management activities. Registration A company unlike partnership form of business comes into existence after registration under company’s Act. In addition, a company carries out its business as stated in company’s Act and as passed by the legislature. Limited liability Ideally, the liability of company members is limited to the assets contributed up to the face value of equity held by them. As such, a member is only liable to pay the uncalled money due on shared held by such member. The creditors therefore cannot recover their dues from members’ personal assets in the event that company assets are inadequate to pay liabilities of the firm. Perpetual succession Unlike partnership form of business, company’s continuity is not dependent on the life of its members. As such, a company will not cease to exist unless it is wound up or in the event the task for which it was formed is accomplished. The members may change overtime, but that does not affect the continuity of a company. Transferability of equity Company shares are easily and freely transferable from one member to the other. Other than in the vent where a shareholder is permanently wedded to the company, a member who transfers shares to another person enjoys all such rights that the transferor had. Common seal A company lacks physical presence and as such it is an artificial person. As such, a company cannot sign its name on a contract and therefore performs it duties through its board of directors who enters into various agreements on its behalf. As such a common seal acts as the official signature for the entity. The name of the company must be engraved on the common seal and any document not bearing the seal my fail to be accepted as authentic as it may render it void of any legal force. Separate property Similar to individuals, a company has a right to purchase or sell properties in its own name. Ideally, the shareholders do not have an equitable or legal interest on the property of the company that they own. Capacity to sue or be sued As a separate entity from its members, a company can sue or be sued in its own name. Social objective Presently, companies are viewed as social institutions in company law. This is because they are obligated to serve the community, workers as well as contributing to development of national economies. As a legal person, a company enjoys legal rights and obligations similar to that of a natural person. Separate management Unlike partnership which is managed and run by partners, a company is managed and administered by its managerial personnel. The members are simply holders of shares and should not necessarily be managers of the entity. Voting rights The shareholders have voting rights commensurate with the number of shares held. For instance, a member with ten shares has ten votes in the company.When establishing a business, the initial decision to make is what form of business to register. This is because they form of business affects individuals liabilities, taxes and how the company is run. In the event one is undecided which form of business to register, the following major distinctions between partnerships and company can help to make an informed decision of the most appropriate form of business? The main differences between a company and partnership form of businesses Structure A company exists as an artificial legal person as opposed to a partnership business which itself is not a legal person. According to Haynesand Allen (2001), continuity of partnership form business is dependent on the life of the partners whereas a company has a perpetual succession. Death of a shareholder does not bring a company to an end as is the case for a partnership business. Shareholding changes hand from one member to another and as such, in the event of demise of one of the shareholders, shareholding will pass to other persons and therefore not necessarily meaning end of the business. Registration and formation of a company is guided on the basis of Companies Act whereas it is not compulsory to register a partnership business. Another way that a partnership business differs from a company is on membership. A limited company must have between two and fifty members unlike a partnership which should have between two to twenty members. Companies and partnership form of businesses differ significantly in form of structures. Companies are more complex and involve many people in decision making as opposed to partnership form of businesses. A company is a separate legal entity from its owners and the shareholders selects its managers besides making decisions on how it should be managed. For a partnership form of business, two or more people share ownership, management duties, liabilities, expenses and profits depending on the capital contribution. Startup costs As opposed to partnerships, companies are more complicated and expensive to form. Company formation involves administrative expenses and complex legal and tax requirements. For instance, a company must file articles of association and must obtain local and state licenses and business permits to operate(Campbell, 1994). In addition, a company must hire a lawyer to help init legal processes. On the other hand, partnerships are less costly and are easier and simpler to form. However, similar to companies, a partnership business must also acquire local and state licenses and business permits to operate. Liabilities In partnership, the partners are held liable for legal responsibilities and all liabilities facing the business. General partner’s assets may be taken to cover business debts in the event the business lacks enough resources to pay off creditors. Partnership agreements states the exact percentage held by each partner and it forms the basis of sharing both profits and losses(Copp, 2011). On the part of companies, members are not held liable for both company’s legal obligations and debts. A company is a separate legal entity and therefore assumes all debts and therefore the shareholders are not at risk of losing their personal assets. Taxation The law does not require partnerships to pay business taxes. The profits or losses for a partnership business are “passed through” to existing partners who are then taxed based on their incomes(Blizzard, 1996). Nonetheless, partnerships are required to file tax returns in order to report their annual business operations and partners’ share of profits or losses. On the other hand, companies are required to pay taxes by the law. Shareholders must also pay taxes on their dividends, bonuses and allowances. Management The management structure of a partnership for of business is much simpler compared to that of a company. In a partnership, all the partners’ make decision on how to run the partnership business. Companies are governed by shareholders through regular meeting to deliberate on company policies and management(Freedman, 2001). However, as opposed to partners’ role in partnership business, shareholders do not have much day-to-day involvement in company affairs as their key role remains overseeing the managers who are charged with the responsibility of running the company. Recommendation as to which structure to adopt As pointed out, Jane and Cherry plans to expand their premises and employees as a result of booming business. In addition, they are also planning to open other Spas in different locations. In this regard, I would recommend to them to adopt a limited company form of business. The decision is reached on the basis of features and key distinction between a limited company and partnership discussed above. With their decision to expand by opening more branches, it could then prove difficult for the two to run all their branches. As such, adopting a company would enable them to appoint managers to run the different branches on their behalf thus freeing themselves the increased burden of managing the expanded chain of Spas(Summa, 1996). Another reason why Jane and Cherry should consider adopting a limited company is that unlike partnership where partners are charged with legal responsibilities, a limited company engages lawyers to act on its behalf. More so, a limited company can either sue or be sued in its own name thus freeing the two from suffering law suits in their individual names. In addition, both Jane and Cherry will be protected from losing their personal assets in the event the Spa business fails to pay off its creditors. Again, as the two seeks to expand, the business has a potential to continually grow and flourish since even in the event of demise of one or the two owners, the business can still continue operating. Even with high taxation, startup costs and complicated structure, a limited company is the only favorable form of business for both Jane and Cherry since its advantages outweighs the disadvantages. References Case laws Century Insurance Co Ltd v Northern Ireland Road Transport Board [1942] APP.L.R. 03/04 Close v Steel Co. of wales [1961] All ER 953 Daniels v Whetstone Entertainment [1962] 2 LLR 1 General Engineering Services Ltd. v. Kingston and Saint Andrew Corporation, (1988) 3 All ER 867 Hartley v Mayoh & Co [1954] 1 All ER 375 Hilton v Thomas Burton (Rhodes) Ltd [1961] 1 All ER 74 Limpus v London General Omnibus Co (1862) 1 H&C 526 Rose v Plenty [1976] 1 WLR 141 Journals Blizzard, D., 1996. Forming a Limited Company. International Small Business Journal, 14(4), pp. 118. Campbell, T.H., 1994. When is it appropriate to use a limited liability company? Journal of Financial Planning, 7(1), pp. 25. Copp, S.F., 2011. A Theology of Incorporation with Limited Liability. Journal of Markets and Morality, 14(1), pp. 14-28. Freedman, J., 2001. Limited liability partnerships in the United Kingdom-do they have a role for small firms? Journal of Corporation Law, 26(4), pp. 897-915. Haynes, P., and Allen, M., 2001. Partnership as union strategy: a preliminary evaluation. Employee Relations, 23(2), pp. 164-187. Jakuntaviciute, G., 2011. The liability of a company director: Civil or material? Socialiniu Mokslu Studijos, 3(4), pp. 38-43. Summa, J.D., 1996. Should you convert to a limited liability company? Journal of the American Society of CLU & ChFC, 50(1), pp. 57. Read More