267 28 2MB
English Pages 660 Year 2012
Ken Oliphant Gerhard Wagner (eds)
Employers’ Liability and Workers’ Compensation
Tort and Insurance Law TIL 31
Tort and Insurance Law Vol 31 Edited by the European Centre of Tort and Insurance Law together with the
Institute for European Tort Law of the Austrian Academy of Sciences
De Gruyter
Ken Oliphant Gerhard Wagner (eds)
Employers’ Liability and Workers’ Compensation
With Contributions by Christian Alunaru Lucian Bojin Dominika Dörre-Nowak Massimo Foglia Michael D Green Florence G’sell-Macrez Ernst Karner Felix Kernbichler Richard Lewis Siewert D Lindenbergh Mark Lunney
Daniel S Murdock Ken Oliphant Alessandro P Scarso Thomas Thiede Vibe Ulfbeck Isabelle Veillard Gerhard Wagner Raimund Waltermann Keizo Yamamoto Tomohiro Yoshimasa
De Gruyter
European Centre of Tort and Insurance Law Reichsratsstraße 17/2 A-1010 Vienna Tel.: +43 1 4277 29650 Fax: +43 1 4277 29670 E-Mail: [email protected] Austrian Academy of Sciences Institute for European Tort Law Reichsratsstraße 17/2 A-1010 Vienna Tel.: +43 1 4277 29651 Fax: +43 1 4277 29670 E-Mail: [email protected]
This study was supported by Munich Re.
ISBN 978-3-11-026996-3 e-ISBN 978-3-11-027021-1 ISSN 1616-8623
Bibliografische Information der Deutschen Nationalbibliothek Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über http://dnb.d-nb.de abrufbar. © 2012 Walter de Gruyter GmbH, Berlin/Boston Druck: Hubert & Co. GmbH & Co. KG, Göttingen Gedruckt auf säurefreiem Papier Printed in Germany www.degruyter.de
Preface This book on employers’ liability and workers’ compensation presents the results of research undertaken by the European Centre of Tort and Insurance Law (ECTIL), in collaboration with the Institute for European Tort Law (ETL) of the Austrian Acaedemy of Sciences. The project aims were developed in discussion with representatives of Munich Re, whose financial support for the project, and ECTIL’s ongoing work in general, is most gratefully acknowledged. Some early results from the project were presented and discussed at a public conference hosted by Munich Re in March 2011, from which the editors derived very useful comments and suggestions. The project could not have been completed without the tremendous efforts of many members of ECTIL/ETL staff, amongst whom we must particularly highlight Thomas Thiede and Marlene Steininger, who acted as project assistants, Donna Stockenhuber, Emma Witbooi and Kathrin Strobach-Karner, who did the copy-editing, and Edina Busch-Tóth, who compiled the index. Annelise Tracy Phillips translated the Austrian country report from German into English. The editors express their grateful thanks to them all. The editors gained considerable assistance from discussion of the research topic with Ina Ebert and Nicholas Roenneberg of Munich Re, and their former colleague, Christian Lahnstein, and thank them all for their input. The latter’s retirement came during the course of the project, and the editors would like to take the opportunity to record their debt of gratitude to him for his immense contribution to ECTIL’s work over several years, and to express the hope that they will continue to benefit from his knowledge, wisdom, enthusiasm and friendship in the future. Ken Oliphant Gerhard Wagner Vienna and Bonn July 2012
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Table of Contents Preface
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List of Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XXVII Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XXIX Mark Lunney Employers’ Liability and Workers’ Compensation: Australia . . . . . I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability . . . . . . . . . . . . . B. Interaction with other institutions . . . . . . . . . . . . . . . . . . C. Empirical evidence . . . . . . . . . . . . . . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. When can workers’ compensation be claimed? . . . . . . . . . 2. Spatial and temporal dimensions of course of employment . . B. Compensation trigger . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . 1. Medical care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Rehabilitation assistance . . . . . . . . . . . . . . . . . . . . . 3. Lost earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Non-pecuniary losses . . . . . . . . . . . . . . . . . . . . . . . 5. Dependents’ benefits . . . . . . . . . . . . . . . . . . . . . . . 6. Comparison with damages in tort . . . . . . . . . . . . . . . . 7. Lump sum or periodical payments? . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Types of system . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Contribution to the workers’ compensation fund . . . . . . . 3. Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . 1. Organisational framework of workers’ compensation institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Who decides claims for benefits . . . . . . . . . . . . . . . . . 3. Reviews and appeals: special tribunals or general civil justice system? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Speed of claims’ resolution and administrative costs . . . . . .
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G. Rights of recourse of workers’ compensation institutions . . . . . 1. Recourse against employer . . . . . . . . . . . . . . . . . . . . 2. Recourse against a co-worker . . . . . . . . . . . . . . . . . . . 3. Recourse against third parties . . . . . . . . . . . . . . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Fund of first resort? . . . . . . . . . . . . . . . . . . . . . . . . 2. Deductibility of benefits . . . . . . . . . . . . . . . . . . . . . 3. Recourse of social welfare agencies, social health insurance, private health insurers against workers’ compensation institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . 1. Availability of damages in addition to workers’ compensation benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Deductibility of benefits provided by workers’ compensation in action against employer . . . . . . . . . . . . . . . . . . . . 3. Subrogation of workers’ compensation into the claim of worker against employer . . . . . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Contract or tort? . . . . . . . . . . . . . . . . . . . . . . . . . . 2. General law or a special category . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Liability of employers for their own acts or omissions . . . . . 2. Liability of employers for the acts or omissions of their employees and others . . . . . . . . . . . . . . . . . . . . . . . 3. Relevance of health and safety legislation in establishing liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Overall a fault-based or strict liability system . . . . . . . . . . 5. Causation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Effect of victim’s contributory conduct . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . 1. Same level as in other cases of personal injury . . . . . . . . . 2. Heads of recoverable damage . . . . . . . . . . . . . . . . . . 3. Costs of medical care . . . . . . . . . . . . . . . . . . . . . . . 4. Costs of rehabilitation assistance . . . . . . . . . . . . . . . . 5. Lost earnings, loss of earning capacity, and loss of pension entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Non-pecuniary loss . . . . . . . . . . . . . . . . . . . . . . . . 7. Dependents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Form of payment . . . . . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . 1. Courts or specialised tribunals . . . . . . . . . . . . . . . . . . 2. General civil procedure or special procedures? . . . . . . . . .
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3. Reviews and appeals . . . . . . . . . . . . . . . . . . . . . . . 4. Speed of claims’ resolution and administrative costs . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Against other employees or their liability insurer? . . . . . . . 2. Against third parties . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . 1. Deductibility of benefits received from social welfare agencies 2. Recourse of social welfare agencies and private insurers against the employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Voluntary or mandatory? . . . . . . . . . . . . . . . . . . . . . 2. General liability insurance or special policy . . . . . . . . . . . 3. Basic principles of employers’ liability insurance . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ernst Karner and Felix Kernbichler Employers’ Liability and Workers’ Compensation: Austria . . . . . . I. Introduction . . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability . 1. Historical development . . . . . . . . . . 2. Basic system . . . . . . . . . . . . . . . . 3. Relation to private law remedies . . . . . B. Interaction with other institutions . . . . . . C. Empirical evidence . . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . . 1. Protected sphere of life . . . . . . . . . . 2. Attribution . . . . . . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . 1. Personal injury . . . . . . . . . . . . . . 2. Sexual harassment . . . . . . . . . . . . 3. Dignitary injuries . . . . . . . . . . . . . 4. Property damage and pure economic loss D. Heads and levels of benefit . . . . . . . . . . 1. Benefits in kind . . . . . . . . . . . . . . 2. Cash benefits . . . . . . . . . . . . . . .
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E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Funding through contributions . . . . . . . . . . . . . . . . . 2. Financial equalisation (Finanzausgleich) . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . G. Rights of recourse of workers’ compensation institutions . . . . . 1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Recourse against the employer . . . . . . . . . . . . . . . . . . 3. Recourse against a colleague? . . . . . . . . . . . . . . . . . . 4. Recourse against third parties . . . . . . . . . . . . . . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Relationship between health and accident insurance . . . . . 2. Relationship between Social Insurance and Minimum Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. General tortious fault-based and the employer’s liability privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Work accidents caused by vehicles for which there is enhanced liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Fault-based liability . . . . . . . . . . . . . . . . . . . . . . . . 2. Strict liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Liability for risks without fault . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . 1. Personal injuries . . . . . . . . . . . . . . . . . . . . . . . . . 2. Material damages . . . . . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
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Vibe Ulfbeck Employers’ Liability and Workers’ Compensation: Denmark . . . . . 111 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability . . . . . . . . . . . . . B. Interaction with other institutions . . . . . . . . . . . . . . . . . . C. Empirical evidence . . . . . . . . . . . . . . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . G. Rights of recourse of workers’ compensation institutions . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
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Richard Lewis Employers’ Liability and Workers’ Compensation: England and Wales 137 I. Introduction . . . . . . . . . . . . . . . . . . . . . . A. The basic system of compensation and liability . 1. Tort . . . . . . . . . . . . . . . . . . . . . . . 2. Workers’ compensation . . . . . . . . . . . . 3. Why preferential compensation for workers? B. Interaction with other institutions . . . . . . . . C. Empirical evidence . . . . . . . . . . . . . . . .
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II. Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Workers covered . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Spatial, temporal and other limitations . . . . . . . . . . . . . 3. Effect of the victim’s contributory negligence . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . . . . . . . . . . . . . . 1. Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Personal injury . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Other than personal injury . . . . . . . . . . . . . . . . . . . . D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . 1. Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Rate of payment . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Comparison of the industrial injuries pension with damages in tort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . 1. Claims and appeals . . . . . . . . . . . . . . . . . . . . . . . . 2. Tribunals not courts . . . . . . . . . . . . . . . . . . . . . . . 3. Administrative cost . . . . . . . . . . . . . . . . . . . . . . . . G. Right of recourse of workers’ compensation institutions . . . . . 1. Rights of recourse against the employer . . . . . . . . . . . . 2. Rights of recourse against a co-worker or third party . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. The sources of funding . . . . . . . . . . . . . . . . . . . . . . 2. Deductibility of benefits . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Vicarious liability . . . . . . . . . . . . . . . . . . . . . . . . . 2. Breach of common law duty . . . . . . . . . . . . . . . . . . . 3. Breach of statutory duty . . . . . . . . . . . . . . . . . . . . . 4. Effect of the victim’s contributory conduct . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Accidents and disease . . . . . . . . . . . . . . . . . . . . . . . 2. Personal injury . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Other than personal injury . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . 1. Number and cost of claims . . . . . . . . . . . . . . . . . . . . 2. Insurers and the administration of the tort system . . . . . . .
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3. The speed of settlement . . . . . . . . . . . . . . . . . . . . . 4. The administrative cost of tort . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Rights of recourse against other employees . . . . . . . . . . . 2. Rights of recourse against third parties . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . 1. Recourse of social security agency against the employer . . . . 2. Reducing damages to take account of the benefits paid . . . . 3. Recovering the cost of National Health Service treatment . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. The scope of compulsory insurance . . . . . . . . . . . . . . . 2. Policy limits and insurance triggers . . . . . . . . . . . . . . . 3. Apportionment . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Scope of each scheme . . . . . . . . . . . . . . . . . . . . . . . 2. Amount and purpose of compensation . . . . . . . . . . . . . 3. Fault and no-fault . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
189 189 190 190 191 191 191 193 193 194 194 195 196 197 197 197 197 199 199 200 201 201 202
Florence G’sell and Isabelle Veillard Employers’ Liability and Workers’ Compensation: France . . . . . . . 203 I. Introduction . . . . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability . . . B. Interaction with other institutions . . . . . . . . C. Empirical evidence . . . . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . . . . 1. Workers covered . . . . . . . . . . . . . . . . 2. Spatial, temporal and other limitations . . . 3. Effects of the victim’s contributory conduct B. Compensation trigger . . . . . . . . . . . . . . . 1. Accidents . . . . . . . . . . . . . . . . . . . . 2. Diseases . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . 1. Personal injury . . . . . . . . . . . . . . . . 2. Pure economic loss . . . . . . . . . . . . . . 3. Property damage . . . . . . . . . . . . . . . 4. Sexual harassment – dignitary injuries . . .
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203 203 204 204 206 206 206 207 212 213 213 214 217 217 218 220 220
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D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . 1. Medical care and rehabilitation assistance . . . . . . . . . . . 2. Lost earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Dependents’ benefits . . . . . . . . . . . . . . . . . . . . . . . 4. Comparison with damages in tort . . . . . . . . . . . . . . . . 5. Lump sum or periodical payments? . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . 1. Accident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Speed of claims’ resolution and administrative costs . . . . . . G. Rights of recourse of workers’ compensation institutions . . . . . 1. Recourse of workers’ compensation institutions against employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Recourse of workers’ compensation institutions against coemployees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Recourse of workers’ compensation institutions against third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Fund of first resort . . . . . . . . . . . . . . . . . . . . . . . . 2. Deductibility of benefits . . . . . . . . . . . . . . . . . . . . . 3. Recourse of social welfare agencies, social health insurance, private health insurers, etc, against workers’ compensation institutions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . 1. Availability of damages in addition to workers’ compensation benefits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Deductibility of benefits provided by workers’ compensation institutions from claim against employer (collateral source rule) 3. Subrogation of workers’ compensation institutions into the claim of workers against employer . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Inexcusable negligence (art L 452-1 Social Security Code, CSS) 2. Wilful misconduct (art L 452-5 CSS) . . . . . . . . . . . . . . . 3. Liability of a third party (art L 454-1 CSS) . . . . . . . . . . . . 4. Traffic accident . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Criminal offence . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Liability of employers for their own acts or omissions . . . . . 2. Liability of employers for the acts or omissions of their employees and others (the scope of vicarious liability; the effect of any ‘common employment’ exclusionary rule) . . . . . . .
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232 232 232 233 234 234 234 235 236 237 238 238 241 241
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3. Relevance of health and safety legislation in establishing liability 4. Overall a fault-based or strict liability? . . . . . . . . . . . . . 5. Causation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Effect of the victim’s contributory conduct . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Inexcusable negligence on the part of the employer . . . . . . 2. General civil liability . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . 1. Inexcusable negligence of the employer . . . . . . . . . . . . . 2. General civil liability . . . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . 1. Inexcusable negligence . . . . . . . . . . . . . . . . . . . . . . 2. Civil liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. In case of employers’ liability . . . . . . . . . . . . . . . . . . 2. In case of a third party’s liability . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
245 246 246 247 248 248 249 251 251 251 254 254 255 255 255 257 257 259 259 259 260 261 262 263 264
Raimund Waltermann Employers’ Liability and Workers’ Compensation: Germany . . . . . 265 I. Introduction . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability 1. History and expansions . . . . . . . . . 2. Insurance and liability . . . . . . . . . B. Interaction with other institutions . . . . . C. Empirical evidence . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . 1. Accidents . . . . . . . . . . . . . . . . . 2. Diseases . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . 1. Occupational accident . . . . . . . . . 2. Occupational disease . . . . . . . . . . 3. Insured ‘categories of damage’. . . . . D. Heads and levels of benefit . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . .
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265 265 265 266 266 266 267 267 268 268 268 269 269 270 270 270 274
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F. Administration and adjudication of claims . . . . . . . . . . . . . G. Rights of recourse of workers’ compensation institutions . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . 1. Personal injuries . . . . . . . . . . . . . . . . . . . . . . . . . 2. Material damages . . . . . . . . . . . . . . . . . . . . . . . . . 3. Liability agreements . . . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Against other employees who caused the harm . . . . . . . . . 2. Against third parties (eg equipment/component manufacturers, suppliers of raw materials, etc) . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . 1. Problems concerning the extended exemption from liability . 2. Are benefits received from social welfare agencies deducted from claims against the employer? . . . . . . . . . . . . . . . 3. Recourse of social welfare agencies and private insurers against the employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination 1. Statutory accident insurance . . . . . . . . . . . . . . . . . . . 2. Employers’ liability . . . . . . . . . . . . . . . . . . . . . . . .
275 276 277 277 280 281 281 283 285 285 287 287 287 288 288 288 289 289 289 290 290 291 291 292 293 293 294 294 294 296
Alessandro P Scarso and Massimo Foglia Employers’ Liability and Workers’ Compensation: Italy . . . . . . . . 297 I. Introduction . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability B. Interaction with other institutions . . . . . C. Empirical evidence . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . .
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D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . 1. Medical care and rehabilitation assistance . . . . . . . . . . . 2. Non-pecuniary losses . . . . . . . . . . . . . . . . . . . . . . . 3. Dependent’s benefits and benefits to their relatives . . . . . . 4. Comparison with damages in tort . . . . . . . . . . . . . . . . 5. Lump sums or periodical payments? . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . G. Rights of recourse of workers’ compensation institutions . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
306 306 307 310 310 311 312 313 315 316 316 317 317 318 322 323 326 326 327 328 328 328 328 329 330 330 331
Keizo Yamamoto and Tomohiro Yoshimasa Employers’ Liability and Workers’ Compensation: Japan . . . . . . . 333 I. Introduction . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability B. Interaction with other institutions . . . . . C. Empirical evidence . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . D. Heads and levels of benefit . . . . . . . . . 1. Medical compensation . . . . . . . . . 2. Compensation for absence from work . 3. Compensation for disabilities . . . . . 4. Compensation for bereaved family . .
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333 333 334 334 335 335 335 336 336 336 337 337 338
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5. Non-pecuniary losses . . . . . . . . . . . . . . . . . . . . . . . 6. Medical examination benefits . . . . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . G. Right of recourse of workers’ compensation institutions . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Interaction with general social welfare provision . . . . . . . 2. Interaction with private insurance . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Against another employee . . . . . . . . . . . . . . . . . . . . 2. Against third parties . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination Siewert D Lindenbergh Employers’ Liability and Workers’ Compensation: The Netherlands I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability . . . . . . . . . . B. Interaction with other institutions . . . . . . . . . . . . . . . C. Empirical evidence . . . . . . . . . . . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
365 365 366 366 367 367 368
Dominika Dörre-Nowak Employers’ Liability and Workers’ Compensation: Poland . . . . . . 369 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability . . . . . . . . . . . . . B. Interaction with other institutions . . . . . . . . . . . . . . . . . . C. Empirical evidence . . . . . . . . . . . . . . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Workers covered . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Spatial, temporal and other limitations . . . . . . . . . . . . . 3. Effect of the victim’s contributory conduct . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . . . . . . . . . . . . . . 1. Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Disease (occupational diseases) . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Personal injury . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Sexual harassment . . . . . . . . . . . . . . . . . . . . . . . . 3. Property damage . . . . . . . . . . . . . . . . . . . . . . . . . 4. Pure economic loss . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . 1. Medical care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Rehabilitation assistance . . . . . . . . . . . . . . . . . . . . . 3. Lost earnings, loss of earning capacity and loss of pension entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Non-pecuniary losses . . . . . . . . . . . . . . . . . . . . . . . 5. Dependant’s benefits . . . . . . . . . . . . . . . . . . . . . . . 6. Comparison with damages in tort . . . . . . . . . . . . . . . . 7. Lump sum or periodical payments . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Type of system . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . 1. Organisational framework of workers’ compensation institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Reviews and appeals: Special tribunals or general civil justice system? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Speed of claims’ resolution and administrative costs . . . . . .
369 369 370 370 370 370 370 371 371 373 373 379 381 381 381 381 381 381 381 383 383 383 383 384 384 384 384 386 386 386 386 387
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G. Rights of recourse of workers’ compensation institutions . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Contract or tort? . . . . . . . . . . . . . . . . . . . . . . . . 2. General law or special category? . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . 1. Liability of employers for their own acts and omissions . . 2. Liability of employers for the acts or omissions of their employees and others . . . . . . . . . . . . . . . . . . . . . 3. Overall a fault-based or strict liability? . . . . . . . . . . . 4. Causation . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Effect of the victim’s contributory conduct . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . 1. Personal injury . . . . . . . . . . . . . . . . . . . . . . . . 2. Sexual harassment . . . . . . . . . . . . . . . . . . . . . . 3. Dignitary injuries . . . . . . . . . . . . . . . . . . . . . . . 4. Property damage . . . . . . . . . . . . . . . . . . . . . . . 5. Pure economic loss . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . 1. Main heads of recoverable damages . . . . . . . . . . . . . 2. Costs of medical care . . . . . . . . . . . . . . . . . . . . . 3. Costs of rehabilitation assistance . . . . . . . . . . . . . . 4. Lost earnings, loss of earning capacity and loss of pension entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Dependents’ benefits . . . . . . . . . . . . . . . . . . . . . 6. Non-pecuniary losses . . . . . . . . . . . . . . . . . . . . . 7. Form of payment . . . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . 1. Courts or specialised tribunals? . . . . . . . . . . . . . . . 2. General civil procedure or special procedures . . . . . . . 3. Reviews and appeals . . . . . . . . . . . . . . . . . . . . . 4. Speed of claims’ resolution and administrative cost . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . 1. Against employees . . . . . . . . . . . . . . . . . . . . . . 2. Against third parties . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Voluntary or mandatory? . . . . . . . . . . . . . . . . . . . 2. General liability insurance or special policy? . . . . . . . . 3. Basic principles of employers’ liability insurance . . . . .
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IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
396 396 396 397 397 397 397
Christian Alunaru and Lucian Bojin Employers’ Liability and Workers’ Compensation: Romania . . . . . 399 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability . . . . . . . . . . . . . B. Interaction with other institutions . . . . . . . . . . . . . . . . . . C. Empirical evidence . . . . . . . . . . . . . . . . . . . . . . . . . . II. Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Spatial limits . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Temporal limitations . . . . . . . . . . . . . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Personal injury . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Sexual harassment and injury to one’s dignity . . . . . . . . . 3. Property damage and pure economic loss . . . . . . . . . . . . D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . 1. Medical care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Rehabilitation assistance . . . . . . . . . . . . . . . . . . . . . 3. Lost earnings, loss of earning capacity and loss of pension entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Expenses refund . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Non-pecuniary losses . . . . . . . . . . . . . . . . . . . . . . . 6. Dependants’ benefit . . . . . . . . . . . . . . . . . . . . . . . 7. Comparison with damages in tort . . . . . . . . . . . . . . . . 8. Form of payment . . . . . . . . . . . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Type of system . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Contributions to the workers’ compensation fund . . . . . . . 3. Risk-rating of contribution . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . 1. Organisational framework of workers compensation institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Who decides over claims for benefits? . . . . . . . . . . . . . . 3. Reviews and appeals: special tribunals or general civil justice system? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Speed of claims resolution and administrative costs . . . . . .
399 399 400 401 402 402 403 404 404 406 406 407 408 409 409 410 411 412 413 413 414 414 414 414 415 415 416 416 417 418 419
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G. Rights of recourse of workers’ compensation institutions . . . . . 1. Recourse against the employer . . . . . . . . . . . . . . . . . . 2. Recourse against a co-worker or against third parties . . . . . H. Interaction with general social welfare provisions and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Liability of employers for their own acts or omissions . . . . . 2. Liability of employers for the acts or omissions of their employees and others . . . . . . . . . . . . . . . . . . . . . . . 3. Relevance of health and safety legislation in establishing liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Overall a fault-based or strict liability system? . . . . . . . . . 5. Causation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Effect of the victim’s contributory conduct . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Personal injury . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Sexual harassment and injuries to dignity . . . . . . . . . . . 3. Property damage and pure economic loss . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with the social welfare system and private insurance . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
419 419 420 420 421 421 421 422 422 423 424 424 425 426 426 427 427 428 428 430 430 431 431 432 432 433 434 434 434 435
Michael D Green and Daniel S Murdock Employers’ Liability and Workers’ Compensation: United States . . 437 I. Introduction . . . . . . . . . . . . . . . . . . . A. Basic system of compensation and liability B. Interaction with other institutions . . . . . C. Empirical evidence . . . . . . . . . . . . . II. Worker’s Compensation . . . . . . . . . . . . . A. Scope of cover . . . . . . . . . . . . . . . . B. Compensation trigger . . . . . . . . . . . .
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1. The ‘accident’ requirement . . . . . . . . . . . . . . . . . . . . 2. Arising out of and in the course of employment . . . . . . . . 3. Occupational Disease . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Sexual Harassment . . . . . . . . . . . . . . . . . . . . . . . . 2. Dignitary Injuries . . . . . . . . . . . . . . . . . . . . . . . . . 3. Property Damage . . . . . . . . . . . . . . . . . . . . . . . . . 4. Pure Economic Loss . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of benefit . . . . . . . . . . . . . . . . . . . . . . 1. Medical Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Rehabilitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Lost Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Non-Pecuniary Losses . . . . . . . . . . . . . . . . . . . . . . . 5. Dependents’ Benefits . . . . . . . . . . . . . . . . . . . . . . . 6. Comparison with Tort . . . . . . . . . . . . . . . . . . . . . . 7. Lump Sum Payments . . . . . . . . . . . . . . . . . . . . . . . E. Funding systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Administration and adjudication of claims . . . . . . . . . . . . . G. Rights of recourse of workers’ compensation institutions . . . . . H. Interaction with general social welfare provision and private insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Interaction with employers’ liability . . . . . . . . . . . . . . . . . III. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Elements of liability . . . . . . . . . . . . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . . D. Heads and levels of damages . . . . . . . . . . . . . . . . . . . . . E. Administration of claims . . . . . . . . . . . . . . . . . . . . . . . F. Rights of recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Interaction with social welfare systems and private insurance . . . H. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV. Evaluation and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Overall costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Interaction between workers’ compensation and private law . . . E. Plans for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Overall quality of each system independently and in combination
441 442 444 446 447 449 449 450 450 450 453 455 459 459 461 462 463 465 467 468 470 470 470 471 473 474 474 475 475 476 476 477 478 479 480 481 481
Thomas Thiede The European Coordination of Employers’ Liability and Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 II. Empirical Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 III. Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 487
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A. B. C. D. E.
Limitation to national territory . . . . . . . . . . . . . . . . . . . . European coordination of social security systems . . . . . . . . . . Sources of law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scope of cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General rules for determining the legislation applicable . . . . . . 1. General application of the law of the country of employment 2. Special provisions for determining the legislation applicable . 3. Pursuit of activities in two or more Member States . . . . . . 4. Freedom of choice . . . . . . . . . . . . . . . . . . . . . . . . . F. Special provisions for determining the legislation applicable in cases of accidents at work and occupational diseases . . . . . . . . G. Administration and adjudication of claims . . . . . . . . . . . . . H. Rights of recourse of workers’ compensation institutions and interaction with employers’ liability . . . . . . . . . . . . . . . . . IV. Employers’ Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. The Law applicable to contractual duties . . . . . . . . . . . . . . 1. Source of law . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . 3. General rules for determining the legislation applicable . . . 4. Special provisions for individual employment contracts . . . . C. The Law applicable to extra-contractual duties . . . . . . . . . . . 1. Source of law . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . 3. General rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Escape clause . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Adjudication of claims . . . . . . . . . . . . . . . . . . . . . . . . 1. Source of law . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Rules for international jurisdiction in relation to contracts of employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . E. Rights of recourse and interaction between employers’ liability and workers’ compensation . . . . . . . . . . . . . . . . . . . . . . . . V. Alternatives, Evaluation and Conclusions . . . . . . . . . . . . . . . .
487 488 489 491 492 492 493 494 495 496 497 498 501 501 505 505 505 506 508 510 510 510 510 511 512 512 512 513 515 515
Ken Oliphant The Changing Landscape of Work Injury Claims: Challenges for Employers’ Liability and Workers’ Compensation . . . . . . . . . . . 519 I. Introduction . . . . . . . . . . . . . . . . . . . . . . A. The Changing Landscape of Work Injury Claims B. The social construction of injury claims . . . . . C. The compensation and liability framework . . . 1. Workers’ compensation . . . . . . . . . . . . 2. Employers’ liability . . . . . . . . . . . . . . D. Plan . . . . . . . . . . . . . . . . . . . . . . . . .
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II. Recognition issues (‘naming problems’) . . . . . . . . . . . . . . A. Issues for Workers’ Compensation . . . . . . . . . . . . . . . 1. An accident preference . . . . . . . . . . . . . . . . . . . 2. Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Mental illness . . . . . . . . . . . . . . . . . . . . . . . . 4. Harassment and discrimination . . . . . . . . . . . . . . B. Issues for employers’ liability . . . . . . . . . . . . . . . . . . 1. An accident preference . . . . . . . . . . . . . . . . . . . 2. Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Mental illness . . . . . . . . . . . . . . . . . . . . . . . . 4. Harassment and discrimination . . . . . . . . . . . . . . III. Attribution issues (‘blaming problems’) . . . . . . . . . . . . . . A. Issues for employers’ liability . . . . . . . . . . . . . . . . . . 1. A violation of the required standard of care . . . . . . . . 2. Causation . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Time limits (prescription) . . . . . . . . . . . . . . . . . 4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 5. The risk of insolvency . . . . . . . . . . . . . . . . . . . . B. Issues for workers’ compensation . . . . . . . . . . . . . . . IV. Challenges for Employers’ Liability and Workers’ Compensation A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Challenges for Workers’ Compensation . . . . . . . . . . . . C. Challenges for Employers’ Liability . . . . . . . . . . . . . . D. Coordination of the two systems . . . . . . . . . . . . . . . . V. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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526 526 526 529 533 536 537 537 539 539 540 542 542 543 545 546 548 549 550 552 552 553 553 556 558
Gerhard Wagner New Perspectives on Employers’ Liability – Basic Policy Issues . . . . 561 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II. Systems of Workers’ Compensation: Basic Features . . . . . . . . . . A. Compensation regardless of fault of employer and contributory fault of employee . . . . . . . . . . . . . . . . . . . . . . . . . . B. Insurance or collectivisation of claims . . . . . . . . . . . . . . . C. Scope of protection . . . . . . . . . . . . . . . . . . . . . . . . . D. Limited compensation, simplified assessment . . . . . . . . . . E. Resolution of disputes out of court . . . . . . . . . . . . . . . . F. Immunity of employers from damages suits . . . . . . . . . . . III. Employers’ Liability: Basic Features . . . . . . . . . . . . . . . . . . A. Bases of liability . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Central features of private liability regimes . . . . . . . . . . . . C. Thresholds for establishing civil liability . . . . . . . . . . . . . IV. The Revival of Employers’ Liability . . . . . . . . . . . . . . . . . . A. Against the industrial preference . . . . . . . . . . . . . . . . . . B. The promise of social security . . . . . . . . . . . . . . . . . . .
. 561 . 563 . . . . . . . . . . . . .
563 564 564 565 567 567 568 568 569 569 570 570 572
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Table of Contents
C. The failure of social security . . . . . . . . . . . . . . . . . . . . . D. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V. Functional Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Needs-based interpretation of the compensation goal . . . . . 2. Corrective justice interpretation of the compensation goal . . B. Deterrence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Strict liability vs fault-based liability . . . . . . . . . . . . . . 2. Insuring against liability . . . . . . . . . . . . . . . . . . . . . 3. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Administrative Costs . . . . . . . . . . . . . . . . . . . . . . . . . D. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI. Challenges for Workers’ Compensation Systems . . . . . . . . . . . . A. The common root of current challenges . . . . . . . . . . . . . . . B. Inroads into the immunity principle . . . . . . . . . . . . . . . . . 1. The expansion of aggravated fault . . . . . . . . . . . . . . . . 2. The substantive issues: Full income replacement and damages for non-pecuniary losses? . . . . . . . . . . . . . . . . . . . . . 3. The administrative issue: upgrading workers’ compensation benefits vs private suits against employers . . . . . . . . . . . C. Claims against third parties . . . . . . . . . . . . . . . . . . . . . 1. The US experience . . . . . . . . . . . . . . . . . . . . . . . . 2. Explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII. Final Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
573 576 576 577 577 578 579 579 580 582 583 586 586 586 587 587 588 591 593 593 594 596 597
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599 Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
XXVI
List of Contributors Christian Alunaru Western University ‘Vasile Goldis’, Arad, Romania. Lucian Bojin Timisoara University, Timis, Romania Dominika Dörre-Nowak Sobczyk & Partners, Kraków, Poland Massimo Foglia Bergamo University, Italy Michael D Green Wake Forest University, Winston-Salem, USA Florence G’sell-Macrez University Paris 1, France Ernst Karner Vienna University and Institute for European Tort Law, Vienna, Austria Felix Kernbichler Vienna University, Austria Richard Lewis Cardiff Law School, United Kingdom Siewert D Lindenbergh Erasmus University Rotterdam, The Netherlands Mark Lunney ANU College of Law, Canberra, Australia Daniel S Murdock Wake Forest University, Winston-Salem, USA Ken Oliphant Institute for European Tort Law, Vienna, Austria Alessandro P Scarso Bocconi University, Milan, Italy
XXVII
List of Contributors
Thomas Thiede Institute for European Tort Law, Vienna, Austria Vibe Ulfbeck Copenhagen University, Denmark Isabelle Veillard University Paris Nord and Sciences Po Paris, France Gerhard Wagner Bonn University, Germany Raimund Waltermann Bonn University, Germany Keizo Yamamoto Kyoto University, Japan Tomohiro Yoshimasa Nagoya Univertsity, Japan
XXVIII
Introduction This book on employers’ liability and workers’ compensation addresses a topic that is of perpetual interest to lawyers, insurers and policy-makers, but appears never before to have been addressed through a comparative academic study of this scale. The subject-matter warrants analysis for numerous reasons, amongst them society’s need for proper mechanisms to ensure the compensation of work injuries and the promotion of occupational safety, the opportunity to compare liability-based and non-liabilitybased approaches to these tasks, and the practical challenges thrown up by the increasingly complex interactions between compensation and liability systems. Research into these questions is especially timely because of the revival of employers’ liability in recent decades, resulting not just from the abolition or curtailment of workers’ compensation in some jurisdictions (albeit a minority) but also the growing number of liability claims brought around the edges of workers’ compensation where it still exists. Important examples include claims brought for compensation of dignitary injuries and harm resulting from sexual harassment, and actions against third parties who contribute to the injury, such as manufacturers and suppliers of plant and equipment. The research aims were to provide a rich and detailed description of existing systems of compensation and liability for work injury in selected countries, to investigate the interactions between those systems, and to make a comparison of their quality and efficacy both individually and in combination. The project also sought to explore the political choice to be made between employers liability and workers compensation as two competing mechanisms for addressing identical social problems. It asked: what is the proper response to those problems in the 21st Century – the collectivisation of responsibility through workers compensation, the use of ordinary private law remedies under a regime of employers liability, or some combination of both? Obviously, answering this question calls for a comparative approach, harnessing experiences with the systems in operation in jurisdictions around the world. The results of the research comprise twelve country reports (Australia, Austria, Denmark, England and Wales, France, Germany, Italy, Japan,
XXIX
Introduction
the Netherlands, Poland, Romania and the United States of America) which are based on a common set of headings (see Annex below), and a concluding set of thematic analyses. The choice of countries was designed to allow the comparison of the different major legal traditions in Europe – common law, Germanic, Romanic, Nordic and the diverse category of post-communist legal systems – and a spread of countries from elsewhere in the world, the latter through the inclusion in the study of Australia, Japan and the United States. The selection also reflected the need to ensure different approaches to compensation and liability issues – in particular, different combinations of employers’ liability and workers’ compensation regimes – were adequately represented. Each of the country reports begins with an introductory section addressing, in the first place, the basic system applying to the compensation of and liability for occupational injuries. Contributors were asked to include a short historical overview, dealing with the introduction of workers’ compensation in their respective jurisdictions and the reasons for it, together with information about any fundamental changes made to it subsequently, and an indication of the general role of private law remedies (primary, supplementary or excluded?). Additional sub-headings invited consideration of the interaction of compensation and liability systems with other institutions, and the available empirical evidence about each system’s operation. Contributors were asked for an outline of the main sources of empirical evidence and, where available, details relating to the number of claims per annum, total and average amounts awarded, the cost to employers as a percentage of payroll, numbers of work accidents and occupational diseases per annum, and rates of work accidents and occupational diseases over time, with an indication of the factors that were or could have been responsible for any rise or fall in such rates. Unfortunately, several contributors reported that only rather limited empirical evidence was available to them. The second section of the country reports deals specifically with workers’ compensation. For present purposes, this term was taken to embrace all forms of work accident insurance independent of the establishment of employers liability. Contributors addressed in turn the scope of cover, the compensation trigger, the scope of protection, the heads and levels of benefits, funding, the administration and adjudication of claims, the rights of recourse enjoyed by workers’ compensation institutions, and the interaction of workers’ compensation with general social welfare provision and private insurance, and with employers’ liability. In the case of the Netherlands, where workers’ compensation was abolished in 1967 so as to integrate compensation for occupational injuries wholly within general social welfare provision, this section departs from the common sub-headings and XXX
Introduction
instead includes a short description of the principal social security benefits available to injured workers. By contrast, the report on England and Wales does follow the common headings in analysying the industrial injuries scheme introduced in place of the former regime of workers’ compensation in 1948. The new scheme is administered through the social security system but can still be regarded as a (diluted) form of work accident insurance. The third section of the country reports, focusing on employers’ liability, replicates broadly the same structure as that applied to workers’ compensation, though with some necessary amendments. The sub-headings the contributors were asked to address were: the classification of the liability (contract or tort?, general law or a special category?); the elements of liability; the scope of protection; the heads and levels of damages; the administration of claims; rights of recourse; the interaction of employers’ liability with general social welfare provision and private insurance; and insurance. Statistics on the numbers and costs of claims were included where available. A particular focus of the research was the extent to which liability claims in respect of harassment and discrimination are able to circumvent attempts to make workers’ compensation the exclusive remedy for occupational injury, and contributors were therefore requested to provide an outline of the relevant liabilities in general civil law and any special regime applying to discrimination. It should be stressed, however, that these are large topics that could not be addressed comprehensively within the present volume. In the fourth, concluding section of the country reports, contributors were asked to address the ‘big policy questions’ raised by the types of system adopted in their respective jurisdictions, and their mutual interaction. The questions highlighted for analysis included the extent to which the goals of compensation and prevention are attained, whether the overall costs are reasonable in light of the benefits provided, whether the interaction of workers’ compensation and employers’ liability furthers or obstructs the attainment of policy goals, and the overall quality of each system independently and in combination. Plans for reform, if any, were also discussed here. The country reports are followed by three thematic analyses. In the first, Thomas Thiede analyses the coordination of employers’ liability and workers’ compensation regimes in Europe through rules governing international jurisdiction and applicable law. As separate principles of EU law govern the coordination of social security systems (including workers’ compensation) and national civil liability laws, a further meta-leval of coordination – coordination of the coordination regimes – is required. XXXI
Introduction
Despite the complexities thereby entailed, the overall system appears to work well enough in practice, though the reliance upon separate institutions in the Member States entails increased bureaucracy and cost. Next, Ken Oliphant looks at the challenges for employers’ liability and workers’ compensation posed by the ‘new landscape’ of work injury claims. By this he refers to a shift from the traditional focus on accidental personal injury to a more complex claims environment in which compensation and liability regimes have had to respond to increasing scientific recognition of the adverse impacts of work on health and to new social sensibilities, including an intolerance of discrimination and harassment. To illuminate the impact of these changes, the paper adopts an analytical framework reflecting scholarly accounts of the social construction of personal injury claims, addressing in turn the issues associated with the recognition of adverse experiences as ‘injurious’ and issues relating to the attribution of recognised injuries to the employer (for employers’ liability) or the employment (for workers’ compensation). Oliphant submits that recognition issues are particularly troublesome for workers’ compensation – as evidenced by the approach taken in different countries to process-related conditions, disease, mental illness and the effects of harassment and discrimination. Conversely, employers’ liability has greater difficulty with the attribution of injuries to persons liable to compensate for them, especially in cases of long-term exposure to risk, gradual onset, uncertain aetiology, uncertain specific causation, chronological uncertainty (when did the risk materialise?) and long latency. Oliphant concludes by identifying respects in which employers’ liability and workers’ compensation fail to attain their respective objectives, and problems resulting from a lack of mutual coordination, and by considering possible reforms to address these deficiencies. Lastly, Gerhard Wagner draws basic policy conclusions from the project as a whole. He begins by noting that the basic features of workers’ compensation have been surprisingly stable across national boundaries: compensation regardless of the fault of the employer and the contributory fault of the employee; the collectivisation of claims through public (or mandatory private) insurance; the limitation of the scope of protection to personal injury, disease and death; the limited compensation payable (especially for non-pecuniary loss) and its simplified assessment; the resolution of claims by administrative agencies rather than courts; and the employer’s (partial) immunity from civil claims where there is workers’ compensation. Employers’ liability, conversely, has the following central features: a general fault-basis; contributory negligence is a possible defence; full compensation is awarded for both pecuniary and non-pecuniary losses; the individualised assessment of damages; and judicial resolution of claims. Wagner XXXII
Introduction
then explains how there has been a ‘revivial’ of employers’ liability in recent decades. Workers’ compensation has been abolished in the Netherlands and (substantially) in England and Wales, with the hope that general social security provision would result in greater equity as between victims of accident and disease in the workplace and elsewhere. When the promise of social security proved an illusion, employers’ liability came to perform a correspondingly larger role. Wagner is critical of these trends, and of any substantial limitation or circumvention of the immunities from civil liability afforded to employers by workers’ compensation, which in his view compensates more equitably than liability law, works well in terms of deterrence, and avoids the high adjudication costs of civil litigation. It should be stressed that, although the editors have written separate concluding chapters addressing different specific aspects of the research, they endorse each others’ analysis of the issues and the conclusions to be drawn for future action. Ken Oliphant Gerhard Wagner
ANNEX: HEADINGS AND GUIDANCE FOR CONTRIBUTORS Contributors were asked to structure their reports according to the numbered headings below. Items designated by bullet points did not have to be addressed in separate sub-headings, but were at least to be addressed clearly and unambiguously in the text. Short explanatory notes were provided in parentheses under certain headings. Additional guideance was also provided to contributors, individually and collective, as the project progressed.
I.
Introduction
A.
Basic system of compensation and liability
■
Existence of public insurance schemes covering workplace injuries?
■
General role of private law remedies: primary, supplementary or excluded?
XXXIII
Introduction
B.
Interaction with other institutions
C.
Empirical evidence
■
Outline of main sources of empirical evidence and details relating to the relative scope of employers’ liability, workers’ compensation and (so far as they deal with employees’ injuries) other institutions; empirical evidence should also, wherever possible, be integrated into each report at appropriate points throughout
II. Workers’ compensation A.
Scope of cover
■
Workers covered
■
Spatial, temporal and other limitations (eg ‘course of employment’, with discussion especially of the extent that travelling to and from work is covered)
■
Effect of the victim’s contributory conduct
B.
Compensation Trigger
■
Accidents (including how distinguished from disease)
■
Disease (prescribed lists, proof in individual cases or both? Special provision for particular conditions?)
C.
Scope of protection
■
Personal Injury
■
Sexual Harassment
■
Dignitary Injuries (eg resulting from discrimination)
■
Property Damage
■
Pure Economic Loss
XXXIV
Introduction ■
D.
(The extent of such protection offered by general employment laws may be mentioned, but the focus should be upon the specific workers’ compensation rules and injuries resulting from accidents or disease)
Heads and levels of benefit
■
Medical Care
■
Rehabilitation Assistance
■
Lost Earnings, Loss of Earning Capacity and Loss of Pension Entitlements
■
Non-Pecuniary Losses
■
Dependants’ Benefits
■
Comparison with Damages in Tort (How much lower?)
■
Lump sums or periodical payments?
E.
Funding systems
■
Type of System (Private or public insurance? Voluntary or mandatory? To what extent, if any, can the employer self-insure?)
■
Contributions to the Workers’ Compensation Fund (Who pays for what?)
■
Incentives (eg Risk-Rating of Contributions)?
F.
Administration and adjudication of claims
■
Organisational Framework of Workers’ Compensation Institutions
■
Who Decides over Claims for Benefits?
■
Reviews and Appeals: Special tribunals or general civil justice system?
■
Speed of claims’ resolution and administrative cost
G.
Rights of recourse of workers’ compensation institutions
■
Recourse against the Employer
■
Recourse against a Co-worker?
XXXV
Introduction ■
Recourse against Third Parties (equipment/component manufacturers, suppliers of raw materials, etc)
H.
■
■
■
I.
Interaction with general social welfare provision and private insurance
Fund of First Resort (Who initially bears the cost: the Social Health Insurance/Public Health Service, Private Health Insurance or Workers’ Compensation?) Deductibility of Benefits (Collateral Source Rule? – Are benefits provided by social or private health insurance deducted from claims against workers’ compensation carriers) Recourse of Social Welfare Agencies, Social Health Insurance, Private Health Insurers, etc, against Workers’ Compensation Institutions?
Interaction with employers’ liability
■
Availability of Damages in addition to Workers’ Compensation Benefits?
■
Deductibility of Benefits provided by WC from Claim against Employer (Collateral Source Rule?)
■
Subrogation of WC into the Claim of Worker against Employer?
III. Employers’ liability A.
Classification
■
Contract or tort?
■
General Law or a Special Category?
B.
Elements of liability
■
Liability of employers for their own acts or omissions
■
Liability of employers for the acts or omissions of their employees and others (the scope of vicarious liability; the effect of any ‘common employment’ exclusionary rule)
XXXVI
Introduction ■
Relevance of health and safety legislation in establishing liability
■
Overall a fault-based or strict liability?
■
Causation (highlighting specific problems of causal uncertainty related to work injuries)
■
Effect of the victim’s contributory conduct
C.
Scope of protection
■
Personal Injuries
■
Sexual Harassment
■
Dignitary Injuries (eg resulting from discrimination)
■
Property Damage
■
Pure Economic Loss
D.
Heads and levels of damages
■
Same Level as in other Cases of Personal Injury?
■
Main heads of recoverable damages
■
Costs of Medical Care
■
Costs of Rehabilitation Assistance
■
Lost Earnings, Loss of Earning Capacity and Loss of Pension Entitlements
■
Non-Pecuniary Losses
■
Dependants’ Benefits
■
Form of Payment (Lump sums or periodical payments?)
E.
Administration of claims
■
Courts or Specialised Tribunals?
■
General Civil Procedure or Special Procedures?
■
Reviews and Appeals
■
Speed of claims’ resolution and administrative cost XXXVII
Introduction
F.
Rights of recourse
■
Against other Employees (who caused the harm) or their liability insurer?
■
Against Third Parties (equipment/component manufacturers, suppliers of raw materials, etc) or their liability insurer?
G.
Interaction with Social Welfare Systems and Private Insurance
■
Deductibility of Benefits Received from Social Welfare Agencies (Collateral Source rule)?
■
Recourse of Social Welfare Agencies and Private Insurers against the Employer?
H.
Insurance
■
Voluntary or mandatory? (If voluntary, how common?)
■
General Liability Insurance or Special Policy? (If a special policy, what is its usual scope?)
■
Basic Principles of Employers’ Liability Insurance (Trigger, Scope of Coverage, Exclusions, Limits, Deductibles, etc)
IV. Evaluation and conclusions A. ■
B. ■
Compensation Does the overall system provide compensation of adequate breadth at adequate levels?
Prevention Are there appropriate incentives to ensure health and safety and compliance with relevant regulations?
XXXVIII
Introduction
C. ■
D.
■
Overall costs Are they reasonable in the light of the benefits provided?
Interaction between workers’ compensation and private law (Employers’ Liability) Does this interaction further or obstruct the goals of compensation and prevention?
E.
Plans for reform
F.
Overall Quality of each system independently and in combination
■
How do they work in the eyes of those concerned? Principal advantages and disadvantages
XXXIX
Employers’ Liability and Workers’ Compensation: Australia Mark Lunney
I.
Introduction
A.
Basic system of compensation and liability1
Australia has a long history of workers’ compensation legislation.2 Be- 1 tween 1900 and 1926, all states and territories except the Australian Capital Territory (ACT) had introduced workers’ compensation legislation.3 The reasons for doing so mirrored those that had convinced the Westminster Parliament in London to introduce such legislation in 1897: concerns that the common law of negligence, with its defences of common employment, contributory negligence and assumption of risk did not operate fairly in relation to those workers injured as an inevitable consequence of industrialisation. Moreover, the rise of organised labour as a political force also contributed to the climate that allowed workers’ compensation legislation to pass:4 ‘As was the case with preventative legislation [occupational health and safety legislation], the introduction of these laws was often bitterly contested by groups of employers, private insurers and others. It often took several attempts, the increased franchise or mobilisation of working class voters and over a decade (if not considerably longer) before workable and comprehensive schemes were achieved’. 1 In accord with the practice of most Australian jurisdictions, in this report the term ‘compensation’ refers to no-fault compensation payable under workers’ compensation schemes, and the terms ‘damages’, ‘award of damages’ and ‘damages award’ refer to the amount payable to the worker in a common law action against the employer and/or a third party. 2 For detail see Industry Commission, Workers’ Compensation in Australia, Report No 36, 1994, Appendix F; K Purse, The Evolution of Workers’ Compensation Policy in Australia (2005) 14 Health Sociology Review 8. 3 The ACT introduced such legislation in 1951. 4 P Bohle/M Quinlan, Managing Occupational Health and Safety: A Multidisciplinary Approach (2nd edn 2000) 322.
1
Mark Lunney
2 As is evident from the above, Australia is a federation and has no one system of compensation and liability that applies to employers and to workers.5 Although it would seem to be an obvious choice to introduce uniform legislation throughout the Australian jurisdictions, different liability regimes at some level operate in every Australian jurisdiction. There are, in fact, nine primary schemes of no-fault workers’ compensation in Australia,6 and if that were not sufficiently complex, there are often additional schemes within jurisdictions that apply to specific categories of injury or worker.7 Moreover, whilst the schemes have some broad similarities, the differences are also considerable and it is impossible to speak of an ‘Australian’ law of workers’ compensation. Whilst this report will attempt to generalise amongst the jurisdictions, it must always be remembered that there will be specific jurisdictional differences in almost every area. It is somewhat of a paradox that almost the only area where uniform provisions have been enacted relate to determining whether the worker has a connection with a jurisdiction for the purpose of determining workers’ compensation entitlements.8
5 For an example of the complications created by the federal structure in this area see Attorney General (Victoria) v Andrews [2007] High Court of Australia (HCA) 9, a challenge by the state of Victoria over the potential scope of the Commonwealth’s workers’ compensation scheme. It has been said that, along with the United States and Canada, Australia is one of only three countries where state or provincial governments have primary constitutional responsibility for workers’ compensation legislation: R Guthrie/K Purse/F Meredith, Workers’ Compensation and Self-insurance in Australia – National Priority or Trojan Horse? (2006) 17 Insurance Law Journal 256. 6 The primary legislative bases of the various schemes are as follows: Safety, Rehabilitation and Compensation Act 1988 (Cth); Workers Compensation Act 1951 (Australian Capital Territory, ACT; Workers Rehabilitation and Compensation Act (Northern Territory, NT); Workers Compensation Act 1987 (New South Wales, NSW); Workers’ Compensation and Rehabilitation Act 2003 (Queensland, Qld); Workers Rehabilitation and Compensation Act 1986 (South Australia, SA); Workers Rehabilitation and Compensation Act 1988 (Tasmania, Tas); Accident Compensation Act 1985 (Victoria, Vic); Workers’ Compensation and Injury Management Act 1981 (Western Australia, WA). See also SafeWork Australia, Comparison of Workers’ Compensation Arrangements in Australia and New Zealand (2011) . 7 For examples of a special category of workers’ compensation for particular diseases, see Workers Compensation (Dust Diseases) Act 1942 (NSW); Workers Compensation (Brucellosis) Act 1979 (NSW). For an example of a special category of workers’ compensation for particular types of employment, see Workers Compensation (Bushfire, Emergency and Rescue Services) Act 1987. The latter type of legislation is usually enacted to allow for nofault recovery of compensation for injury where there may be no formal relationship of employer-worker. 8 Broadly, a worker’s employment is connected with (a) the State in which the worker usually works in that employment; or (b) if no State or no one State is identified by paragraph (a), the State in which the worker is usually based for the purposes of that employment; or (c) if no State or no one State is identified by paragraph (a) or (b), the State in which the employer’s principal place of business in Australia is located.
2
Australia
At first glance, the position is more uniform in relation to employers’ 3 liability at common law. Here the liability is based primarily on the law of tort (although there may be concurrent contractual obligations). However, a closer inspection reveals dramatic jurisdictional differences as well. First, in many jurisdictions the common law has been modified. Second, in some jurisdictions the statutory changes to the general common law of tort do not apply to claims made by workers against employers. In some of these jurisdictions, specific statutory modifications to the common law have been introduced which apply only to the actions by workers against employers. Finally, although most jurisdictions allow the worker to claim either (or in some cases both) workers’ compensation or a common law action against the employer, there are limits placed on when the common law action may be brought. Again, these limits vary among the jurisdictions.
B.
Interaction with other institutions
The provision of social welfare is primarily the responsibility of the federal 4 government.9 This responsibility has been discharged in a number of pieces of legislation, the most important of which is the Social Security Act 1991. The detail is complicated but, in general, the following process determines how compensation payments are treated for the purpose of determining their relationship with social welfare payments. First, the compensation payment must fall within the definition of ‘compensation’ in the Social Security Act 1991 s 17(2). In general, payments that are made (whether as a periodic payment or as a lump sum) under a workers’ compensation scheme that are wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury will fall within that provision. Second, any person who receives a compensation payment and who is claiming or has applied to receive a ‘compensation affected payment’ (broadly, any kind of social welfare payment) will have the amount of the compensation affected payment reduced by the person’s daily rate of periodic compensation.10 A formula is provided to calculate the daily rate of periodic compensation.11 If, however, the person was already in receipt of a compensation affected payment prior to becoming entitled to
9 Constitution of Australia, sections (ss) 51 (xxiii), (xxiiiA). 10 Social Security Act 1991 (Cth) section (s) 1173. Note though that social welfare benefits may not be payable for a certain period where compensation is paid in a lump sum: s 1170. 11 Ibid, s 1173(3).
3
Mark Lunney
compensation, payments of periodic compensation (for example, workers’ compensation) are treated as income, that income forming part of the assets of the person in determining whether he/she is entitled to social welfare payments.12
C.
Empirical evidence
5 Each jurisdiction which has a statutory scheme of workers’ compensation has established a statutory body to monitor the operation of the scheme.13 In some jurisdictions these bodies have a statutory requirement to collect and publish statistics relevant to the authority’s ability to carry out its functions under the Act. For example, in South Australia, the WorkCover Corporation of South Australia is required to collect, analyse and publish information and statistics relating to occupational health, safety, or welfare, workers’ rehabilitation and workers’ compensation.14 Even in those jurisdictions where it is not statutorily required, however, as a matter of practice these authorities publish annual reports which contain statistics on the number of accidents within the jurisdiction.15 In most jurisdictions there is an obligation on the authorities to engage in research to prevent workplace injuries and to promote effective rehabilitation programmes and the statistical data collected by the authority is used to discharge these functions. In some jurisdictions the requirement to carry out or promote research projects, courses and programmes is statutorily required.16 6 On a national scale, the Australian Bureau of Statistics periodically compiles statistical information on work-related accidents. In its latest report, 12 13
14 15
16
4
Ibid, s 1173(4). The exception is the federal scheme for seafarers. For the other schemes, the relevant bodies are Work Cover Authority of New South Wales (Workplace Injury Management and Workers Compensation Act 1998 (NSW)); Victorian WorkCover Authority (Accident Compensation Act 1985 (Vic)); Workers’ Compensation Regulatory Authority (Workers’ Compensation and Rehabilitation Act 2003 (Qld)); WorkCover Corporation of South Australia (WorkCover Corporation Act 1994 (SA)); WorkCover Western Australia Authority (Workers’ Compensation and Injury Management Act 1981 (WA)); WorkCover Tasmania (Workers Rehabilitation and Compensation Act 1988 (Tas)); WorkSafe ACT (no specific legislative basis, operates under the auspices of the Office for Regulatory Services); Northern Territory Work Health Authority (Workplace Health and Safety Act (NT)); Comcare (Safety, Rehabilitation and Compensation Act 1988 (Cth)). WorkCover Corporation Act 1994 (SA) s 13(1)(l). For example, in New South Wales the Work Cover Authority of New South Wales published an annual Statistical Bulletin, which provides detailed statistical information about the number and type of workplace accidents: see for the 2008/2009 report. See eg Safety, Rehabilitation and Compensation Act 1988 (Cth) s 69(d).
Australia
which covered the twelve month period July 2009 – June 2010, it found that of 12 million Australians who worked for some of the period, 640,700 experienced at least one work-related injury or illness, a rate of 53 per 1000 employed.17 However, only 61 % of these injuries or illnesses resulted in some type of financial assistance being paid, and of that figure, just over half (59 %) received workers’ compensation. This means that almost 36 % of those suffering workplace injury received workers’ compensation.18 Of those who did not receive any compensation for their injuries, about 50 % did not apply for workers’ compensation because the injury was minor, about 10 % because they did not think they were eligible and about 10 % because they were not covered and were not aware of workers’ compensation.19 Since 2009, SafeWork Australia, an Australian government statutory agency 7 created as a national policy body (not as a national regulator) to improve work health and safety and workers’ compensation arrangements, has collected Australia-wide workers’ compensation statistics. In its latest report (for 2008-2009), it calculated that there were 128,735 serious workers’ compensation claims, equating to 13 serious claims per 1,000 employees. A serious claim was one involving either death, a permanent incapacity, or a temporary incapacity requiring an absence from work of one working week or more.20 SafeWork Australia has also taken over responsibility for producing the Comparative Performance Monitoring Report, first produced in 1998, which compares and evaluates the workplace safety and workers’ compensation schemes in Australia and New Zealand. The scale of workers’ compensation is demonstrated by its latest report, which states that Australian schemes spent just over AU $ 7,302 million in 2009-2010 (on current exchange rates, just over E 6,000 million).21
II.
Workers’ Compensation
A.
Scope of cover
Drawing on its English antecedents, workers’ compensation legislation in 8 Australia was established to provide no-fault compensation to employees.
17 18 19 20 21
Australian Bureau of Statistics, Work-Related Injuries 2009–2010, p 4. Ibid, p 7 f. Ibid. SafeWork Australia, Compendium of Workers’ Compensation Statistics Australia 2008– 2009, p 1. SafeWork Australia, Comparative Performance Monitoring Report (13th edn 2011) p viii.
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The employee was given the limited meaning of a person who was employed under a contract of service, as opposed to a contract for services, the latter being classified as an independent contractor. In current Australian workers’ compensation regimes, some jurisdictions retain the term ‘employee’ as the person entitled to claim workers’ compensation.22 However, most jurisdictions use the expression ‘worker’ to delimit the class of persons who may claim under the legislation. The distinction is of no practical importance as the statutory definitions of ‘employee’ and ‘worker’ both refer to persons employed under a contract of service. 9 More important is that, for the purposes of workers’ compensation legislation, an employee or worker can have both a more limited and a more expanded meaning than at common law. The detail varies considerably between jurisdictions so the following should be seen as merely giving a flavour of these variations.23 In a number of jurisdictions, for example, special provision is made to extend workers’ compensation protection to timber contractors (those engaged to fell trees) by deeming the contract with the employer to be a contract of service.24 Variously, jockeys and other persons engaged in sports, taxi drivers, rural workers, religious officers, and students may all be employees or workers for the purpose of being eligible to receive workers’ compensation payments. In some cases, persons who are employees or workers under these extended definitions are also covered for workers’ compensation under separate schemes established for that class of employment.25 10 In cases of the death of the employee/worker, all Australian jurisdictions extend the recovery of workers’ compensation benefits to dependents of the deceased. The detail varies amongst the jurisdictions but all require both a financial dependency in fact by the dependent on the deceased as well as there being some kind of family or kinship relationship between the parties. Most jurisdictions provide for the financial dependency con-
22 23
24 25
6
See eg Safety, Rehabilitation and Compensation Act 1988 (Cth) s 14. The main provisions are as follows: Safety Rehabilitation and Compensation Act 1988 (Cth) s 5; Workplace Injury Management and Workers Compensation Act 1998 (NSW) Schedule 1; Accident Compensation Act 1985 (Vic) ss 6–17; Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 11, Schedule 2; Workers Rehabilitation and Compensation Act 1986 (SA) s 3; Workers’ Compensation and Injury Management Act 1981 (WA) Part II; Workers Rehabilitation and Compensation Act 1988 (Tas) Part I; Workers Compensation Act 1951 (ACT) Chapter 3; Workers Rehabilitation and Compensation Regulations (NT) s 3A. See eg Accident Compensation Act 1985 (Vic) s 6. For example, the broad definition of ‘fire fighter’ in Workers Compensation (Bush Fire, Emergency and Rescue Services) Act 1987 (NSW) s 5 would also cover those fire fighters that fall within the extended definition of worker or employee in Workplace Injury Management and Workers Compensation Act 1998 (NSW) Schedule 1 Cl 13.
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dition to be satisfied by showing that the dependent was wholly, mainly or partly dependent on the ‘earnings’ of the deceased or would have been so dependent but for the injury.26
1.
When can workers’ compensation be claimed?
Following the English workers’ compensation legislation (introduced in 11 1897), Australian jurisdictions limited claims to where the injury had been caused by an accident which arose out of and in the course of employment. Both of these requirements have now been modified. Coverage of disease will be discussed at a later stage but it should also be noted that the standard clause in Australian jurisdictions for defining when workers’ compensation is payable is that workers must suffer an injury that arises ‘out of or in the course of employment’. The change has had important consequences. It was long recognised that ‘arising out of’ connoted a causal connection between the employment and the injury for which the employee was claiming compensation. However, it remained unclear whether the statutory expression that the injury arose ‘in the course of employment’ required there to be any causal connection between the employment and the injury, or whether it was sufficient that the injury occurred at the time when the employee was acting in the course of employment. It was not until 1960 that the High Court of Australia, by a three-two majority, held that all that was required to satisfy the requirement that the injury arise in the course of employment was a temporal connection between the injury and employment. This was graphically illustrated by the facts of the case, where the employee suffered a traumatic physiological change (he ruptured his oesophagus) whilst at work and performing his job. This was held to be sufficient to allow his estate to claim for workers’ compensation benefits (the employee died of the injury) although the jurisdictions in Australia have now imposed varying causal requirements in addition to the injury arising in the course of employment.27
26
27
This is to cover the situation where the employee is injured and then dies; as long as the dependent was financially dependent at the date of the initial injury, he/she is deemed to be dependent at the date of the death even if this was not the case because the injury had prevented the employee from earning. See no 18 f below.
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2.
Spatial and temporal dimensions of course of employment
12 It has long been recognised in Australia that the course of employment may extend beyond both the place of employment as well as the time the employee is formally employed. For example, the High Court of Australia has held that an employee who was injured whilst sight-seeing during his ‘day-off’ was nonetheless acting in the course of employment.28 Much will depend on the circumstances: in the case mentioned the employee was flown into a remote mining area of Western Australia for a fixed term of employment. The employer provided the accommodation and most opportunities for recreational activities in the short period during which the employee was not working. In these circumstances the High Court viewed the entire period of time at the mining site as one period of employment and, as the sight-seeing had been effectively organised by the employer, the accident took place during the course of that employment. 13 Particular rules apply to employees injured in the course of journeys and recesses. As usual, a variety of approaches can be found. In a number of jurisdictions the approach adopted is broadly that of the common law. This would include some journeys (eg travelling between different places of employment at the employer’s request) but would not include journeys to and from work from the employee’s residence.29 In a number of other jurisdictions, journeys that would not traditionally fall within the common law meaning of course of employment have been included through legislation. For example, New South Wales deems certain journeys to be in the course of employment, including journeys from a place of abode to the place of employment.30 A variation of this extension is contained in South Australia, where journeys between a worker’s place of residence and place of employment fall within the course of employment only if there is a real and substantial connection between the employment and the accident which causes the injury.31 The fact that the accident occurred as part of a journey to work does not of itself satisfy the real and substantial connection requirement.32 These basic rules are subject to a number of excep-
28 29
30
31 32
8
Hatzimanolis v ANI Corporation Ltd (1992) 173 Commonwealth Law Reports (CLR) 473. This is made explicit in Tasmania, Western Australia and Victoria, the three states that broadly adopt the common law (Accident Compensation Act 1985 (Vic) s 83(2)(b); Workers Rehabilitation and Compensation Act 1988 (Tas) s 25(6)(a); Workers’ Compensation and Injury Management Act 1981 (WA) s 19). Workers Compensation Act 1987 (NSW) s 10. Other journeys included are journeys between places of abode or employment and educational establishments where attendance is required or expected by the employer, and journeys between workplaces. Workers Rehabilitation and Compensation Act 1986 (SA) s 30(5). Workers Rehabilitation and Compensation Act 1986 (SA) s 30(6).
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tions. First, injuries occurring as a result of deviations or interruptions to the journey for reasons unconnected with the employment and which materially increase the risk of injury are not within the course of employment. Second, no compensation is payable if the injury was caused by serious and wilful misconduct of the worker, which includes being under the influence of alcohol or other drugs unless the misconduct played no role in the injury or the alcohol or other drugs were not ingested voluntarily. In general, it is not necessary that the employment be a substantial contributing factor to the injury sustained.33 Legislation has also been passed to deal with the situation where injuries 14 occur to an employee whilst the employee is on a break or recess during the employment. Even in those jurisdictions that do not have such legislation, it remains possible for an employee to remain in the course of employment through the application of the common law rules, but the statutory provisions remove any element of doubt. The most favourable of the provisions deem the worker to have been in the course of employment if the injury occurred when the worker is temporarily absent from the place of employment, on a day on which the worker is employed, during any ordinary recess.34 In a number of jurisdictions the worker is not deemed to be in the course of employment during recess periods if the worker during that period exposes him or herself to abnormal risk. Apart from the extensions mentioned above, each jurisdiction has statu- 15 tory extensions to the course of employment particular to that jurisdiction. In most jurisdictions the extensions cover employees who are at educational or technical schools at the request of their employer or are there because it is expected by the employer.35 Also, attendance at places that is required as part of a claim for workers’ compensation usually comes within the course of employment under the statutory extensions. It is debatable whether specific provision needs to be made for these situations as it is likely they would fall within the common law meaning of course of employment.36
33
34
35 36
In New South Wales, this is achieved by exempting the legislative provision applying to journeys from the normal causal requirement but in some other jurisdictions where the same rule applies it is expressly provided for in the sections dealing with journeys (eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 35(2)). See eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 34(1). In New South Wales the worker is also covered for any authorised absences from the place of employment: Workers Compensation Act 1987 (NSW) s 11. See eg Safety Rehabilitation and Compensation Act 1988 (Cth) s 6(1). See eg Workers’ Compensation and Injury Management Act 1981 (WA) s 19(1).
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16 Apart from the specific cases mentioned above, the question of whether the employee’s conduct is to be considered in the course of employment is left to the common law. In general terms, conduct of the employee that cannot fairly be considered to be connected to the employment will not fall within the course of employment. By statute, injury that is intentionally, deliberately or wilfully self-inflicted does not attract compensation.37 Injury that is caused or contributed to by serious and wilful misconduct of the worker also falls outside the scope of workers’ compensation schemes unless it results in death or serious injury.38 Carelessness by the worker does not of itself deprive the worker of compensation under the schemes. Note also that in some jurisdictions, and in the case of diseases, a wilful and false declaration by the worker that he/she had not previously suffered from the disease will prevent the recurrence of the disease from being a compensable injury.39
B.
Compensation trigger
17 In most Australian jurisdictions, the compensation trigger is the suffering of ‘injury’ arising out of or in the course of employment by the worker where the result is the inability or incapacity for work in the same manner as prior to the injury. In South Australia, the triggering event is defined to be the suffering of a ‘disability’.40 These terms are usually defined to include a disease or other form of progressive or cumulative condition that results in impairment of the worker. Disease is itself defined in most jurisdictions, a common form being that a disease is any physical or mental ailment, disorder, defect or morbid condition whether of sudden or gradual development and includes the aggravation, acceleration, exacerbation or recurrence of any pre-existing disease.41 18 In general, Australian jurisdictions draw some distinction between personal injury and disease even though both fall within the general definitions of injury or disability. Although the detail is complicated and varies amongst jurisdictions, the reason is that different causal requirements may apply to injuries that are diseases. Put simply, in most jurisdictions, a claim for compensation in respect of a disease requires a greater causal connection than where the claim is for a personal injury. Hence in some 37 38 39 40 41
10
See eg Workers Compensation Act 1951 (ACT) s 82(2). See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 25(2)(a)(i). See eg Workers Compensation Act 1951 (ACT) s 27(3). Workers Rehabilitation and Compensation Act 1986 (SA) s 30. Accident Compensation Act 1985 (Vic) s 5.
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jurisdictions, there is no separate causal requirement between personal injury and the employment other than that it arises out of or in the course of employment (and as discussed earlier, arising in the course of employment does not require any causal connection).42 Conversely, claims for compensation for disease arising out of or in the course of employment require there to be some additional causal connection between the disease and the employment. Most jurisdictions require the employment to make a significant or substantial contribution to the disease,43 although in South Australia the employment need only make a contribution to the disease.44 In the Northern Territory the employment must materially contribute to the contraction, aggravation, acceleration or exacerbation of the disease, meaning that it must be the real, proximate or effective cause of the disease.45 Although more stringent causal requirements may attach to disease than 19 to other kinds of personal injury, all Australian jurisdictions provide some legislative assistance to the worker in establishing the required causal connection between the employment and the disease. A common form is that where the disease is linked to the nature of the employment, the disease is taken to have arisen out of or in the course of employment and the employer is liable to pay compensation.46 It has been held that if this can be established, then the employee is not required to prove that the injury resulted from employment with any particular employer.47 In one or two jurisdictions the legislation provides for a rebuttable presumption in favour of a connection between the employment and the disease where there is a statistical increase in the likelihood of contracting the disease amongst workers involved in that type of employment compared to those workers who are not.48 In many jurisdictions the legislation goes further
42
43 44
45 46
47 48
See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 25(1)(a). However, a number of jurisdictions require a causal connection between any injury, whether a personal injury or a disease, and the employment for compensation to be payable; see eg Workers Compensation Act 1987 (NSW) s 9A(1), requiring that the employment be a significant contributing factor to the injury for compensation to be payable. Safety Rehabilitation and Compensation Act 1988 (Cth) s 5B. Workers Rehabilitation and Compensation Act 1988 (SA) s 30(2)(b). Eligibility for compensation also arises where the disease arises out of the employment but as discussed earlier this requirement can only be satisfied by establishing a causal connection between the employment and the injury. Workers Rehabilitation and Compensation Act (NT) s 4(6A), (7). See eg Workers’ Compensation and Injury Management Act 1981 (WA) s 32. The diseases and the required employment for the presumption to apply are specified in Schedule 3 of the legislation. Connair Pty Ltd v Frederiksen (1979) 142 CLR 485. See eg Safety, Rehabilitation and Compensation Act 1988 (Cth) s 7(2), 7(3).
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and specifies that there is a rebuttable presumption that particular diseases are linked to the nature of particular employment.49 In effect, this changes the onus of proof: the general provisions require the employee to establish the link between the employment and the disease whereas under the specific provisions the employer must disprove the connection. It is not clear how the employer would do this in practice. 20 In most jurisdictions, if the injury to the worker constituted by the disease is contracted by a gradual process, the current employer is required to pay compensation when the disease occurs if the disease was one which was due to the nature of the current employment.50 The jurisdictions differ but in most the disease is deemed to constitute an injury when it results in the full or partial incapacity of the worker to work in the employment.51 If, at the time the disease causes these effects, the employee is not working in an employment which is linked to the disease, most jurisdictions provide that the employer who last employed the employee in an employment where the disease was linked to the nature of that employment is liable to pay compensation.52 Where other employers employed the employee in similar employment at an earlier time, the later employer is given rights of contribution against the earlier employers, although the recourse is limited to those employers who employed the employee within a particular time period from the date of the injury.53 21 The distinction between diseases and other forms of personal injury is important because of the different eligibility rules that may apply to the payment of compensation. That said, there is surprisingly little by way of general rules that assist to determine the difference, a case by case analysis being preferred. There are also a number of specific statutory provisions in the jurisdictions that defy generalisation.54 Perhaps the best general guide is provided by a number of decisions of the High Court about fifty years
49
50 51 52 53
54
12
The diseases and the required employment for the presumption to apply are usually specified in secondary legislation: see Workers Compensation Act 1987 (NSW) s 19; Workers Compensation and Rehabilitation Act 1986 (SA) s 31. See eg Workers Compensation and Rehabilitation Act 1988 (Tas) s 78. See eg Workers Compensation and Rehabilitation Act 1986 (SA) s 113. See eg Workers Compensation Act 1987 (NSW) s 15(1)(b). The time periods are variable: in South Australia no time limit is provided (Workers Compensation and Rehabilitation Act 1986 (SA) s 113(3)); in New South Wales contribution may only be sought from previous employers who employed the worker within twelve months of the injury occurring (Workers Compensation Act 1987 (NSW) s 15(2)); in Tasmania the period is three years (Workers Rehabilitation and Compensation Act 1988 (Tas) s 78(2)). See eg Accident Compensation Act 1985 (Vic) s 86(2) which provides special rules for diseases consisting of, caused by, resulting in or associated with a heart attack or stroke.
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ago where the key distinction was said to be the suddenness or abruptness of the physiological change that resulted in the injury. In Commonwealth v Hornsby55 Windeyer J said, in the context of legislation that required personal injury by accident: ‘But an injury or incapacity that is an ordinary result of the progress of a disease according to its ordinary course is not, I think, an accident. A usual consequence or the normal climax of a progressive malady does not become an accident because it manifests itself suddenly and, to the patient, unexpectedly... What for present purposes the authorities establish is that if some external event or some act done by the man himself causes a sudden, harmful and unexpected physiological change to occur, that may amount to an injury by accident – and this may be so although the event or act would not have had the same consequences if the man had not been suffering from some predisposing disease. In such cases it is because the injury was not the result of the mere progress of an autogenous disease but on the contrary was unexpectedly precipitated by some external event or definite act that it can be attributed to an accident’. The key point here is that the sudden physiological change may be the 22 result of an underlying disease but this of itself does not mean that the injury is a disease. Only diseases that do not result in the necessary sudden physiological change attract the special provisions applying to disease.56 Although it has been recognised that the application of this approach does not necessarily lead to consistent results, it has been reaffirmed by subsequent decisions of the High Court in more recent times.57 It should also be remembered that the issue is really only of importance in those jurisdictions where there are different causal requirements between diseases and other types of injury that attract compensation. Where the causal requirement between the employment and the injury is the same, regardless of whether the injury is a disease or of some other type, the distinction may be of no practical importance.
55 56
57
(1960) 103 CLR 588. In Kennedy Cleaning Services Pty Ltd v Petkoska (2000) 200 CLR 286, Gleeson CJ and Kirby J listed (at [40]) dermatitis, lead poisoning, and brucellosis as examples of progressive types of diseases. Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310; Kennedy Cleaning v Petkoska (2000) 200 CLR 286.
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C.
Scope of protection
23 The primary function of workers’ compensation legislation in the Australian jurisdictions is to provide compensation for personal injury resulting in incapacity to work or death. ‘Injury’ is usually defined to mean a physical or mental injury or a personal injury,58 both of which will include diseases. 24 Sexual harassment and discrimination arising out of or in the course of employment do not fall within the scope of the compensation schemes unless their effect is to cause the worker to suffer a mental injury.59 Claims of this nature that relate to the reasonable actions of employers on matters of transfer, demotion, promotion, discipline, or counselling of a worker or to bring about the cessation of a worker’s employment, are excluded. There are separate statutory remedies available to the victims of sexual and racial harassment.60 25 All Australian jurisdictions provide some measure of compensation for property damage although a number do so only is respect of property damage that is related to physical injury, such as the cost of therapeutic appliances, damage to prosthetic devices and replacement of crutches.61 In some jurisdictions compensation is provided for damage to clothing62 and in South Australia compensation is payable for damage to the worker’s personal effects or tools of trade.63 26 The Australian workers’ compensation schemes compensate for injury or disease leading to incapacity. Although some of the compensation is awarded for economic losses (such as loss of earnings), all of the economic losses are related to the injury or disease that is the primary ground for compensation. For example, although several jurisdictions explicitly allow the worker to claim the cost of altering a house or car so as to be
58
59
60 61 62 63
14
See eg Safety Rehabilitation and Compensation Act 1988 (Cth) s 5A (physical or mental injury); Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 32(1) (personal injury). Also referred to as psychological injury (see Workers Compensation Act 1987 (NSW) s 11A). Examples frequently given in advice to workers is that a compensation claim might arise where the harassment leads to anxiety or depression with the result that the worker is incapacitated for work. See eg Racial Discrimination Act 1975 (Cth); Sex Discrimination Act 1984 (Cth); AntiDiscrimination Act 1977 (NSW). See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 74. See eg Workers’ Compensation and Injury Management Act 1981(WA) Schedule 1 Clause 17(6). Workers Rehabilitation and Compensation Act 1986 (SA) s 34(1). It does not extend to compensation for damage to a motor vehicle: s 4(2).
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suitable for an injured worker64 – clearly economic losses – the alterations relate to the physical injury of the worker and cannot be considered as providing compensation for pure economic losses. Apart from scope of limitations by virtue of the nature of the damage, there 27 are also what might be called jurisdictional limitations. In all jurisdictions there are specific provisions preventing an injured worker from recovering compensation from two different jurisdictions for the same injury. Where compensation is paid in one jurisdiction and subsequently the worker receives compensation from another jurisdiction, the compensation payer in the first jurisdiction can recover a sum from the worker.65
D.
Heads and levels of benefit
1.
Medical care
All Australian jurisdictions provide that costs of medical care reasonably 28 associated with the injury are within workers’ compensation schemes. Medical care is defined broadly and generally includes medical, hospital, nursing, rehabilitation and ambulance costs. All jurisdictions allow the reasonable costs of travel to receive medical care as recoverable although there is a wide variety as to how this is done: some have a threshold distance that must be travelled66 whilst others limit the amount that can be charged for private transport.67 The jurisdictions vary on the extent to which medical services provided outside a hospital can be recovered eg nursing or attendance care services that are provided gratuitously or on a non-commercial basis by family members at the worker’s home. The legislation in some jurisdictions does not provide for recovery for such care68 whilst in others it is limited, either by the amount of care provided69 or by allowing that the compensation will70 or may71 be paid to or on behalf of the carer.
64 65
66 67 68 69 70 71
See eg Safety Rehabilitation and Compensation Act 1988 (Cth) s 39. See Workers Compensation Act 1987 (NSW) s 9AC. The amount that can be recovered is the lesser of the amount of compensation paid in the first jurisdiction or the amount paid in the second. Safety, Rehabilitation and Compensation Act 1988 (Cth) s 16(7). See eg Workers Compensation Act 1987 (NSW) s 64. Workers’ Compensation and Injury Management Act 1981 (WA) Schedule 17. Workers Compensation Act 1987 (NSW) s 60AA, which excludes such care provided on a temporary basis: not more than six hours a week and for not more than three months. Workers Compensation Act 1987 (NSW) s 60AA(5)(c). Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 225.
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29 A number of jurisdictions place total or partial caps on the amounts that can be claimed for medical expenses72 and some limit the fees that can be charged for prescribed services provided to workers.73 Generally, providers of medical services are not able to charge more for the treatment of workers than for other patients and commit an offence if they do so.74
2.
Rehabilitation assistance
30 All Australian jurisdictions have in place mechanisms to rehabilitate the injured worker. The Commonwealth scheme requires the worker submit to, and the employer to provide, an assessment to determine if rehabilitation is appropriate for the worker.75 If the worker does not submit to such an assessment, eligibility for compensation is suspended until an examination takes place.76 Most other jurisdictions impose requirements on the employer to have procedures in place to deal with the rehabilitation of injured workers, usually by requiring the employer and/or their insurers to have specific rehabilitation policies and programmes to be in place77 and by giving regulatory agencies the responsibility for enforcing these requirements and for promoting effective policies and procedures on rehabilitation.78 31 The costs of rehabilitation are considered as part of the compensation payable to the employer and are not payable directly to the worker, at least while the injury continues.79 32 Although the wording varies, the purpose of rehabilitation is to restore the worker to the same capacity as before the injury so that the worker remains 72
73 74 75 76 77
78
79
16
See eg Workers’ Compensation and Injury Management Act 1981 (WA) Schedule 17(1); Workers Compensation Act 1987 (NSW) s 61(3) (medical treatment: AU$ 50,000); s 62(5) (hospital treatment: AU$ 50,000); s 63(1) (ambulance treatment: AU$ 10,000). See eg Workers’ Compensation and Injury Management (Scales of Fees) Regulations 1998. Workers Rehabilitation and Compensation Act 1988 (Tas) s 75(2A)(b). Safety, Rehabilitation and Compensation Act 1988 (Cth) s 37. Safety, Rehabilitation and Compensation Act 1988 (Cth) s 36(4). Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 52; Workers Rehabilitation and Compensation Act 1988 (Tas) Part XI (requiring the insurer to appoint an injury management co-ordinator for an insured employer and the appointment of a return-to-work co-ordinator by an employer of more than fifty workers). See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 26(1) which requires the WorkCover Corporation of South Australia to establish or approve rehabilitation programmes to achieve the best practicable levels of physical and mental recovery for workers and so that injured workers are, where possible, restored to the workforce and the community. See eg Workers Rehabilitation and Compensation Act (NT) s 75B.
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valuable to the workforce and the community.80 As part of the rehabilitation process, employers are generally required to keep the worker’s employment open for a period of twelve months after the injury.81 If full recovery cannot be made, in some jurisdictions the employer is under an obligation to employ the worker in an employment that is suitable for his/her postinjury capacity.82 If no such employment can be found, the employer is released from the obligation to re-employ the worker,83 although in some jurisdictions there is a specific requirement to assist the worker to find alternative employment.84 Some jurisdictions allow a worker dismissed as not fit for employment after the injury to seek reinstatement.85
3.
Lost earnings
All Australian jurisdictions provide compensation for loss of earnings. 33 This occurs when the injury or disability results in total or partial incapacity for work.86 Weekly compensation is payable in respect of such total or partial incapacity.87 It is impossible to provide a detailed account of the entitlements under each 34 of the schemes. Broadly, in the case of total impairment, each scheme divides the incapacity into periods.88 In some schemes, the worker is entitled to the full pre-injury earnings, average weekly earnings or weekly amount payable under an applicable industrial award during the first period89 whilst in others compensation is awarded for only a percentage of these amounts.90 If full incapacity continues into later periods, the amount of the weekly payments reduces to a percentage of these amounts.91 Some 80
81 82
83 84 85 86 87 88 89 90 91
See eg Accident Compensation Act 1985 (Vic) s 3, which provides that two of the objectives of the Act are to make provision for the effective occupational rehabilitation of injured workers and their early return to work, and to increase the provision of suitable employment to workers who are injured to enable their early return to work. See eg Workers’ Compensation and Injury Management Act 1981 (WA) s 84AA(1). See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 58B. For discussion of these requirements under the Commonwealth legislation see A Anforth/T Thawley, Refusals to Offer Suitable Employment (1997) Torts Law Journal 176. See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 143L(2). Safety, Rehabilitation and Compensation Act 1988 (Cth) s 40(1). Workers Compensation Act 1987 (NSW) s 241. See eg Workers Compensation Act 1987 (NSW) s 33. Commonwealth schemes do not make a distinction between total and partial incapacity. A common first period is 26 weeks from the date of incapacity, and a second period between 26–52 weeks. See eg Workers Rehabilitation and Compensation Act (NT) s 64. See eg Accident Compensation Act 1985 (Vic) s 93A. See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 69B(2E).
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jurisdictions also place maximum amounts that can be awarded as weekly compensation.92 Most Australian schemes are long-tail schemes in that entitlement to compensation for loss of earnings may continue until the worker reaches the specified age at which benefits cease to be payable. However, in Queensland benefits cease five years from the date the incapacity commences or if the total amount of compensation, including compensation paid by way of a lump sum for non-pecuniary loss, exceeds the prescribed amount.93 35 Australian jurisdictions deal with compensation for partial incapacity similarly as for total incapacity.94 Generally, the base figure of compensation is the difference between the amount the worker earned prior to the partial incapacity and the amount that the worker earns or could have earned after the injury.95 In some jurisdictions where the worker is not in employment post-injury there are requirements that the worker be actively seeking employment to be eligible for compensation.96 As for total incapacity, jurisdictions variously allow the full amount of the difference in pre- and post-injury earnings or a percentage of it to be received as compensation.97 In some jurisdictions, a partial incapacity may be treated as a total incapacity if the worker has recovered from the partial incapacity so as to be fit for employment of a particular kind but the remaining injury prevents the worker, in practice, from obtaining such employment.98
92 93
94 95
96
97
98
18
See eg Workers Compensation Act 1987 (NSW) s 35. See Workers’ Rehabilitation and Compensation Act 2003 (Qld) s 144A. Note also that the Tasmanian scheme limits weekly payments to the period of nine years from the date of the incapacity: Workers Rehabilitation and Compensation Act 1988 (Tas) s 69B(2E). There are some exceptions; in New South Wales, eg benefits cease after 104 weeks if certain conditions are met (Workers Compensation Act 1987 (NSW) s 52A). See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 69(1)(b). Some jurisdictions place a cap on the amount that can be used for the weekly earnings the worker would have earned but for the injury: Workers Compensation Act 1987 (NSW) s 35; Accident Compensation Act 1985 (Vic) s 93A(2)(b). Some jurisdictions provide great detail for determining this question: Workers Compensation Act 1987 (NSW) s 38A. In others this is implied by the requirement that the worker is assumed to earn the income that the worker could reasonably be expected to derive: Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 162. Compare Workers Rehabilitation and Compensation Act 1988 (Tas) s 69(1)(b) (full difference) with Accident Compensation Act 1985 (Vic) s 93A(2)(b) (difference between 95 % of worker’s pre-injury average weekly earnings and the worker’s current weekly earnings). Workers’ Compensation and Injury Management Act 1981 (WA) Schedule 1 Clause 8.
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Apart from disqualifying events related to the worker’s recovery or con- 36 duct,99 and subject to long stop provisions,100 entitlement to weekly payments will continue until the worker reaches the age at which compensation ceases to be payable. This is normally 65,101 although there are provisions that if the injury occurs after the worker’s sixty-fourth birthday, then compensation is payable for a period of twelve months.102
4.
Non-pecuniary losses
All jurisdictions in Australia allow recovery for non-pecuniary or non- 37 economic loss. The preferred way of describing this compensation is as compensation for permanent impairment. The details of the schemes vary dramatically between the jurisdictions but the most common form of assessing awards of compensation for permanent impairment is for an assessment to be made of the degree of permanent impairment to the worker that results from the injury.103 This is usually expressed as a percentage of whole body impairment and the worker is entitled to an amount determined by applying a formula which includes this percentage, up to a maximum amount.104 Some jurisdictions place thresholds on whole body impairment that must be met before any compensation for impairment is payable105 and in some cases whole body impairment resulting from psychological injury is excluded.106 A slightly different approach is adopted in the Australian Capital Territory, where compensa99
100
101
102 103
104
105 106
This varies amongst the jurisdictions but for an example see Workers Rehabilitation and Compensation Act 1986 (SA) s 36 (dealing with, amongst others, recovery of the worker from the injury, the worker returning to work, obtaining work with a salary equivalent to the pre-injury salary, or residing outside the state). As noted above, some jurisdictions (Queensland and Tasmania) have statutory limits on the time benefits which can be payable whilst some others require approval of the relevant WorkCover authority for the weekly benefit to continue (see eg Accident Compensation Act 1985 (Vic) s 93C). In New South Wales, the age is linked to the age at which an age pension is payable, which is currently 67: see Workers Compensation Act 1987 (NSW) s 52; Social Security Act 1991 (Cth) s 23(5A) – (5D). See eg Workers’ Compensation and Injury Management Act 1981 (WA) s 56. See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 43A. Some jurisdictions provide considerable detail on how the level of impairment is to be calculated; see eg Workers’ Compensation and Rehabilitation Regulations 2003 (Qld) Schedule 2. See eg Workers Compensation Act 1987 (NSW) s 66. There are considerable variations between the maximum amounts; as at the end of 2009 the lowest – Western Australia – was AU$ 168,449 and the highest – South Australia – was AU$ 420,558. Usually between 5–10 %: see eg Safety, Rehabilitation and Compensation Act 1988 (Cth) s 24 (10 %); Workers Rehabilitation and Compensation Act 1988 (Tas) s 71 (5 %). See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 43(5) (no entitlement to compensation for psychiatric impairment). Some jurisdictions place specific whole
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tion is limited to specified injuries – commonly referred to as a ‘table of maims’ – and compensation is provided for individual injuries, with a cap on the amount that can be awarded in the case of multiple injuries.107 38 A number of jurisdictions award additional amounts of compensation for non-economic loss. This is usually an additional award to compensate for pain and suffering relating to the impairment, ie it is logically separate from compensation for the impairment itself.108 In Queensland, additional lump sum compensation is payable on a sliding scale if the injury results in a work-related impairment of 30 % or more.109 Moreover, if the worker is assessed with a WRI of 15 % or more, a lump sum payment for gratuitous care provided to the worker is payable if certain conditions are met.110
5.
Dependents’ benefits
39 All Australian jurisdictions provide for benefits to be payable where the injury causes the death of the worker. Broadly, benefits are paid to dependents of the workers but what this means in practice varies in different jurisdictions. In all jurisdictions a dependent must be someone who is wholly or partly dependent on the worker’s earnings at the time of the death111 and was someone who formed part of the deceased’s family,
107
108
109 110 111
20
body impairment thresholds for psychological injury; see Workers Compensation Act 1987 (NSW) s 65A (15 %); Accident Compensation Act 1985 (Vic) s 98C(3)(a) (30 %). See Workers Compensation Act 1951 (ACT) Part 4.4, Schedule 1. The Queensland scheme, that also has a detailed list of injuries and the amounts that can be awarded, specifically recognises that injuries not listed may still give rise to permanent impairment, and, consequently, attract compensation (Workers’ Compensation and Rehabilitation Regulations 2003 (Qld) s 92(4)). This is clear in New South Wales (Workers Compensation Act 1987 (NSW) s 67). It is less clear in the Commonwealth scheme where the extra compensation is for pain and suffering, loss of expectation of life, and loss of amenities (Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 4, 27) as the latter two headings are at least partially objective and it is therefore difficult to see how they represent different losses from the impairment itself. The explanation lies in the fact that in Australia, damages for loss of amenities of life have a subjective component (Skelton v Collins (1966) 115 CLR 94) and so the additional compensation can be based on the subjective knowledge of the impairment. This also explains why the Commonwealth scheme requires the employee to be aware of the non-economic loss before any compensation is payable (Safety, Rehabilitation and Compensation Act 1988 (Cth) s 4, definition of non-economic loss). Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 192. Note that the Work Related Injury (WRI) scale is different from percentages of whole person impairment. Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 193. Accident Compensation Act 1985 (Vic) s 5.
Australia
broadly defined.112 For those dependents who are totally dependent on the deceased worker’s earnings, benefits are payable in two ways. First, a lump sum is payable to defined groups of dependents, usually to be divided amongst the dependents if there is more than one eligible dependent in the group.113 Second, additional weekly payments114 are also payable to specified dependents, normally children under the age of 16, or if a student, until the age of 21.115 In Western Australia, a child dependent who is totally dependent on the worker’s earnings may under certain conditions elect to receive a lump sum rather than weekly payment.116 Many jurisdictions make distinctions between dependents who are totally 40 dependent on the worker’s earnings and those who are partially dependent. As for total dependency, compensation involves the payment of a lump sum, weekly payments, or a mix of both depending on the jurisdiction.117 In most jurisdictions, the amounts that are payable to the dependents are not fixed but is the amount that is reasonable and proportionate to the loss of the dependents.118 Weekly compensation is payable to dependents for the length of time the 41 dependency would have lasted if the worker had not died. For children, this is normally to the age of 16, or in jurisdictions that allow compensation to dependent students, until age 21,119 whilst in jurisdictions which
112 Some jurisdictions are more specific; see eg Safety Rehabilitation and Compensation Act 1988 (Cth) s 4, defining a dependent as the spouse, parent, step-parent, father-inlaw, mother-in-law, grandparent, child, stepchild, grandchild, sibling or half-sibling of the worker. 113 See eg Workers Compensation Act 1987 (NSW) s 25(1)(a). 114 Weekly payments are either of a fixed amount, increased periodically by a set formula, or for a percentage of the workers’ notional earnings: compare Workers Compensation Act 1987 (NSW) s 25(1) (fixed amounts) with Workers Rehabilitation and Compensation Act 1986 (SA) s 44. 115 See eg Workers Compensation Act 1987 (NSW) s 25(1)(b). Some jurisdictions provide a mixture of weekly payments and lump sum depending on the age of the children and whether there was a dependent spouse; see eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 200. In some jurisdictions weekly payments are payable to a wider class; see eg Workers Rehabilitation and Compensation Act 1986 (SA) s 44 (dependent spouses and relatives eligible for weekly payments). 116 Workers’ Compensation and Injury Management Act 1981 (WA) Schedule 1(1). 117 See eg Safety Rehabilitation and Compensation Act 1988 (Cth) s 17(4) (lump sum); Workers’ Compensation and Injury Management Act 1981 (WA) Schedule 1 (2) (3) (weekly payment for partially dependent children) Workers Rehabilitation and Compensation Act 1986 (SA) ss 44, 45A (both lump sum and weekly payments). 118 See eg Accident Compensation Act 1985 (Vic) s 92A(8B). 119 See eg Workers Compensation Act 1987 (NSW) s 25(2).
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provide for weekly payments other than to children, it is for a set period120 or not beyond the date at which such payments would, assuming that the worker had survived but had been permanently incapacitated for work, have ceased to be payable to the worker.121 42 Where a worker dies leaving no dependents, provision is made in all jurisdictions for compensation to be paid for funeral expenses.122 43 A number of jurisdictions make explicit provision for compensation payments received by the worker in respect of the injury prior to the death. Broadly, these payments are to be ignored in assessing the dependents’ claim.123 Some jurisdictions also have specific provisions124 as to the effect of the dependents recovering any damages in a common law action in respect of the death; generally, that some or all of the damages are to be repaid to whoever is responsible for providing the workers’ compensation benefit to the dependents,125 or by extinguishing the right to any workers’ compensation not determined at the date of the judgment or settlement of the common law claim.126
6.
Comparison with damages in tort
44 For a long period, common law awards of damages in tort actions remained the province of the common law, and while that situation was in place, tort damages could unequivocally be said to be more generous than compensation payable under the workers’ compensation scheme. However, major statutory change of common law damages awards was made in the first decade of the twenty-first century, some of which involved introducing restrictions on awards of damages that had been in place in workers’ compensation and motor accident schemes. The result is
120 Workers Rehabilitation and Compensation Act 1988 (Tas) 67A(2) (two years from date of death). 121 Workers Rehabilitation and Compensation Act 1986 (SA) s 44(8). 122 As is typical in Australian schemes, the maximum amount is prescribed but is not uniform. 123 See eg Workers Compensation Act 1987 (NSW) s 25(3). In South Australia the aggregate of total weekly payments to dependents cannot exceed the weekly amount the deceased would have received for total incapacity if he/she had lived nor can any compensation awarded to dependents duplicate any compensation received by the deceased prior to death: Workers Rehabilitation and Compensation Act 1986 (SA) ss 44 (9), (13). 124 Other jurisdictions have general provisions that would also cover common law claims by dependents. These will be discussed below. 125 Safety, Rehabilitation and Compensation Act 1988 (Cth) s 49. 126 Workers Rehabilitation and Compensation Act 1988 (Tas) s 133(2).
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that the gap between damages in common law claims and compensation under workers’ compensation schemes is now less than at any time in the past. This is especially so in relation to workplace injuries where additional restrictions, over and above those that apply generally, have been imposed on awards of damages. That said, there are some important differences which remain. Common 45 law awards for loss of earning capacity are generally based on the full amount of the loss of earning capacity over the period that the loss will last. As we have seen, workers’ compensation schemes generally do not provide full recovery of loss of earning capacity over the entire period; some schemes only provide compensation for a set period whilst other limit recovery the longer the incapacity continues. Awards for nonpecuniary loss tend to be higher in common law claims, although the thresholds and caps that form part of workers’ compensation schemes have been adopted in most Australian jurisdictions for common law tort damages albeit they are a little higher than in workers’ compensation schemes. Conversely, there may be occasions where workers’ compensation schemes may be more generous to dependents than awards under statutory provisions allowing dependents of a deceased to recover for loss caused by death although much will depend on the circumstances of individual cases.127
7.
Lump sum or periodical payments?
Most benefits payable under workers’ compensation schemes are payable 46 as lump sums, either to compensate for non-pecuniary loss or as reimbursement for other kinds of losses incurred by the worker (eg medical expenses). Periodical payments are the norm only for income replacement and for certain payments to dependents. Even in these situations, however, it is possible for the liability for periodical payments to be redeemed
127 There is no equivalent of the lump sum payable to dependents under workers’ compensation schemes in claims for wrongful death outside of workers’ compensation. The lump sum in workers’ compensation schemes is generally payable regardless of the length of time the dependency may have lasted. Conversely, claims for wrongful death outside of workers’ compensation are calculated on the basis of the length of the time the dependency may have lasted. Where the value of the dependency is likely to be modest (common where the worker is in a low-pay occupation), the workers’ compensation lump sum may be more generous than the claim under the wrongful death legislation, especially where the period of dependency is relatively short.
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or commuted to a lump sum by agreement with the worker.128 This is normally for periodical payments relating to incapacity for work129 but it is also possible to commute payments for medical expenses in some jurisdictions.130 Most jurisdictions require the medical state of the worker to be stable before redemption is possible.131 In some jurisdictions redemption is only possible if the worker has reached a certain age132 or the weekly payments have been paid for a certain period.133 All jurisdictions provide some protection to the worker entering into a redemption agreement; this can involve ensuring the worker has received competent professional advice134 to requiring any redemption agreement to be registered for it to be enforceable.135 47 When payment under a redemption agreement is made,136 or, in some jurisdictions, when registration takes place,137 entitlement to further compensation for weekly payments (or medical expenses if covered) ceases.138 In some jurisdictions this means no further compensation at all, even if it does not involve weekly payments.139
128 Except in Tasmania, which does not provide for redemption of weekly payments. Note also that in the Commonwealth scheme, if certain conditions are met the weekly payment must be commuted to a lump sum. However, this scheme is the only one that allows for weekly payments to be recommenced after commutation if the injury causes further incapacity: see Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 30, 31. 129 See eg Workers Rehabilitation and Compensation Act (NT) s 74. 130 See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 42(1). The Victorian legislation appears to allow any aspect of compensation to be commuted but this is subject to conditions set out in regulations: Accident Compensation Act 1985 (Vic) s 118. South Australia is the only jurisdiction that expressly provides for weekly payments to dependents to be commuted: Workers Rehabilitation and Compensation Act 1986 (SA) s 44(14). 131 See eg Workers Rehabilitation and Compensation Act (NT) s 74(1)(b)(i). Curiously, in Queensland redemption of weekly payments is only available where the worker’s injury is not stable and stationary for the purposes of assessing permanent impairment: Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 171. 132 Workers Rehabilitation and Compensation Act 1986 (SA) s 42(2)(e)(ii). 133 Usually six months (see eg Workers’ Compensation and Injury Management Act 1981 (WA) s 67(1)) or two years (see eg Workers Compensation Act 1987 (NSW) s 87EA. 134 Workers Rehabilitation and Compensation Act 1986 (SA) s 42(2)(a). 135 Workers Compensation Act 1987 (NSW) s 87F(6). 136 See eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 176. 137 See eg Workers Compensation Act 1987 (NSW) s 87K. 138 See eg Workers Compensation Act 1987 (NSW) s 87K; Safety, Rehabilitation and Compensation Act 1988 (Cth) s 30(1). 139 See eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 176.
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E.
Funding systems
1.
Types of system
Australian jurisdictions operate two types of workers’ compensation 48 schemes. The first type of scheme imposes the primary liability to pay workers’ compensation on the employer. In these schemes, the employer is required to take out insurance with a private insurer to cover this liability.140 Private insurers are licensed by the regulatory body responsible for the scheme in the particular jurisdiction.141 The second type of scheme creates a central fund operated by a central regulatory authority with employers paying contributions to the fund.142 Whilst this is an adequate general explanation of the schemes in Australia, 49 it must be recognised that not every scheme fits conveniently into this dual classification. In Queensland, for example, the statutory requirement on the employer is to take out insurance to cover the liability to pay workers’ compensation. However, that liability must be insured primarily under a WorkCover policy, ie a policy issued by WorkCover Queensland, the effect of which is that WorkCover Queensland is the sole commercial provider of workers’ compensation insurance.143 A similar scheme operates in Victoria where the liability must be insured under a WorkCover Policy.144 However, the payment of benefits, collection of premiums, management of claims, and provision of rehabilitation advice is carried out through agents of WorkCover Victoria, the agents being major private insurance companies. All Australian jurisdictions require the employer to be covered for their 50 workers’ compensation liability, either through insurance or by contributions to a fund depending on the jurisdiction.145 There are two exceptions 140 See eg the scheme in Tasmania: Workers Rehabilitation and Compensation Act 1988 (Tas) s 97. 141 See eg Workers Compensation Act 1987 (NSW) Part 7 Division 3. In practice, however, most insurance is provided by Scheme Agents, large private insurers who are agents of the Nominal Insurer, a body created by the workers’ compensation legislation. The Nominal Insurer is deemed to be a licensed insurer: see Workers Compensation Act 1987 (NSW) Part VII Division 1A. 142 See eg the Commonwealth scheme: Safety Rehabilitation and Compensation Act 1988 (Cth) s 14, Part VII. 143 Workers’ Compensation and Rehabilitation Act 2003 (Qld) ss 48, 384; The Queensland Workers’ Compensation Scheme: Ensuring Sustainability and Fairness, Discussion Paper, Department of Justice and Attorney General (Qld), February 2010, p 7. 144 Accident Compensation (Workcover Insurance) Act 1993 (Vic) ss 7, 9. 145 See eg Workers Compensation Act 1987 (NSW) s 155; Workers Rehabilitation and Compensation Act 1986 (SA) ss 59, 66.
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to this general rule. All Australian jurisdictions in one form or another allow certain employers to self-insure.146 The conditions on which this is allowed vary but all jurisdictions require that the employer demonstrate sufficient financial resources to cover liabilities under the workers’ compensation scheme.147 Some jurisdictions limit self-insurance to employers who employ a particular number of employees.148 Where a licence or permit is granted, a number of jurisdictions make provision for the employer to deposit securities with the relevant regulatory authority.149 51 A number of jurisdictions expressly provide for employers to be exempt. An employer can be exempt where the minimum requirements for taking insurance are not met,150 or because it is considered that insurance arrangements outside the jurisdiction are sufficient to protect the worker.151 52 In those jurisdictions where employers insure against liability with private insurers, or where the employer is self-insured, provision is made for the worker to receive compensation if either the employer or insurer has acted in a way that would prevent the insurer providing cover for the worker’s claim against the employer.152 This will primarily be where the employer fails to insure or where the policy is voided through the employer’s insolvency. As far as the insurer is concerned, these provisions will apply if the insurer defaults on its obligations under the policy or becomes insolvent. The detail varies considerably between jurisdictions but, broadly, all jurisdictions set up some kind of fund and/or some kind of nominal defendant against whom claims for compensation can be made in these circumstances.153 Contributions to the funds are generally made from premiums paid to insurers and from levies imposed on selfinsurers.154
146 See eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) Chapter 2 Part 4. 147 See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 105(a). 148 See eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) ss 71, 72 (2000 employees). 149 See eg Workers Compensation Act 1987 (NSW) s 213. For criticism of the financial guarantees (or lack of) required by self-insurers, see R Guthrie/R Aurbach, Workers’ Compensation Self Insurers in Australia: Insolvency and Worker Protection (2010) 21 Insurance Law Journal 24. 150 See eg Workers Compensation Act 1987 (NSW) s 155A; Accident Compensation (WorkCover Insurance) Act 1993 (Vic) s 7(1A). 151 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 49. 152 See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 126. 153 See eg Workers Compensation Act 1987 (NSW) Part 4 Division 6, Part 7 Division 1A, Division 7. Where the employer ceases to exist, some jurisdictions deem the contract of insurance to remain in place so that the worker retains rights against the insurer: see Workers’ Compensation and Injury Management Act 1981 (WA) s 173. 154 See eg Workers Compensation Act 1951 (ACT) s 168A.
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2.
Contribution to the workers’ compensation fund
In those jurisdictions that operate a central fund scheme, the schemes are 53 funded by levees or premiums set by the regulatory body. Key components of the levy/premium are the aggregate annual remuneration paid to workers by the employer and the class of employment in which the worker is employed.155 In those jurisdictions that provide for the employer to take out private insurance, compensation is funded primarily through premium payments. A number of jurisdictions utilising private insurance regulate premium pricing. In some the pricing is set by the regulatory authority by the application of a formula based on the factors outlined above,156 whilst in Western Australia recommended rates are set which allow some scope for insurers to charge different premium rates.157 In the jurisdictions where premium pricing is not specifically regulated, employers are under an obligation to furnish insurers with relevant information about the remuneration of their employees and the nature of their employment.158
3.
Incentives
In jurisdictions that regulate premium setting, and in those jurisdictions 54 that operate a fund system, the claim history of the particular employer is taken into account in setting the premium or levy. For example, in South Australia, the adequacy or inadequacy of measures taken by the employer to reduce the incidence of work-related traumas and the incidence or costs of claims for compensable disabilities suffered by the employer’s workers are two factors that are considered in deciding whether the individual employer is entitled to a remission of the levy amount or should be charged a supplemental amount.159
155 See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 66. 156 See Workers Compensation Act 1987 (NSW) s 169 (and for an example of a premiums order see Insurance Premiums Order 2010–2011 (NSW) ). 157 Workers’ Compensation and Injury Management Act 1981 (WA) Part VIII. In Tasmania, the insurer must make available the industry rates it is using to calculate premiums, and the WorkCover Tasmania Board makes available suggested premium rates for particular classes of employment but they are not mandatory: Workers Rehabilitation and Compensation Act 1988 (Tas) ss 102A, 102B. 158 See eg Workers Rehabilitation and Compensation Act (NT) s 130. 159 Workers Rehabilitation and Compensation Act 1986 (SA) s 67(1). In relation to nonfund jurisdictions, see Insurance Premiums Order 2010–2011 (NSW) . See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 10 (WorkCover Tasmania Board). See eg South Australia, where WorkCover SA has appointed an agent, Employers Mutual. Accident Compensation Act 1985 (Vic) s 18A (Victorian WorkCover Authority may carry on business under trading name of ‘WorkSafe Victoria’). Workers’ Compensation and Rehabilitation Act 2003 (Qld) Part 8, where WorkCover Queensland undertakes the insurance business of the scheme. See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 34. Workers Rehabilitation and Compensation Act 1988 (Tas) s 36. Workers Compensation Act 1951 (ACT) s 122. In some jurisdictions conditions must be met, such as the inability to locate the employer, before the claim can be made to the insurer: Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 66. Workers Rehabilitation and Compensation Act 1986 (SA) s 52(4)(a) (but note that if the worker is not employed at the time of the injury, the claim is made to the regulatory body).
Australia
ulatory body.168 In most jurisdictions a medical certificate is required, at least if the claim is for certain types of benefit.169 The process for deciding claims once lodged also varies amongst the 57 jurisdictions. In most jurisdictions the claim is decided by the employer170 or by the insurer.171 In jurisdictions where compensation is paid out of a central fund it is normally the regulatory body responsible for the fund that makes the initial decision.172 Making a claim should be distinguished from giving notice of the injury. 58 Most jurisdictions require that the worker give notice of the injury to the employer.173 In some jurisdictions, the failure to give notice within a set period precludes the worker from making a claim for compensation although there are a number of situations in which the worker is excused for not doing so.174 In other jurisdictions, provisional payment of benefits can commence once notice of the injury has been given.175
3.
Reviews and appeals: special tribunals or general civil justice system?
All Australian jurisdictions provide detailed procedures for parties to 59 challenge decisions made as to the eligibility or otherwise of the worker for compensation. Some jurisdictions require or allow arbitration or mediation as the first stage of dispute,176 and many jurisdictions have
168 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 132(2). While this section states the claim must be made to the insurer, in practice the sole provider of insurance is the regulatory body responsible for providing insurance established under the Act, WorkCover Queensland. 169 See Workers Rehabilitation and Compensation Act 1988 (Tas) s 34; Workers’ Compensation and Injury Management Act 1981 (WA) s 57A. 170 Workers Rehabilitation and Compensation Act (NT) s 85(1). 171 This is implicit in Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 65; see also WorkCover Guidelines for Claiming Compensation Benefits, April 2009 (), which assumes the insurer makes the original decision. A number of other jurisdictions do not explicitly state that the insurer is responsible for the decision but other provisions assume this is the case: see Workers Compensation Act 1951 (ACT) s 129. 172 Workers Rehabilitation and Compensation Act 1986 (SA) s 53. 173 See eg Accident Compensation Act 1985 (Vic) s 102(1). The exception is Queensland where the employer alone is placed under an obligation to report the injury to WorkCover Queensland: Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 133. 174 See eg Workers Rehabilitation and Compensation Act 1988 (Tas) ss 32, 37, 175 Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 267. 176 See eg Workers Rehabilitation and Compensation Act (NT) s 103J.
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established specialist tribunals to hear appeals at various stages of a dispute.177 Alternatively, some jurisdictions use ordinary civil courts or other specialist courts as intermediate appellate courts in disputes over benefit entitlements.178 Most jurisdictions retain a final appeal to courts in the ordinary civil justice system but the grounds on which such an appeal may be made are strictly limited.179 60 Most jurisdictions regulate matters of evidence in arbitrations, mediations and in proceedings before specialist tribunals. In some cases the tribunals and courts are not bound by the formal rules of evidence and can inform themselves as they see fit.180
4.
Speed of claims’ resolution and administrative costs
61 All Australian jurisdictions impose time limits on when a worker can make a claim for compensation.181 Once a claim is made, most jurisdictions set a time within which an initial decision on the claim must be made where the claim involves the payment of weekly benefits182 although there are provisions in some jurisdictions allowing the decision to be deferred.183 Some jurisdictions also impose time limits on when an initial decision can be disputed.184 However, the further up the appeal process one goes the less specific the time limits become. As a general (and
177 See eg the Workers Compensation Commission in New South Wales (Workplace Injury Management and Workers Compensation Act 1998 (NSW) Part 10) and Workers Rehabilitation and Compensation Tribunal in Tasmania (Workers Rehabilitation and Compensation Act 1988 (Tas) Part 2 Division 2). 178 See, eg, Accident Compensation Act 1985 (Vic) Part III Division 1 (County Court); Workers’ Compensation and Rehabilitation Act 2003 (Qld) Chapter 13 Part 3 (Industrial Magistrates and Industrial Court). 179 This is usually to the Supreme Court or Court of Appeal of the jurisdiction and only on questions of law: see eg Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 353; Workers Rehabilitation and Compensation Act (NT) s 116. 180 See eg the County Court in Victoria (Accident Compensation Act 1985 (Vic) s 44(1)); Workers Rehabilitation and Compensation Tribunal in Tasmania (Workers Rehabilitation and Compensation Act 1988 (Tas) s 49(1)(a)). 181 A common period is six months from the date of the injury: see eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 32(1)(b). 182 This can vary from 10 days (Workers Rehabilitation and Compensation Act (NT) s 85) to 84 days (Workers Rehabilitation and Compensation Act 1988 (Tas) s 81A). 183 Although the decision maker may be under additional obligations if the claim is not determined within the set time: see Workers Compensation Act 1951 (ACT) s 132 (insurer cannot reject claim after one year from receiving claim without leave of Magistrates Court). 184 See, eg, Workers Rehabilitation and Compensation Act 1986 (SA) s 90A (one month); Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 542 (three months).
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unsurprising) rule, the procedures are tailored to resolve the majority of claims expeditiously, recognising that this may not be possible for more complicated claims or claims involving questions of law. Most jurisdictions allow for weekly payments of compensation to com- 62 mence prior to the claim being formally accepted and such payments may extend to the period during which the claim is disputed.185 If the claim is ultimately unsuccessful, there are procedures for any overpayment to be recovered from the worker.186 The administrative cost of workers’ compensation schemes is generally 63 borne by the scheme itself. In the most recent Comparative Performance Monitoring Report covering 2009-2010, SafeWork Australia found that 56 % of the costs of workers’ compensation schemes in Australia related to direct compensation to workers for illness and injury, and a further 22 % was spent on related medical and other services costs.187 The administrative costs for claims management, premium collection, and associated expenses amounted to 17 % of total costs, while regulation,188 dispute resolution,189 and corporate administration costs190 totalled 4.5 %. These costs are included as part of the operating costs of the scheme when premium or levy rates are set.191 The internalising of dispute resolution costs is also reflected in the rules as to legal costs that apply in a number of jurisdictions in relation to disputes. Only in rare cases, usually where the
185 In some jurisdictions the periods for which provisional weekly benefits are payable are limited: In South Australia the payments are only for a period of 13 weeks (Workers Rehabilitation and Compensation Act 1986 (SA) Part 4 Division 7A). 186 In some jurisdictions there is a general power to recover overpayments as a debt due to whoever paid the compensation (see Workers Rehabilitation and Compensation Act 1988 (Tas) s 149) whilst in others recovery is only allowed where the worker has been guilty of some wrongful conduct in relation to the claim (see Workers Compensation Act 1951 (ACT) s 135). 187 SafeWork Australia (fn 21) p viii. 188 Ibid, p 54. These include costs associated with licence and performance management, compliance activity, fraud investigations, litigation and prosecution, return to work and compensation advertising, IT costs, injury management and return to work research, actuarial services and administration and overseeing of self-insurers and exempt employers. 189 Ibid, p 55. These include costs associated with all activities associated with the finalising of disputes other than the direct costs associated with a claim, such as legal representation costs, which are included as claim payments. Includes costs associated with departments of justice/courts, conciliation, medical panels and workers’ compensation tribunals/courts. See ibid. 190 Ibid. These include costs associated with executive management, board/management committee, corporate planning and reporting, finance, human resources and personnel, administration, audit costs, corporate legal costs, bank charges and IT costs (including depreciation). 191 For levy rates see Workers Rehabilitation and Compensation Act 1986 (SA) s 66(8)(b)(ii).
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worker has been through a number of levels of appeal, can costs be awarded against the worker.192 In some jurisdictions the normal rule is that each party bears its own costs193 but in South Australia a worker is in certain circumstances entitled to a costs order in his/her favour unless the worker acted unreasonably, vexatiously or frivolously in bringing or in relation to the conduct of the proceedings.194
G.
Rights of recourse of workers’ compensation institutions
1.
Recourse against employer
64 Where the employer fails to comply with the obligation to insure against its liabilities under the schemes or for some other reason cannot pay, compensation can be paid to the worker out of a default fund set up for this purpose.195 Where this occurs, most Australian jurisdictions provide for the fund to be reimbursed by the employer.196 The employer’s conduct may also be relevant to the calculation of its premium or levy or may constitute an offence under the workers’ compensation legislation or other relevant legislation (such as occupational health and safety legislation).
2.
Recourse against a co-worker
65 There are no provisions governing recourse against a co-worker.197 There are general provisions (discussed below) that deal with situations where
192 Hence costs are usually at the discretion of the court when an appeal is brought to the Supreme Court/Court of Appeal: see eg Workers’ Compensation and Injury Management Act 1981 (WA) s 254. 193 See eg Workers Rehabilitation and Compensation Act (NT) s 103G (in relation to mediation). In New South Wales, in certain proceedings the worker cannot be ordered to pay costs unless the claim by the worker is considered frivolous or vexatious, fraudulent or made without proper justification: Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 112(3). 194 Workers Rehabilitation and Compensation Act 1986 (SA) s 95 (but not applying to proceedings before the Full Bench of the Workers’ Compensation Tribunal or the Supreme Court). 195 In South Australia, these payments are made out of the central fund. 196 See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 48; Workers Rehabilitation and Compensation Act 1988 (Tas) s 130. In New South Wales the liability can be waived if it unlikely it can be recovered from the employer: Workers Compensation Act 1987 (NSW) s 145. 197 In a number of jurisdictions it is expressly provided that the employer shall not seek any contribution from a worker in respect of its liabilities under the Act: see eg Workers Rehabilitation and Compensation Act 1986 (SA) s 115.
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the injury to the worker creates a third party liability separate from any liability of the employer; the effect of these provisions is usually to limit the amount of compensation that is payable to the worker in respect of the injury. However, in most cases the employer will be vicariously liable for the tort of the co-worker so the co-worker’s liability to the injured worker will also be a liability of the employer. Although the employer retains a right of indemnity against the co-worker for any liability incurred by the employer as a result of the worker’s tort198, this has been abolished in a number of Australian jurisdictions199 and where it has not it is rarely invoked. For that reason, even in those jurisdictions where default funds are subrogated to the rights of an employer200, it is extremely unlikely there could be any recourse against a co-worker.
3.
Recourse against third parties
Most Australian jurisdictions allow for recourse against third parties 66 where the worker has received compensation but has not recovered damages against a third party who is independently liable for the injury caused to the worker.201 The extent of the third party’s obligation to indemnify the party who has paid compensation is limited to the amount of the damages that could have been awarded against the third party.202 However, if the worker’s injury was caused in circumstances giving rise to a cause of action for damages against the employer, the extent of any indemnity to which the employer is entitled against the third party is reduced by the amount of any contribution which the employer could be ordered to pay the third party in respect of the worker’s injury.203 The possibility of an independent claim in tort against a third party also 67 has other effects on the payment of compensation. Where compensation has been paid prior to recovering damages from a third party (for the same injury), most jurisdictions require the compensation to be repaid by the worker to whoever paid the compensation, the amount being capped by the amount of the damages awarded in the action against the third party.204 The compensation payment may entitle the party making that
198 199 200 201 202 203 204
Lister v Romford Ice and Cold Storage Co Ltd [1957] Appeal Cases (AC) 555. See F Trindade/P Cane/M Lunney, The Law of Torts in Australia (4th edn 2007) 795 f. Workers Compensation Act 1987 (NSW) s 148A. See eg Workers Rehabilitation and Compensation Act 1986 (SA) s 54(7). See eg Workers Compensation Act 1987 (NSW) s 151Z(1)(d). See eg Workers Compensation Act 1987 (NSW) s 151Z(2)(e). See eg Workers Compensation Act 1951 (ACT) s 183(1)(b).
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payment to a first charge on any damages subsequently recovered from a third party in respect of the same injury.205 Where damages are recovered prior to or during compensation payments, in a number of jurisdictions the right to receive compensation, or further compensation, is extinguished from the date of the judgment or settlement.206
H.
Interaction with general social welfare provision and private insurance
1.
Fund of first resort?
68 In some respects – especially in relation to income replacement – workers’ compensation schemes may be seen as funds of first resort. This is primarily because of the relatively short period that can elapse before benefits may be payable if notice has been given of the injury. In other respects, such as medical expenses, workers’ compensation schemes do not at first glance operate as a fund of first resort. The wording of the legislation indicates that the worker is to be reimbursed for medical costs incurred as a result of the injury.207 This is reinforced by provisions that require medical accounts to be forwarded to the employer.208 However, in practice, all jurisdictions have procedures in place for any medical costs to the worker that fall within the scheme’s coverage to be paid directly by whoever is responsible for the payment of compensation.209
2.
Deductibility of benefits
69 There are no rules that apply generally throughout Australian jurisdictions relating to deductibility of benefits with the result that most benefits are not deducted from compensation payments. A number of jurisdictions direct that specific benefits are not to be taken into account210 and a number
205 See eg Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 207B(2). 206 See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 133(2). Other jurisdictions provide that the amount of compensation is to be reduced by any damages recovered (Workers’ Compensation and Injury Management Act 1981 (WA) s 93(1)(a)). 207 See eg Workers Compensation Act 1987 (NSW) s 60(3). 208 Workers Rehabilitation and Compensation Act 1988 (Tas) s 76A. 209 Either by direct invoicing or by requiring the worker to submit invoices to the employer/insurer. 210 See eg South Australia: Workers Rehabilitation and Compensation Act 1986 (SA) s 114 (ex gratia payments, and payments under accident insurance policies, to the worker);
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of others limit compensation payments by reference to whether the worker was receiving certain types of other benefit.211 The widest provision is in New South Wales, where the Workers’ Compensation Commission may decide that the worker is entitled to a limited, or to no, weekly payment if to do so would be to allow the worker or family member of the worker to receive Commonwealth social welfare benefits.212
3.
Recourse of social welfare agencies, social health insurance, private health insurers against workers’ compensation institutions
The interaction between social welfare payments and workers’ compensa- 70 tion has been discussed previously. In terms of recoupment of social welfare payments, it is only to be noted here that there are provisions which allow for part of a compensation payment to a worker to be paid to the relevant government department by Workers’ Compensation Institutions.213 First, a potential compensation payer or insurer must give notice on becoming liable to pay compensation to a worker. If a social welfare payment has been received by a worker to which he/she was not entitled, a secretary of the relevant government department can recover from the compensation payer or insurer a specified amount (which in practice will be the amount of benefits that the worker was not entitled to receive) prior to the compensation being paid to the worker. The payment by the compensation payer or insurer to the department reduces their liability to pay compensation to the worker by the amount of the payment. Note also that if for some reason the worker receives both a full compensation payment and social welfare benefits to which they were not entitled, the government department may seek to recover the excess payments from the worker.214
211
212 213 214
Workers Rehabilitation and Compensation Act 1988 (Tas) s 69(5) (in the case of weekly payments, any sum paid or payable under any contract of assurance or insurance (including a contract made with a friendly society or other benefit society or association or a trade union) or out of any relief, superannuation, or sustentation fund, or other fund (whether statutory or otherwise) of the like nature). Accident Compensation Act 1985 (Vic) s 96 (weekly payments affected by any disability pension received by the worker or receipt of retirement or superannuation pension related to the employment which lead to the injury); Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 154 (receipt of age, disability or certain widow’s pension affects amount of weekly payment). Workers Compensation Act 1987 (NSW) s 45. See Social Security Act 1991 (Cth) ss 1182–1184E. A compensation payment is one that is made wholly or partly in respect of lost earnings or lost capacity to earn. Social Security Act 1991 (Cth) ss 1178–1181.
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71 The recoupment of health benefits payable under social health insurance is governed by the Health and Other Services (Compensation) Act 1995 (Cth). The legislation applies to workers’ compensation but is limited to judgments or settlements for amounts in excess of $ 5,000.215 Generally, this will only apply where there has been a lump sum payment for nonpecuniary loss relating to an injury or where payments in respect of medical expenses have been commuted to a lump sum. In these cases, the compensation payer may be required to deduct the amount of eligible benefits received by the worker prior to paying the compensation to the worker.216 Any such payment made to the Commonwealth reduces the liability of the compensation payer to the worker in respect of the compensation payable to the worker.217 72 There are no formal provisions dealing with reimbursement of private health providers. However, at least one Australian jurisdiction gives advice to workers that if their medical expenses have been paid by a private health insurer, the insurer should contact the worker’s claim manager218 and the practice is that the private health insurers are reimbursed. On general principles the private insurer who pays the medical costs of the insured worker should be subrogated to any rights the worker has to payment of those medical expenses from the employer/insurer/central fund.
I.
Interaction with employers’ liability
1.
Availability of damages in addition to workers’ compensation benefits
73 All Australian jurisdictions have modified the right of the worker to claim tortious damages at common law from their employer for an injury which also attracts compensation under the workers’ compensation schemes.219 In a number of jurisdictions the worker’s claim for damages at common law against the employer in respect of a compensable injury has been
215 Health and Other Services (Compensation) Act 1995 (Cth) s 38. Note that recoupment also applies to reimbursement arrangements for medical expenses but it does not appear that benefit payments under workers’ compensation schemes fall within the statutory definition. 216 Health and Other Services (Compensation) Act 1995 (Cth) s 24. 217 Health and Other Services (Compensation) Act 1995 (Cth) s 31. 218 WorkCover South Australia. 219 The worker’s rights against third parties are generally unaffected, although damages awards may be affected: see Workers Rehabilitation and Compensation Act 1988 (Tas) s 133(1).
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abolished220 or the worker must have suffered a threshold level of impairment before an action for damages is allowed.221 Other jurisdictions preserve common law liability but impose restrictions on the damages that can be awarded in actions in negligence (including for this purpose negligence amounting to a breach of contract) or other tort against the employer.222 In some jurisdictions the worker must make an election between receiving compensation or making a claim for damages, either for the whole injury223 or for specific heads of damages.224
2.
Deductibility of benefits provided by workers’ compensation in action against employer
In jurisdictions where a common law claim against an employer is 74 allowed, an award of damages effects the compensation available to the worker in respect of the same injury. In some jurisdictions, an award of damages prevents any further entitlement to compensation for the same injury.225 As a general rule, the liability of the employer for damages is reduced by the amount of workers’ compensation benefits that have already been paid to the worker226 or, in those jurisdictions where the
220 Workers Rehabilitation and Compensation Act (NT) s 52; Workers Rehabilitation and Compensation Act 1986 (SA) s 54(1). 221 Accident Compensation Act 1985 (Vic) s 134AB(2); Workers’ Compensation and Injury Management Act 1981 (WA) s 93L. Note that in Victoria the method for proving whether the threshold level of impairment has been met is complicated and may depend on, among other things, the level of impairment assessed in the worker’s claim for workers’ compensation: see Accident Compensation Act 1985 (Vic) ss 134AB (3), (4), (15), (16), (38). 222 Workers Compensation Act 1987 (NSW) ss 151, 151E; Accident Compensation Act 1985 (Vic) s 134AB. 223 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 239 (compensation for permanent impairment or election for damages where work-related impairment of worker is less than 20 %). 224 Safety Rehabilitation and Compensation Act 1988 (Cth) s 45 (election between compensation for permanent impairment or action for damages for non-economic loss). 225 See eg Workers Compensation Act 1987 (NSW) s 151A(1). 226 Workers Rehabilitation and Compensation Act 1988 (Tas) s 133(1) (liability of employer or any other person reduced by the extent of the compensation paid); Workers Compensation Act 1987 (NSW) s 151A(1)(b) (amount of weekly benefit already paid to be deducted from the award). There remain significant differences in detail between the schemes: in Western Australia (Workers’ Compensation and Injury Management Act 1981 (WA)) there are restrictions on when a worker can elect to claim for common law damages (s 93K), different compensation benefits are payable in the period between when the claim is brought and judgment depending on the level of impairment of the worker (s 93P), yet once judgment is given in the common law action, compensation benefits are deducted from the damages award (s 92(b)) and there is no further entitlement to compensation (s 92(e)).
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award of damages does not terminate the right to compensation, is reduced by the amount of compensation paid already or payable in future to the worker.227 In a number of jurisdictions there are overarching provisions that prevent the worker from being compensated twice, so that if the worker recovers damages for an injury for which compensation has been paid, but no deduction has been made from the damages awarded against the employer, the party paying the compensation can recover the amount of compensation from the worker.228
3.
Subrogation of workers’ compensation into the claim of worker against employer
75 The nature of workers’ compensation schemes in Australia does not allow the schemes to be subrogated to the worker’s claim against the employer.
III. Employers’ Liability A.
Classification
1.
Contract or tort?
76 Depending on the circumstances, liability of employers for injuries to workers can arise under any number of legal categories. For present purposes, the most common remains liability for negligence. Legal negligence or carelessness can give rise to liability in three main legal categories. It can amount to the tort of negligence, it can amount to the breach of an express or implied term of a contractual obligation to use reasonable care, or it might amount to the tort of breach of statutory duty if the statutory duty is one that requires the exercise of reasonable care. These will be discussed further below. However, it should be noted here that the limitations on the common law liability discussed above apply where the injury is caused by the negligence or other tort of the worker’s employer, even though the damages are recovered in an action for breach of contract or in any other action. In other words, if the gist of the action is negligence, the limitations cannot be avoided by the worker framing the action in contract for breach of the employer’s duty to exercise reasonable care.
227 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 270. 228 See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 31E.
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2.
General law or a special category
Although employer’s liability is sometimes separated for the purpose of 77 exposition, the liability of the employer is simply a specific application of the general law rules of civil liability.
B.
Elements of liability
1.
Liability of employers for their own acts or omissions
The liability of employers for negligence is well established in Australia. 78 Employers will owe a duty of care to employees with respect to physical injury and property damage. It is commonly stated that the duty requires the employer to take care in relation to three areas: selection of appropriately skilled staff, provision and maintenance of proper plant and equipment, and the provision of a safe system of work229 but these are just specific examples of the general requirement that the employer must take reasonable care to prevent reasonably foreseeable injury to the employee. Once a duty of care has been established, the employee must establish that this duty has been breached (that the employer has been negligent) and that the breach of duty caused the damage for which the employee is bringing the claim.230
2.
Liability of employers for the acts or omissions of their employees and others
The ordinary rules of vicarious liability apply to the employer-employee 79 relationship. As long as an injury has been caused to an employee as a result of a tort by another employee acting within the scope of his/her employment, the employer will be vicariously liable. It should be noted that the concept of ‘course of employment’ is a broad one and an employer may be vicariously liable even for intentional wrongdoing of an employee.231 Even if there is no relationship of employer/employee, an employer may 80 be liable for acts of independent contractors which cause injury to other 229 See, generally, Wilsons and Clyde Coal Co Ltd v English [1938] AC 57; Neill v NSW Fresh Food & Ice Pty Ltd (1963) 108 CLR 362; McLean v Tedman (1984) 155 CLR 306. 230 For a detailed discussion see Trindade/Cane/Lunney (fn 199) Chapter 10.3. 231 See the discussion in New South Wales v Lepore (2003) 217 CLR 92.
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employees. The duty of care imposed on the employer is said to be nondelegable, meaning that the duty cannot be discharged by delegating the responsibility the employer owes to the employee to an independent contractor, even if the employer has exercised reasonable care in selecting the independent contractor.232 In the employment context, non-delegable duties were introduced to overcome the limitations of the defence of common employment (a defence that prevented the employer from being vicariously liable for the torts of an employee where the plaintiff was also an employee of the employer), and although that defence was abolished by statute by the middle of the twentieth century, the employer remains subject to non-delegable duties.
3.
Relevance of health and safety legislation in establishing liability
81 There are two ways in which health and safety legislation may be relevant to establishing liability. First, breach of a relevant health and safety obligation may be actionable of itself through the tort of breach of statutory duty.233 This will be particularly important where the duty imposed on the employer is absolute ie the employer must ensure that precaution X or Y is taken, as opposed to a statutory obligation to use reasonable care to ensure precaution X or Y is taken, which may differ little from the obligation imposed on the employer by the law of negligence. It should be noted, however, that not every breach of a statutory obligation gives rise to a private law cause of action by the person injured as a consequence of the breach.234 Apart from situations where the legislation expressly states whether breach of its obligations are actionable, it is for the courts to determine the answer to this question. Although, as a general rule, courts have been more willing to find that breaches of health and safety legislation can give rise to a private law action, each provision must be considered individually.235
232 For a recent affirmation see Leighton Contractors Pty Ltd v Fox [2009] HCA 35, [21]. 233 For a recent and controversial example see Parry v Woolworths Limited [2009] Queensland Supreme Court: Court of Appeal (QCA) 26 (breach of Workplace Health and Safety Act 1995 (Qld) if the worker is injured at work and there is a causal connection between the injury and the work; the onus is on the employer to establish a defence under the Act). 234 For a discussion of these issues see Trindade/Cane/Lunney (fn 199) Chapter 13. 235 Ibid.
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4.
Overall a fault-based or strict liability system
As is evident from the above discussion, an employer’s liability to employ- 82 ees can be strict or fault-based. The most common actions against employers are fault-based, no-fault compensation being available under the workers’ compensation schemes.
5.
Causation
The general rule of causation in Australia for tort cases is that the 83 defendant’s tort must have caused or materially contributed, on the balance of probability, to the plaintiff’s injury.236 This is applied in actions against employers. Australian courts have been reluctant to create special rules of causation for work-related injuries. In the recent decision of South Australia v Ellis237, the High Court declined to consider whether the exception to the normal rules of causation created by the House of Lords in Fairchild v Glenhaven Funeral Services Ltd238 applied in Australia. In Ellis, the plaintiff contracted lung cancer, one possible cause of which was occupational exposure to asbestos. The plaintiff’s case was unsuccessfully argued on the basis of traditional rules of causation, and on those rules the plaintiff could not show the asbestos was a probable cause of the lung cancer (the plaintiff had also been a smoker). Whether the High Court will adopt the radical Fairchild solution when directly confronted with the question remains to be seen.239
6.
Effect of victim’s contributory conduct
All Australian jurisdictions have legislation that apportions damages be- 84 tween a plaintiff and defendant where the plaintiff’s conduct amounts to contributory negligence and this legislation applies to actions between employers and employees. However, a number of jurisdictions have specific provisions applying to these actions. In New South Wales, damages for
236 See Henville v Walker (2001) 206 CLR 459 at 493 per McHugh J, cited with approval in RTA v Royal [2008] HCA 19, [85] per Kirby J. 237 [2010] HCA 5. 238 [2003] 1 AC 32. 239 See J Stapleton, Factual Causation and Asbestos Cancer (2010) 126 Law Quarterly Review (LQR) 351, pointing out the inconsistent results reached by state courts by adopting the orthodox approach in mesothelioma cases because of the different evidentiary bases for the disease accepted in different courts.
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deprivation or impairment of earning capacity are not to be reduced because of contributory negligence below the amount that the court estimates would have been payable by way of a commutation of weekly payments of compensation.240 In a number of jurisdictions, the worker is expressly required to mitigate his/her loss, which includes satisfactorily participating in rehabilitation.241 In Queensland, some of the statutory changes that were made to the common law of tort in the early part of the twenty-first century have been extended to claims for damages by employees from employers. These include stating a number of circumstances where the court can make a finding of contributory negligence242, reductions of 100 % for contributory negligence243, and presumptions of contributory negligence in cases where the worker is intoxicated.244 85 The defence of voluntary assumption of the risk is curtailed in New South Wales. Instead, where the defence would have been applicable, the worker’s damages are to be reduced by the amount the court considers would have been just and equitable on the presumption that the worker was contributorily negligent.245 Even without this provision, it should be remembered that it is extremely difficult to establish this defence against a worker, the courts being slow to find any acceptance of the risk by the worker.246
C.
Scope of protection
86 As for other tort claims, the primary heads of damages recoverable in an action by a worker against an employer will be for personal injury and
240 Workers Compensation Act 1987 (NSW) s 151N. Commutation of payments are discussed at no 47 f above. 241 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 267. Note that the worker is also under a duty to mitigate with respect to payments of workers’ compensation but that this may be discharged by participating in rehabilitation: s 231. 242 For example, where the worker failed to comply, so far as was practicable, with instructions given by the worker’s employer for the health and safety of the worker or other person, or failed at the material time to use, so far as was practicable, protective clothing and equipment provided, or provided for, by the worker’s employer, in a way in which the worker had been properly instructed to use them: Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 305H(1). 243 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 305G. Under the general apportionment provisions the High Court has held that there cannot be a reduction of 100 % as this is inconsistent with the damage being caused partly by the fault of both parties, a precondition for the apportionment legislation to apply: Wynbergen v Hoyts Corporation [1997] HCA 52. 244 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 305J. 245 Workers Compensation Act 1987 (NSW) s 151O. 246 See generally Trindade/Cane/Lunney (fn 199) Chapter 14.2.
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property damage. In claims for negligence, this is because a duty of care will be owed by the employer in respect of these kinds of harm; in claims for breach of statutory duty, this is because these are the kinds of harms that it was intended that the statutory duty would protect.247 It is also possible that psychological harm that amounts to a recognised mental illness may be protected in the tort of negligence as long as this was a reasonably foreseeable reaction to the employer’s breach of duty.248 It is unlikely that pure economic loss suffered by the worker would be covered as a duty of care would not be owed in the vast majority of cases. The common law does not provide compensation for mental harm falling 87 short of a recognised mental illness in the law of negligence.249 As discussed above, there are separate statutory remedies for sexual and racial discrimination.250
D.
Heads and levels of damages
1.
Same level as in other cases of personal injury
Common law claims against the employer by the worker were amongst 88 the first claims to be regulated by statute. In those jurisdictions, this resulted in a less generous regime for injured workers than for other victims of a tort who suffered personal injury. However, a number of jurisdictions have now modified the rules governing the award of damages in personal injury cases generally by incorporating some of the limitations that previously applied only to employer/worker claims.251 Moreover, some jurisdictions which never applied a restricted damages regime to employer/worker claims have now done so for non employer/
247 It is a requirement of the tort that the harm was of a type that was meant to be protected by the statutory duty; see Trindade/Cane/Lunney (fn 199) Chapter 13. 248 In some jurisdictions the liability in negligence for mental harm is governed by statute; see eg Civil Liability Act 2002 (NSW) Part 3. Note though that the damages may be limited by the legislation governing the common law claim between employer and worker: Workers Compensation Act 1987 (NSW) s 151P (only a limited class of persons can be awarded damages for psychological or psychiatric injury). 249 Tame v New South Wales; Annetts v Australian Stations Pty Ltd (2002) 211 CLR 317. An action for defamation (ie damage to reputation) may lie if the worker is defamed by the employer but there is nothing specific about the employer/worker relationship to this tort and it will not be discussed. 250 See eg Racial Discrimination Act 1975 (Cth); Sex Discrimination Act 1984 (Cth); AntiDiscrimination Act 1977 (NSW). 251 See eg Civil Liability Act 2002 (NSW) Part 2.
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worker claims.252 As can be gathered, the answer to the question is very much jurisdiction specific.
2.
Heads of recoverable damage
89 The main heads of recoverable damage are loss of earning capacity, medical expenses, and non-pecuniary loss. The main exception is in New South Wales, where damages are expressly restricted to loss of past and future earning capacity.253 In a number of jurisdictions, no action can be brought unless the worker has suffered a permanent impairment of at least 15 %.254 In Western Australia, where the worker’s permanent impairment is less than 25 %, the amount of damages is assessed as a percentage of a maximum figure, the maximum only to be awarded in a most extreme case in which the worker’s degree of permanent impairment is less than 25 %.255 One may query whether the most extreme case of a less than 25 % permanent impairment is a coherent concept.
3.
Costs of medical care
90 At common law the costs of medical, hospital and nursing care incurred by the worker are recoverable. The costs incurred must be reasonable.256 Costs of medical care will also include the costs of any care provided gratuitously to the plaintiff as a result of the accident.257 However, a number of jurisdictions do not allow a claim for this kind of loss.258
4.
Costs of rehabilitation assistance
91 At common law the economic losses associated with converting the worker’s home and other major assets to suit the worker’s post-injury cir-
252 See eg Civil Liability Act 2002 (Tas) s 3B, Part 7. 253 Workers Compensation Act 1987 (NSW) s 151G. 254 Workers Compensation Act 1987 (NSW) s 151H; Workers’ Compensation and Injury Management Act 1981 (WA) s 93K(4)(d); cf Workers Rehabilitation and Compensation Act 1988 (Tas) s 138AB (20 %). 255 Workers’ Compensation and Injury Management Act 1981 (WA) s 93K(5). 256 RP Balkin/JLR Davis, Law of Torts (4th edn 2009) para [11.23]. 257 See Griffiths v Kerkemeyer (1977) 139 CLR 161. 258 See Accident Compensation Act 1985 (Vic) s 134AB(24) (also excluding claims for medical expenses); Workers’ Compensation and Rehabilitation Act 2003 (Qld) ss 306E–306H.
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cumstances are recoverable.259 There is no specific head of damages for rehabilitation costs, separate from the costs of medical care and treatment.
5.
Lost earnings, loss of earning capacity, and loss of pension entitlements
A number of jurisdictions make specific provision for this head of da- 92 mages in claims by the employee against the employer. Some jurisdictions require that the loss exceed a threshold amount before damages under this head are recoverable, and also set a maximum amount that can be recovered.260 Other jurisdictions cap the maximum weekly amount that the worker can claim for loss of earning capacity and set a maximum retirement age by which the earnings are to be calculated.261 Loss of pension benefits is also a head of recoverable damages but its recovery is not regulated by legislation.262
6.
Non-pecuniary loss
A number of jurisdictions regulate the recovery of non-pecuniary loss in 93 actions by employees against employers (where its recovery is allowed). In Queensland, the amount recoverable is linked to the assessment of the worker’s impairment on an injury scale value, that value being entered into a formula to arrive at the amount recoverable (up to a maximum amount where the scale value is 100).263 In Victoria, damages for nonpecuniary loss are not recoverable unless assessed at over a threshold amount, and there is also a cap on the amount that can be awarded.264
259 Balkin/Davis (fn 256) para [11.21]. 260 Accident Compensation Act 1985 (Vic) s 134AB(22). Once the threshold amount is reached damages are awarded in full up to the statutory cap. 261 Workers Compensation Act 1987 (NSW) ss 151I, 151IA (maximum loss of weekly earnings not to exceed the maximum that would be payable as weekly benefit for workers’ compensation; maximum retirement age 65); Workers’ Compensation and Rehabilitation Act 2003 (Qld) (weekly loss of earnings capped at three times average weekly earnings). 262 Note, however, that the amount for lost pension benefits is calculated by reference to the amount recovered for loss of earnings, and where this amount is regulated there will be a flow-on effect for the amount recoverable for lost pension benefits. 263 Workers’ Compensation and Rehabilitation Act 2003 (Qld) ss 306O, 306P; Workers’ Compensation and Rehabilitation Regulations 2003 (Qld) ss 112D, 112E, Schedule 12. The amount recoverable is the same as in any fault-based tort claim: see Civil Liability Act 2003 (Qld) ss 61, 62; Civil Liability Regulation 2003 (Qld) ss 6, 6A, Schedule 6A. 264 Accident Compensation Act 1985 (Vic) s 134AB(22).
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The Commonwealth scheme also imposes a cap on the amount that can be recovered for non-pecuniary loss,265 and the cap on total damages to be awarded to a worker with a permanent impairment of 25 % in Western Australia necessarily limits the award for non-pecuniary loss.266
7.
Dependents
94 The claim for loss of dependency by dependents of a deceased worker (apart from workers’ compensation claims) is brought under statute. The structure of the statutory action is that if the deceased would have had an action if he/she had been injured rather than killed, any dependent (as defined) has an action against the defendant responsible for the death for loss of dependency.267 In those jurisdictions where the worker’s claim against the employer is regulated, the dependents’ claim is also affected as the worker’s claim is defined to include any claim by a dependent of the worker.268 Hence if the worker would have had no claim, or have had the claim limited in some way, the dependents can be in no better position. However, because of the limits on what the dependents may recover, not all of the limitations on the action of the living plaintiff will be applicable.269 Moreover, the dependents’ claim is for loss of dependency, not for loss of earnings, so the limits on loss of earnings recovery must in this context be read as applying to the maximum amount that can be recovered for loss of dependency.270 Where dependents have claimed compensation under workers’ compensation schemes, damages for loss of dependency are reduced.271
8.
Form of payment
95 As common law actions, damages are payable in the usual way of a lump sum.272 Where future losses are concerned, they must be reduced to net
265 266 267 268 269 270
Safety, Rehabilitation and Compensation Act 1988 (Cth) s 45(4). Workers’ Compensation and Injury Management Act 1981 (WA) s 93K(5). See eg Compensation to Relatives Act 1897 (NSW) s 3(1). See eg Accident Compensation Act 1985 (Vic) s 134AB(1). For example limits on claims for non-pecuniary loss. See eg Workers Compensation Act 1987 (NSW) s 151G(2) (excepting dependents from the limitation that the only claim is for loss of earning capacity), s 151I (applying the cap on loss of weekly earnings by the worker to claims by dependents). 271 See eg Workers’ Compensation Act 1951 (ACT) s 185; Accident Compensation Act 1985 (Vic) s 134AB(25). 272 In rare cases, a structured settlement may be ordered which will mean periodic payments to the plaintiff.
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present value and awarded as part of the lump sum. This process can only be carried out by giving a value to the real rate of return on investments (broadly, the rate of return after inflation and taxation have been taken into account). Some jurisdictions now specify the rate of return, varying between five and six percent.273
E.
Administration of claims
1.
Courts or specialised tribunals
As a general rule, claims for damages against employers are dealt with in 96 the ordinary courts of civil justice that have jurisdiction over tort claims. There are some exceptions for specific injuries where, at first instance, the claim is heard in a statutory tribunal.274
2.
General civil procedure or special procedures?
The general rules of civil procedure apply in common law actions by 97 employees against employers. In individual jurisdictions some modifications to the general rules are mandated.275 The most comprehensive variation is in Queensland, where specific pre-trial procedures are listed276, a compulsory pre-trial mediation conference is required277, and the mode of trial and who the defendant is must be specified.278 In Victoria, the WorkCover Authority – effectively the insurer – must make a statutory offer to settle after holding a mandatory conference.279
273 Accident Compensation Act 1985 (Vic) s 134AB(32) (6 %); Workers Compensation Act 1987 (NSW) s 151J (5 %). 274 See eg Dust Diseases Tribunal 1989 (NSW) s 11 (claims for damages for dust diseases to be heard in the Tribunal). 275 See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 136, allowing the employer to serve notice to a worker to commence a common law action within a specified time. 276 Workers’ Compensation and Rehabilitation Act 2003 (Qld) Chapter 5, Part 5 (imposing notice requirements, joint experts report etc). 277 Workers’ Compensation and Rehabilitation Act 2003 (Qld) Chapter 5, Part 6; also required in New South Wales (Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 318A). 278 Workers’ Compensation and Rehabilitation Act 2003 (Qld) Chapter 5, s 300 (defendant to be employer), s 301 (exclusion of jury trial). 279 Accident Compensation Act 1985 (Vic) s 12.
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3.
Reviews and appeals
98 The general rules of civil procedure apply for appeals from decisions in common law actions by employees against employers.
4.
Speed of claims’ resolution and administrative costs
99 As a general rule, actions for damages in the civil courts may take longer than claims for compensation under workers’ compensation schemes. In some jurisdictions this is ensured by not allowing workers to bring a common law claim until six months have elapsed from the date notice of the injury was given to the employer280 or by requiring that certain preconditions are met before court proceedings can be brought.281 More generally, the time limits imposed for decision under workers’ compensation schemes result in most decisions being made more quickly than common law proceedings brought for the same injury.282 100 A number of jurisdictions have specific provision relating to costs in relation to common law claims between employers and workers. The jurisdictions differ significantly; some set maximum amounts of costs that can be charged and introduce a general rule that each party is to bear their own costs283 while others set out in detail when costs are to be awarded against each party284 and how costs are to be calculated.285 Other than a (very) broad goal of limiting the amount of legal costs incurred in
280 Workers Compensation Act 1987 (NSW) s 151C. 281 Workers’ Compensation and Rehabilitation Act 2003 (Qld) s 295. 282 New South Wales is often identified as the worst jurisdiction for delay. Writing in 2009, Spigelman CJ of the Supreme Court of New South Wales said that there was no reason why District Court cases should not be disposed of to final hearing within 12 months, and within two years in the Supreme Court, but that many cases take longer than they should (JJ Spigelman, Case Management in New South Wales, Paper prepared for the judicial delegation from India, Sydney, 21 September 2009, p 29 f ). For an informative comparative study on delay in Australian and German courts see A Marfording/A Eyland, Civil Litigation in New South Wales: Empirical and Analytical Foundations with Germany, University of New South Wales, Faculty of Law Research Series 2010, Working Paper 28, . 283 Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 346, Workers’ Compensation Regulation 2003, Part 19. A restriction on costs also applies in Western Australia: Workers’ Compensation and Injury Management Act 1981 (WA) s 87. 284 Workers’ Compensation and Rehabilitation Act 2003 (Qld) Chapter 5, Part 12. 285 See WorkCover Legal Costs Order 2006 (Vic), made under Accident Compensation Act 1985 (Vic) s 134AG.
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this type of case, it is difficult to discern any common theme in the costs provisions of the various jurisdictions.286
F.
Rights of recourse
1.
Against other employees or their liability insurer?
This issue has been discussed in relation to possible claims by workers’ 101 compensation institutions against fellow employees.287 For the reasons outlined in that discussion it is very unlikely that there could be any recourse against another employee liable in tort for the worker’s injury.
2.
Against third parties
Where two parties are liable in tort for the same damage, all Australian 102 jurisdictions have legislation providing for a contribution between tortfeasors and there are few specific provisions in workers’ compensation legislation that concern this issue.288 As any compensation payment made by the employer/insurer to the worker is generally deductible from any damages recoverable by the worker in a common law action against the employer, the compensation payment also counts as payment of the worker’s damages award for the purposes of contribution proceedings between the employer and an independent tortfeasor.289 Where the damages are assessed against the employer differently from how they are assessed against a non-employer tortfeasor, the amount of contribution should only relate to the amount of damages assessed as against the employer.290 In Western Australia, if the employer is only liable to pay
286 For example by way of comparison to New South Wales, it is rare in Victoria for each party to bear their own costs; one of the parties must pay the costs of the other depending on the amount of the judgment and the amount of the statutory settlement offer made by WorkCover: Accident Compensation Act 1985 (Vic) s 134AB(28). 287 See no 66 above. 288 An exception is Victoria, which provides that liability to pay damages in a common law proceeding is to be apportioned amongst those liable by agreement or, in default, as is just and equitable as decided by a court: Accident Compensation Act 1985 (Vic) s 129P. Rather, most provisions are concerned with the employer’s rights against the third party, either where the employer is liable only to pay the worker compensation or where the employer is also liable to pay the worker common law damages: see eg Worker’ Compensation Act 1987 (NSW) s 151Z. 289 See eg Workers Rehabilitation and Compensation Act 1988 (Tas) s 133(2). 290 In relation to the third party’s claim against the employer, see Workers Compensation Act 1987 (NSW) s 151Z(2)(c), (d), which reduces the amount recoverable by the worker
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reduced damages because the worker’s impairment is less than 25 %, the employer is not liable to make a contribution in respect of any damages awarded against another person in relation to the injury.291 If an action is brought solely against an employer, it seems the employer could join a third party to the action, and if the third party was also found liable, it would have to pay 100 % of the damages awarded to the worker.
G.
Interaction with social welfare systems and private insurance
1.
Deductibility of benefits received from social welfare agencies
103 The deductibility of social health and social welfare benefits is governed by statute. The provisions are complex but, in principle, damages are assessed without reference to any social health or social welfare payments.292 However, there is legislation allowing for recoupment by the relevant government department of all or some of the benefits paid to the plaintiff worker (see below).
2.
Recourse of social welfare agencies and private insurers against the employer
104 An award of damages is a compensation payment in the same way as an award of workers’ compensation is a compensation payment, for the purpose of the recoupment provisions that apply to social health and social welfare benefit payments. These have been discussed previously.293 Although both recoupment regimes broadly operate to exclude ‘doubledipping’, they operate in slightly different ways. For social health benefits, the scheme aims to recoup the amount of benefits to the plaintiff worker up to the date of judgment or settlement.294 Conversely, the recoupment scheme for social welfare benefits excludes eligibility for social welfare payments for a period beginning on the day when the loss
291 292 293 294
50
against the third party by the difference between the amount of contribution recoverable from the employer on the damages as assessed against the third party, and the amount of contribution recoverable against the employer as assessed against the more limited damages regime for actions against the employer. Workers’ Compensation and Injury Management Act 1981 (WA) s 93K(8). See Shield Contractors Pty Ltd v McGill [1997] QCA 359. See no 5 above. Health and Other Services (Compensation) Act 1995 (Cth) Part 3.
Australia
of earning capacity began and ending a certain number of weeks later as determined by a formula.295 If, however, social welfare benefits are paid in this period they can be recouped from either the party paying the compensation or the worker.296 Private health insurers who insure on an indemnity basis are subrogated 105 to the insured’s rights against any third party.297
H.
Insurance
1.
Voluntary or mandatory?
Of the Australian jurisdictions that allow the employee a common law 106 claim against the employer, all but one require the employer to take out insurance against any common law liability to pay damages to a worker.298
2.
General liability insurance or special policy
Most jurisdictions provide some detail as to the form that an accident 107 insurance policy should take.299 In jurisdictions where insurance is provided by the regulatory body (WorkCover), standard policies are issued.300 In other jurisdictions, particular provisions are mandatory but others may 295 Social Security Act 1991 (Cth) ss 1169, 1170. 296 Social Security Act 1991 (Cth) Part 3.14 Division 4 Subdivisions A, B. 297 Personal accident insurance is not indemnity insurance and does not entitle the insurer to exercise these rights. 298 See eg Workers Compensation Act 1951 (ACT) s 144. The primary exception is Western Australia, which only requires the employer to insure its liabilities under the workers’ compensation scheme (Workers’ Compensation and Injury Management Act 1981 (WA) s 160). However, the Standard Indemnity Policy for workers’ compensation liability also provides cover for common law damages, if certain conditions are met, up to a maximum of AU$ 50,000,000 for injuries arising from any one event: . The Commonwealth scheme which applies to seafarers, which is an employer liability scheme, also does not require insurance against the employer’s common law liability to the employee but this is much less significant as the common law liability is severely truncated: Seafarers Rehabilitation and Compensation Act 1992 (Cth) Part 4. 299 The exception is Tasmania, which simply requires that the policy insure the employer against the liability to pay compensation and damages: Workers Rehabilitation and Compensation Act 1988 (Tas) s 97. 300 See eg Accident Compensation (WorkCover Insurance) Act 1993 (Vic) s 9. The standard policy is available at .
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be added by agreement between the insurer and the employer.301 Where there is no statutory requirement to insure against common law liability, specific policies are also mandated in a number of jurisdictions in relation to the employer’s liability to insure against liability to pay compensation.302
3.
Basic principles of employers’ liability insurance
108 The basic principles are set out in the legislative provisions that require insurance to be taken out against the employer’s liability for compensation and or/damages; this determines the scope of the coverage. Generally, insurance must be taken out for the full amount of the employer’s liability to pay workers’ compensation and for an unlimited amount for other liability independent of the Act relating to the injury or death of a worker.303 The triggering event is the creation of the liability in the employer to pay either or both of workers’ compensation or common law damages.304 The employer is usually under an obligation to notify the insurer of the injury within a short period.305 Some jurisdictions have an excess amount before the insurer becomes liable.306 109 Most jurisdictions limit the circumstances in which an insurer can cancel the insurance policy.307 Consent of the regulatory body may be required.308 301 Workers Compensation Act 1987 (NSW) s 159; Workers Compensation Regulation 2003 (NSW) reg 49, Form 3. 302 In the Northern Territory, there is no liability to insure against common law liability as it has been abolished but Workers Rehabilitation and Compensation Act (NT) s 126, Schedule 2, specifies the provisions of the policy for workers’ compensation. Similar prescription applies in Western Australia (Workers’ Compensation and Injury Rehabilitation Act 1981 (WA) s 169, ) where common law liability exists but there is no obligation on the employer to insure against it. 303 See eg Workers Compensation Act 1987 (NSW) s 155. 304 See eg Workers Compensation Regulation 2003 (NSW) reg 49, Form 3, Clause 3. 305 In New South Wales this is 48 hours (Workers Compensation Regulation 2003 (NSW) reg 49, Form 3); in Western Australia ‘as soon as practicable’ (Standard Employer Indemnity Policy, Condition 3, ). 306 See eg Workers Compensation Act 1987 (NSW) s 160. In Tasmania a similar result is reached by prohibiting the employer from insuring for small initial amounts of compensation payable to the worker: Workers Rehabilitation and Compensation Act 1988 (Tas) s 979(1A). 307 See eg Workers Compensation Act 1951 (ACT) s 153. 308 Workers Compensation Regulation 2003 (NSW) reg 49, Form 3, Clause 18 (consent of Workcover NSW required to cancel policy, although insurers are given advance consent in three cases: employer ceased trading, liquidator/trustee in bankruptcy appointed,
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In New South Wales the prescribed terms of policy state that cover is conditional on the employer complying with the provisions of the policy, the Act and the regulations under the Act.309 In Western Australia, an insurer may not refuse cover because of any act or omission of the employer where the act or omission did not cause or contribute to the injury for which compensation is claimed, but the insurer’s liability to indemnify the employer is reduced by the amount that fairly represents the extent to which the insurer’s interests were prejudiced as a result of the act or omission.310 In Victoria, the standard insurance policy provides that a breach of a provision or condition of the policy allows the insurer to recover the loss suffered by the breach as well as allowing the insurer to deny liability. Other jurisdictions do not deal specifically with the issue of non-compliance with the terms of the policy.311
IV. Evaluation and Conclusions A.
Compensation
It is very difficult to assess quality in the absence of uniform criteria. 110 Whilst the workers’ compensation schemes in theory provide more immediate access to benefits than a damages claim, there is some evidence to suggest the increasing privatisation of the schemes through the increasing role of private insurers has lead to increasing dissatisfaction with the schemes by injured workers.312 Moreover, although common law damages remain higher than those offered under workers’ compensation schemes, the gap has now been reduced, or not eliminated, so those workers who are injured as a result of fault are not quite so privileged a class as they were in comparison to those only entitled to workers’ compensation benefits. However, whether the schemes, individually or in combination, provide adequate benefits to injured workers is ultimately a political question.
309 310 311
312
business has been sold: ). Workers Compensation Regulation 2003 (NSW) reg 49, Form 3, Clause 24. Workers’ Compensation and Injury Management Act 1981 (WA) s 174A. Note though that in the standard policy used in Western Australia, the insurance cover is provided subject to a list of conditions that must be satisfied: see Standard Employer Indemnity Policy . See M Parrish/T Schofield, Injured Workers’ Experiences of the Workers’ Compensation Claims Process: Institutional Disrespect and the Neoliberal State (2005) 14 Health Sociology Review 33.
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B.
Prevention
111 It is very hard to assess whether the incentives to ensure safety at work are appropriate. One factor that can be considered with relative ease is the statistics relating to accidents at work. In New South Wales, the largest jurisdiction in Australia in terms of population, the most recent Statistical Review (2008/2009)313 showed the ten year trend from 1990/2000 to 2008/ 2009 for injuries resulting in permanent impairment was a reduction of 42 %. The number, incidence and frequency rates for major employment injuries in the same period also show a significant reduction although there have been minor increases for the last two years. For the same period there has been a 10 % reduction in claims for temporary disability. The fatality incident rate (the number of fatalities per 100,000 employers) has fallen by 57 % since 1987/1988. However, the fact remains that for the 2008/2009 period there were 139 deaths and 133,000 employment injuries reported, giving an injury rate of 4.33 %.314 Other jurisdictions also show a reduction in the long term trend. In Victoria, claims for 1,000 workers fell from 11.10 to 10.8 in one year, as did hospital admissions of 2 or more days per 10,000 workers, from 7.39 to 7.30.315 Between 2003/4 and 2008/9, total claims fell from just over 32,000 to just over 28,600.316 A similar reduction in claims can also be seen in South Australia, where total claims against registered employers and self insurance have fallen by about 5 % a year since 1996/7 until 2009.317 112 Another point that must be considered is that workers’ compensation regimes deal primarily with the consequences of workplace accidents. Although there are various monitoring and research obligations imposed on the regulatory agencies, the primary legislation dealing with workplace safety is occupational health and safety legislation.318 In many ways, the main legislative framework for ensuring the safety of workplaces,
313 Located at . 314 The Report uses an incident rate, which is the number of employment injuries and diseases divided by the total number of employees multiplied by 1000. This figure has been converted to a percentage. 315 WorkSafe Victoria, Annual Report 2009, p 21. Fatalities also fell from 77 to 72. 316 Ibid. 317 WorkCover South Australia, Statistical Review Part I, 2008–2009, p 12. But some of the reduction may be explicable by the changes to eligibility made during that period: K Purse, From WorkCover to WorkCover Lite in South Australia (2009) 22 Australian Journal of Labour Law (AJLL) 188. 318 Each jurisdiction currently has its own occupational health and safety law (see eg Occupational Health and Safety Act 2000 (NSW)) but it has been agreed that national legislation will be introduced in each jurisdiction in 2012. The history leading up to
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including accident prevention, lies in this legislation. In other words, any preventative effect of compensation payments or common law damages must be seen in the context of there being another set of laws primarily responsible for ensuring workplace safety.319
C.
Overall costs
Again, it is difficult to assess whether costs are reasonable in the abstract. 113 Broadly, the costs of administering the workers’ compensation systems are less than the common law for two reasons. First, the decision making procedures, both at first instance and at intermediate appellate levels, is less cumbersome and formal than for common law liability, which by and large uses the ordinary courts of civil justice.320 Although evidence is hard to find, it seems that initial resolution of workers’ compensation claims are handled as they were meant to be. For example, in Western Australia, workers received a liability notification from the insurer within the required time in 86 % of cases.321 Second, the costs of establishing fault are avoided in the no-fault workers’ compensation, and there are also evidentiary aids to establishing causal links in workers’ compensation claims that are not available in common law actions. These reduce the overall costs of awarding workers’ compensation benefits in comparison to common law claims.322
D.
Interaction between workers’ compensation and private law
The detail of this interaction has been considered above. At a broader 114 level, the different regimes for common law damages and workers’ compensation are reflective of another problem with the system of dealing with compensation for accidents in Australia. There is first a differentia-
319
320 321
322
this national legislation can be found on the SafeWork Australia website (). There are obviously links between occupational health and safety and workers’ compensation and in some jurisdictions both schemes are regulated by the same body; see eg WorkSafe Victoria; cf Queensland, where there is a separate body responsible for occupational health and safety, Workplace Health and Safety Queensland. Although, as pointed out at no 101 above, there are restrictions on costs awards in common law claims in many jurisdictions. WorkCover WA, Workers’ Compensation and Western Australia: Statistical Report 2005/6 – 2008/9, p 15. But for a less charitable look at the process when liability is disputed, see R Guthrie, Improper Conduct and Good Faith in Workers Compensation Claims (2001) Insurance Law Journal 141. See K Purse, Common Law and Workers’ Compensation in Australia (2000) 13 AJLL 260.
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tion between injuries caused by fault (common law) and those without fault (workers’ compensation, social welfare). However, even within the first category, much depends on the context of the fault-based injury. As the author of an influential report on reform of the common law of negligence, Justice David Ipp323, has written, the levels of compensation for a fault-based injury may depend on whether the fault occurred in a workplace accident, a motor vehicle accident, or some other kind of accident.324 This remedial patchwork quilt makes little sense in terms of accident victims themselves.
E.
Plans for reform
115 Without doubt, the most significant reform that could take place would be the introduction of a uniform system of workers’ compensation. This was recommended in the 2004 report of the Productivity Commission of Australia, National Workers’ Compensation and Occupational Health and Safety Frameworks325, but the recommendations in this respect were not accepted by the then federal government.326 More recently, SafeWork Australia has been given responsibility for developing and instituting the National Workers’ Compensation Action Plan.327 This is a high level strategic plan based on achieving reform through consensus and it is interesting to note that it has not been listed as a priority for SafeWork Australia for 2011–12. At the time of writing it seems unlikely that there will be any progress on national laws for the foreseeable future.
323 Review of the Law of Negligence, 2002 (available at ). 324 Justice D Ipp, The Politics, Purpose and Reform of the Law of Negligence (2007) 81 Australian Law Journal 456, 461. 325 Productivity Commission, National Workers’ Compensation and Occupational Health and Safety Frameworks, Productivity Commission Inquiry Report No 27, March 2004, available at . For criticism of the recommendations, see K Purse/R Guthrie/F Meredith, Faulty Frameworks: The Productivity Commission and Workers’ Compensation (2004) 17 AJLL 306. 326 There is an interesting contrast with occupational health and safety law, where the proposals for a similar national framework have met with much greater success. For reasons why this might have occurred see K Purse/R Guthrie, Workers Compensation Policy in Australia: New Challenges for a New Government (2008) Journal of Applied Law and Policy 99, 106–108. 327 National Workers’ Compensation Action Plan 2010–2013 .
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Another factor, related to the above, is the question of whether certain 116 large corporations which have multi-jurisdictional operations will be allowed to register under the Commonwealth scheme as self-insurers. A fiercely contest decision of the High Court held that there was no constitutional barrier to the Commonwealth passing legislation that allows this to occur, but state governments are concerned that such corporations might be able to exit their own schemes, causing increasing economic pressures on the state schemes. At the date of writing, the Federal Government is maintaining an embargo on the granting of new licences for eligible companies under the Commonwealth scheme but this is dependent on the states adopting national occupational health and safety legislation by a specified date.328 If, as now seems possible, some states do not do so, this issue is likely to re-emerge as an area of major controversy in the future.329 At a state level, the primary concerns remain ones of cost. In 2010, the 117 Queensland Department of Justice and Attorney-General published a discussion paper on the future of the Queensland scheme.330 Over the previous two financial years of 2007–2008 and 2008–2009, WorkCover Qld’s investment returns fell by AU$ 800 million and there was an underwriting shortfall of AU$ 500 million. Moreover, the paper estimated that common law claim liabilities would rise from 41 % of all payments in 2008–2009 to 64 % in 2017–2018. Not surprisingly, the proposed reforms to reduce expenditure included restricting further the circumstances in which common law claims can be brought.331 Of course, premium or contribution rates could be increased but it must always be remembered that the schemes involve political compromises between different interest groups and reform proposals are often made by parties with a vested interest.332 The result, as can be seen from the above discussion, leads to a
328 See Parliamentary Library, Background Note: Towards National Workplace Safety and Workers’ Compensation Systems: A Chronology, available at . 329 For discussion see Guthrie/Purse/Meredith (2006) 17 Insurance Law Journal 256. 330 The Queensland Workers’ Compensation Scheme: Ensuring Sustainability and Fairness, Discussion Paper, Department of Justice and Attorney General (Qld), February 2010. 331 For example by applying more consistently the damages regime that applies in non employer-employee cases, allowing common law claims only where employment was the major significant contributing factor to the injury, and by relaxing the rules as to when costs can be awarded against a plaintiff. Most the proposed reforms were implemented by legislation in mid 2010. 332 See eg Workers Compensation: A Program for Reform in South Australia (2007), proposals put forward by Business SA, a leading business advocacy group in South
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wide variety of different schemes, frequently changed, with wide variations in detail between jurisdictions.
F.
Overall quality of each system independently and in combination
118 Very few justifications are given in Australia for the continuing existence of no-fault workers’ compensation schemes. Such schemes have been in place for over 100 years and, as was noted by the New South Wales Law Reform Commission in 1982, the only serious suggestion for abolition of workers’ compensation was the Woodhouse Committee which recommended the introduction of comprehensive no-fault accident compensation schemes. As the Commission noted, ‘There have been many official inquiries into the workers’ compensation system in Australia, but they have been concerned with recommending improvements to the established framework.’333 This trend has remained: neither the Industry Commission Report of 1994 nor the Productivity Report of 2004 into workers’ compensation considered its abolition.334 119 However, a number of academics have pointed out the inequalities inherent in singling out one group of accident victims for special treatment. Commenting on reforms of the Victorian scheme which attempted to reduce costs of the workers’ compensation scheme, Glaser and Laster comment:335 ‘The paradox of Workcare is that it is a selective right granted to those with the status of “worker”. Yet the same system which delivers special benefits to the privileged group is required to ensure that its beneficiaries leave it as speedily as possible. It is assumed that the scheme can resolve the paradox and at the same time is able to define clear criteria for eligibility, minimise conflicts both at an individual and political
Australia (available at ). 333 New South Wales Law Reform Commission, Accident Compensation, Issues Paper No 2, 1982, para 3.59. 334 Industry Commission, Workers’ Compensation in Australia, Report No 36, 1994; Productivity Commission, National Workers’ Compensation and Occupational Health and Safety Frameworks, Report No 27, 2004. 335 W Glaser/K Laster, The Workers Compensation Scheme in Victoria: Who Takes the Blame? (1990) 25 Australian Journal of Social Issues 137, 150 f. See also H Luntz, The Role of Compensation in Health and Safety at Work (1981) 23 Journal of Industrial Relations 383; id, A Personal Journey through the Law of Torts (2005) 27 Sydney Law Review 393, 398 f.
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level and achieve success in financial and managerial terms. However, the scheme breaks down precisely because of its selective nature: a perception is created that status is a more important determinant of entitlement than need. Workers are thus envied because of their favoured access to benefits and services and are at the same time scapegoated when their use of such benefits and services is seen as “excessive”... Perhaps the time has come when workers as a class should be neither favoured nor stigmatised.’ Whatever the reality – which is that workers’ compensation benefits have 120 been cumulatively reduced over the last twenty years - the rhetoric relating to workers’ compensation is that such schemes are part of a civilised society that cares for its workers. As the Chair of Worksafe Victoria put it in the Annual Report for 2009, ‘Regardless of the economic outlook, we have an obligation to the Victorian community to keep improving. It is this social contract that drives us to deliver the best possible value and service.’336 As the Industry Commission report noted, workers’ compensation schemes have traditionally been seen as an appropriate form of social support, complementing the social security system.337 Although this obviously begs the question of why different (even if complementary) schemes of social welfare should be in place for different kinds of accident victims, it seems to have been assumed that the scale and value of workplace injuries justifies the different treatment.338 It cannot be denied that any attempt to abolish workers’ compensation, 121 even to incorporate it into a wider scheme, would be fraught with political risk. Glaser & Laster, quoted above, after making the case for abolition of the special treatment for workers, immediately accept that such a reform might not be socially or politically acceptable. A reason is provided by Arup:339 ‘For the victim, inclusion in the workers’ compensation system also means that the financial support is styled as compensation for an individual wrong or at the least for the human toll which the production system exacts, rather than a dole payment for failure to be competitive in the labour market. For the employer, inclusion signifies an
336 WorkSafe Victoria, Annual Report for 2009, p 11. 337 Industry Commission, Workers’ Compensation in Australia, Report No 36, 1994, p XXIX. 338 See Key Point 1 in the Overview of the Productivity Commission, National Workers’ Compensation and Occupational Health and Safety Frameworks, Report No 27, 2004, which stresses the economic impact of work-related injuries. 339 C Arup, A Critical Review of Workers’ Compensation, in: M Quinlan (ed), Work and Health: The Origins, Management and Regulation of Occupational Illness (1993) 271.
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assignment of responsibility for wrongdoing or for complicity in production’s toll, rather than the anonymity of a tax system in which all citizens share.’ 122 Whatever the abstract merits of these arguments, they are politically persuasive. ‘Employee preference’ in social welfare provision is likely to remain a reality for some time. 123 The position is more complicated when it comes to the relationship between workers’ compensation and common law liability. As we have noted above, most Australian jurisdictions allow common law actions against the employer, at least in a modified form.340 Initially, as was frequently the case with workers’ compensation legislation, workers needed to choose between the common law action or the statutory workers’ compensation benefits. Hence from its inception, compensation for workplace accidents in Australia has two streams. Moreover, as the availability of negligence actions in respect of workplace accidents increased because of the demise of the defence of common employment, the reduction of contributory negligence from a complete to partial defence, and the difficulty of establishing the assumption of risk defence in the employment context, the relationship between common law claims and workers’ compensation was the subject of legislative reform. Those in favour of retaining the common law action have stressed that it accords with long standing notions of justice (what today might be called ‘corrective justice’) in that compensation is tailored to meet the needs of the injured worker, that it encourages safety in the workplace, and that it overcomes the inadequacy of the level of compensation under workers’ compensation legislation.341 None of these reasons are convincing. Many workers’ compensation schemes have eliminated the common law claim in respect of workplace injuries; this is simply seen as the trade-off to provide wider no-fault benefits. Evidence that tort liability acts as a deterrent is notoriously equivocal and direct regulation of the workplace through occupation health and safety legislation may well be more effective in improving safety in the workplace.342 And if workers’ compensation benefits are inadequate, the solution is not to provide a remedy for the privileged class of workers who are tort victims but to increase levels of 340 The main exception is South Australia, where the common law action was abolished as part of reforms carried out in the 1980s which extended the period during which workers’ compensation benefits were payable: see Purse (2005) 14 Health Sociology Review 8, although note that many of these reforms have now been reversed (Purse (2009) 22 AJLL 188). 341 Purse (2000) 13 AJLL 260. 342 Ibid.
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benefit across the board for injured workers. It must be admitted, however, that this last possibility seems very unlikely given the political climate. Seen in this context, the two-track scheme for compensating victims is likely to be in place for the foreseeable future, even if its presence may actually hinder more wide ranging reform in the future.
61
Employers’ Liability and Workers’ Compensation: Austria Ernst Karner and Felix Kernbichler
I.
Introduction
A.
Basic system of compensation and liability
1.
Historical development
The Austrian accident insurance law currently in force began to develop 1 more than 100 years ago during the Industrial Revolution. The Austrian Accident Insurance Act of 1887 (österreichisches Unfallversicherungsgesetz 1887), which followed the German model, was enacted only three years after the German Accident Insurance Act of 1884 (deutsches Unfallversicherungsgesetz 1884) which, at the instigation of Bismarck, had adopted the long-disputed concept of compulsory insurance.1 The starting point of Austrian accident insurance was to provide employees with protection in respect of particular hazards to their physical integrity which arose by reason of the use of machinery.2 The general law of compensation only offers employees limited protection from the consequences of an accident because the employer is often not at fault in respect of the accident and because it is feared that litigation between employer and employee would undermine workplace harmony.3 The basic principle that employers assume liability for the risks they create was, therefore, actualised via an employer financed accident insurance. In order to offset the fact that the 1 For an account of its historical development see K Grillberger, Österreichisches Sozialrecht (7th edn 2008) 4 ff; T Tomandl in: T Tomandl, System des österreichischen Sozialversicherungsrechts (Loseblattsammlung – in the following: Tomandl) 2.3.1. 2 Tomandl/Tomandl (fn 1) 2.3.1. 3 See Oberster Gerichtshof (Austrian Supreme Court, OGH) 2 Ob 530/51 = Entscheidungen des OGH in Zivil- und Justizverwaltungssachen (SZ) 24/12; E Kunst, Haftpflicht- und Sozialversicherung, Soziale Sicherheit (SozSi) 1977, 177; Tomandl/Tomandl (fn 1) 2.3.1; critically K Grillberger, Die Haftung bei Arbeitsunfällen unter Arbeitskollegen, Deutsches Recht der Arbeit (DRdA) 1974, 256.
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accident insurance premium is paid entirely by the employer, the latter is principally absolved from all liability for personal injury arising out of work accidents.4 2 Initially, only the particular risks which arose out of dangerous operations were insured. This insurance, known as operational insurance (Betriebsversicherung), was successively widened in its application and was eventually replaced, initially in 1926 in respect of employees, by personal insurance (Personenversicherung). From then on all employees in all businesses were insured against any accident which occurred at work. The journey to and from work and work-related illnesses were covered even earlier. In 1928 certain categories of farmers and foresters were the first self-employed persons given accident insurance protection. 3 Between 1939 and 1945 the laws of the German Reich were applied in Austria. During this period accident insurance regarding farm workers was extended. After 1945 German accident insurance law initially remained in force and was only replaced in 1956 by the General Social Security Act (Allgemeines Sozialversicherungsgesetz, ASVG), which was built upon the German rules.5 The ASVG consolidated the illness, accident and old age insurances for employees and workers. Self-employed persons engaged in commercial as well as persons engaged in certain altruistic activities were included for the first time; the latter even if the person injured was not insured so that the accident insurance scheme incorporated an element of social security.6 4 A further important enhancement occurred when the 32nd amendment to the ASVG7 (32. ASVG-Novelle) extended insurance protection to schools and higher educational institutions.8 5 Finally, the amendments to the ASVG and to the Social Security Act for the Self-Employed (Gewerbliches Sozialversicherungsgesetz, GSVG) in 1997 and 1998 integrated freelancers (freie Dienstnehmer) and the new self-employed9 (Neue Selbstständige) in the social insurance cover in order to create a
4 Tomandl/Tomandl (fn 1) 2.3.1; W Brodil/M Windisch-Graetz, Sozialrecht in Grundzügen (6th edn 2009) 87 f. 5 Tomandl/Tomandl (fn 1) 2.3.1. 6 Ibid, 2.3.1. 7 Bundesgesetzblatt (Federal Law Gazette, BGBl) 1976/204. 8 For further details see Tomandl/Tomandl (fn 1) 2.3.2.3.3; see also M Galler, Die Stellung von Studierenden in der Sozialversicherung, Juristische Ausbildung und Praxisvorbereitung (JAP) 2006/207, 30 ff. 9 This catch-all term is intended to include all self-employed activities, see Brodil/WindischGraetz (fn 4) 38.
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comprehensive social insurance obligation for all those who are commercially active.10 Thus, Austrian accident insurance has three aims: to protect the insured in 6 their role as an economically active person, schoolchild or student and as a person engaged in providing voluntary assistance to others.11 Admittedly, this broad objective is only partly in line with the original idea of financing by employer contribution.12
2.
Basic system
The basic idea of accident insurance was to displace employers’ liability by 7 an insurance13 solely paid for by the employers, providing them with a privileged position in terms of liability. This employers’ liability privilege (Dienstgeberhaftungsprivileg) was embo- 8 died in § 333 subsec 1 ASVG which provides that an employer is only liable to compensate an insured for a loss arising out of a physical injury caused by a work accident or a work-related illness in case of intent. Even in such cases not the whole loss has to be compensated because the insured’s or their surviving dependents’ claim for damages is, according to § 333 subsec 2 ASVG, reduced by the amount of the statutory accident insurance. § 333 subsec 3 ASVG provides for an exception where the work accident is caused by a vehicle for which the business carries enhanced liability.14 Work colleagues, as well as the employer, enjoy a liability privilege by 9 means of a quite complex statutory ‘detour’.15 Insofar as the social insurance carrier has to provide any benefit to the injured person, their claim for damages is assigned by operation of law to the social insurance carrier which has an action for recourse (§ 332 ASVG).16 However, if the tortfeasor is a colleague of the insured, the insurance carrier, who is subrogated to
10 11 12 13
14 15 16
Ibid, 19. Tomandl/Tomandl (fn 1) 2.3.1. In addition see no 155 ff below. On this O Edlbacher, Wandel und Krise des Haftungsgrundes des Verschuldens, in: FS Wilburg (1965) 89; H Koziol, Österreichisches Haftpflichtrecht II (2nd edn 1984) 221; Tomandl/Tomandl (fn 1) 2.3.1; Bericht des Ausschusses für soziale Verwaltung 613 BlgNR 7. GP; OGH 4 Ob 71/57 = SZ 30/37; 4 Ob 66/63 = Zeitschrift für Verkehrsrecht (ZVR) 1964/62; 8 Ob 146/77 = SZ 50/156. For further details see no 118 below. For further details see no 97 ff below. There are comparable provisions in § 190 Social Security Act for the Self-Employed (Gewerbliches Sozialversicherungsgesetz, GSVG), § 178 Social Security Act for Farmers (Bauern-Sozialversicherungsgesetz, BSVG), § 125 Social Security Act for Civil Servants (Beam-
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the injured person in this claim, can assert this claim according to § 332 subsec 5 ASVG only if the insured event was caused intentionally, by gross negligence or if a vehicle for which the business carries enhanced liability is involved. In the latter case the right to recourse is limited to the amount insured. Hence, the social insurer’s recourse is excluded where the colleague caused the damage through slight negligence or is limited to the value of the insurance if a vehicle is involved. Consequently, the colleague is not held liable in such cases. In contrast, the injured person can still claim compensation from the colleague in respect of damage which is not covered by the social insurance.17 The injured person’s direct claim for damages for pain and suffering (Schmerzengeld) and compensation for property damage, therefore, remain valid. 10 The employer’s liability privilege is, as already indicated, generally seen as a trade-off for the financing of accident insurance. This may be true of its historical origins but is not in respect of accident insured schoolchildren, students or altruistic activities. The displacement of employers’ liability is, therefore, no longer capable of representing a meaningful basis for accident insurance but only represents a partial,18 though important aspect and especially cannot justify the work colleague’s liability privilege. For this divergence from the normal liability regime, neither other legitimation is evident nor is reasoning provided by the legislator.19
3.
Relation to private law remedies
11 If an insurance case arises out of factual circumstances which also give rise to a claim for damages, the question of the relationship between the social insurance benefits and the damages claim arises.20 Austrian social insurance law provides two different approaches21 to resolving this systemic issue which arises as a matter of principle whenever third parties provide cover in liability cases:
17 18 19 20
21
66
ten-Kranken- und Unfallversicherungsgesetz, B-KUVG), § 64a Social Security Act for Public Notaries (Notarversicherungsgesetz, NVG). See Koziol (fn 13) 233 f; M Neumayr in: M Schwimann, ABGB Praxiskommentar (3rd edn 2005) (in the following: Schwimann) § 332 ASVG no 152. Tomandl/Tomandl (fn 1) 2.3.1. Cf H Krejci/E Böhler in: Tomandl (fn 1) 3.2.2.6 with further references. See in detail H Krejci, Grundsatzfragen des Haftpflicht- und Regreßsystems im Recht der sozialen Sicherheit, in: Reformen des Rechts (1979) 409 ff; E Kunst, Haftpflicht- und Sozialversicherung, SozSi 1977, 165 ff; H Koziol, Probleme aus dem Grenzbereich von Schadenersatz- und Sozialversicherungsrecht, DRdA 1980, 371 ff. See H Krejci in: Tomandl (fn 1) 3.1; Schwimann/Neumayr (fn 17) § 332 ASVG no 1.
Austria ■
In most cases social insurance law provides for the statutory transfer of the insured’s claim against the person liable to the social insurance carrier which is obliged to make payment (assignment by operation of law, Legalzession; § 332 ASVG). The social insurance carrier can claim recourse against the person who caused the damage although this recourse is limited in respect of work colleagues (§ 332 subsec 5 ASVG).
■
On the other hand, if the employer or equivalent is responsible for the work-related injury or accident, the ASVG provides for a comprehensive exclusion of liability (employers’ liability privilege, Dienstgeberhaftungsprivileg; § 333 ASVG). However, the social insurance carrier is entitled, subject to certain preconditions, to an independent claim for recourse against the person who caused the injury (§ 334 ASVG).
The provisions of § 332 ff ASVG thus supplement or, rather, revise the law 12 of compensation. These provisions are, therefore, matters of civil law.22 It should be noted that the ASVG only provides for special rules for 13 damage arising out of personal injury as a result of a work accident or work-related illness and the employers’ liability privilege only supersedes the provisions of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB) and the Train and Vehicle Liability Act (Eisenbahn- und Kraftfahrzeughaftpflichtgesetz, EKHG) to this extent.23 Damage to property is not included and the general rules of the ABGB consequently apply.24
B.
Interaction with other institutions
Statutory health and accident insurance obligations can both arise where 14 there is a work-related accident or illness. Of course the needs of the insured will only be met once and the insurance carrier which is actually responsible is obliged to refund the insurance carrier which is not responsible if it has made payments to the insured.25 The obligation to refund may also arise if the injured person has received 15 benefits under the means-tested minimum insurance scheme (Mindestsicherung) which replaced social assistance (Sozialhilfe) according to arts 22
22 23 24
25
OGH 2 Ob 213/74 = SZ 47/133. Koziol (fn 13) 220; OGH 4 Ob 72/69 = ZVR 1971/13; 4 Ob 37/73 = Evidenzblatt der Rechtsmittelentscheidungen (EvBl) 1973/264; 8 Ob 164/80 = ZVR 1982/365. Koziol (fn 13) 220; Schwimann/Neumayr (fn 17) § 333 ASVG no 17; OGH 2 Ob 35/57 = Juristische Blätter (JBl) 1957, 455; 2 Ob 303/62 = EvBl 1963/91; 2 Ob 158/65 = SZ 38/96; 8 Ob 274/75 = SZ 49/15. Further details in no 101 ff below.
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and 24 Federal Law Gazette (Bundesgesetzblatt, BGBl) I 2010/96. Because the minimum insurance scheme, like social assistance before it,26 is only an additional scheme,27 its insurance carrier can demand a refund from the social insurance carrier which is actually obliged to pay.28
C.
Empirical evidence
16 In Austria in 2011 4,699,606 people had accident insurance29 with the General Insurance Organisation (Allgemeine Unfallversicherungsanstalt, AUVA). The total number of insured persons was made up of 1,236,691 workers, 1,603,639 employees, 449,681 self-employed persons and 1,409,595 schoolchildren and students. Altogether 163,781 work-related accidents occurred with workers having 76,893, employees 26,002, selfemployed persons 3,237, schoolchildren and students 54,373 and other insured persons 3,195. 1,309 instances of work-related illness were registered, the most common of which were noise-related hearing loss (788) and skin problems (150). In 72,497 instances the right to a retirement pension was accepted, not including 60,753 disability retirement cases and 11,744 cases of pensions for dependents.30
II.
Workers’ Compensation
A.
Scope of cover
17 Statutory accident insurance regulates two different types of insurance case: work accidents and work-related illnesses.31 The same aspects of life are covered in both cases and individuals are protected whether acting as an economically active individual, student or altruistic volunteer.32 In both cases the injury to health which arises out of the work accident or work-
26 27 28 29
30 31 32
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See Grillberger (fn 1) 132. Cf RV 677 BlgNR 24. GP 1; EBRV 677 BlgNR 24. GP 7. Further details in no 106 f below. These figures do not include those insured with the three other smaller accident insurance carriers namely the Farm Workers Social Insurance Organisation (Sozialversicherungsanstalt der Bauern, SVB), the Insurance Organisation for Railways and Mining (Versicherungsanstalt für Eisenbahnen und Bergbau, VAEB) and the Insurance Organisation for Civil Servants (Versicherungsanstalt der öffentlich Bediensteten, BVA). All data has been taken from the AUVA homepage (, subitem: Service, Zahlen und Fakten). In respect of both see no 29 ff below. Tomandl/Tomandl (fn 1) 2.3.2.1.
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related illness must be attributable to the accident insurance and must, therefore, be closely connected to the protected sphere of life.33 This is of pivotal importance because in accident insurance the ‘all or nothing’ principle applies. There is no obligation to provide reduced benefits but rather there is either full responsibility for a personal injury or none at all.34 Three criteria must be satisfied in order for an obligation to make 18 payment to arise. There has to be a work accident or work-related injury35 which affects the protected area of life36 and is attributable to the accident insurance.37
1.
Protected sphere of life
Economic activity is at the centre of the sphere of life protected by accident 19 insurance. The demarcation of what falls within the protection of accident insurance is usually unproblematic because the accidents usually occur during performance of work activities.38 Acts which are merely preparatory to or are the consequences of economic activities are problematic because, according to Austrian jurisprudence, they are not covered.39 Hence, there is no insurance cover for visiting a business with the intention to conclude an employment contract40 or having a discussion with an employer with a prospect to asserting the right to take statutory holidays.41 If work is performed at business premises, insurance protection stretches 20 to cover the whole period of attendance at the location. Business travel is also covered.42 The self-employed do not have this type of connection to a business organisation so the criterion applied is whether the activity objectively serves the interests of the business.43
33 34 35 36 37 38 39 40 41 42 43
Ibid. Brodil/Windisch-Graetz (fn 4) 90; Tomandl/Tomandl (fn 1) 2.3.2.4. See no 29 ff below. See no 19 ff below. See no 25 ff below. Brodil/Windisch-Graetz (fn 4) 90 f. See critically in respect of the consequences of commercial activity Tomandl/Tomandl (fn 1) 2.3.2.3.1.3.A. Oberlandesgericht (Higher Regional Court, OLG) Wien 16 R 121/74 = ZAS 1975/14. OLG Wien 15 R 180/68. Brodil/Windisch-Graetz (fn 4) 91. Ibid, 92.
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21 In addition to actual work, numerous other activities have been included by statute within the insurance cover, for example doctor’s appointments (§ 175 subsec 2 no 2 ASVG) and participation in professional education and development courses (§ 176 subsec 1 no 5 ASVG). 22 Furthermore, commuting accidents are covered. These arise in connection with work-related travel or on the way to and from the workplace or educational institution (§ 175 subsec 2 no 1 ASVG)44. The starting point of the journey is usually the insured’s home but Austrian jurisprudence also accepts a permanent second home45 or temporary accommodation in case of the short term unavailability of one’s home.46 In order to be covered by the insurance, the trip must either have been undertaken for the purposes of the performance of work activities or to return home. For example, a person who goes to their workplace just to chat with colleagues or to meet with them is not undertaking protected, work-related travel.47 23 As previously stated, schoolchildren and students are also insured and are essentially treated in the same way. Cover is extended to travel to and from school, doctor’s appointments and school ski trips as well as to school attendance itself.48 24 Finally, uninsured persons who provide voluntary assistance are also covered by accident insurance if they are, in fact, under no statutory duty to intervene.49
2.
Attribution
25 The work accident or work-related illness must be attributable to the protected sphere of life in order to give rise to a claim on the accident insurance.50 It is, in this context, stressed that the criteria for attribution had to be developed out of the law of accident insurance itself, from its values and objectives, and not merely borrowed from another compensation scheme, for example, tort law.51 So, for example, it should not be
44 45 46 47 48 49 50 51
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In detail Tomandl/Tomandl (fn 1) 2.3.2.3.1.9 and 2.3.2.4.1.6.G. OLG Wien 11 R 281/57. OLG Wien 11 R 235/58. Tomandl/Tomandl (fn 1) 2.3.2.3.1.9. Brodil/Windisch-Graetz (fn 4) 95. Ibid. For full details Tomandl/Tomandl (fn 1) 2.3.2.4. In this sense Tomandl/Tomandl (fn 1) 2.3.2.4; in detail id, Das Leistungsrecht der Unfallversicherung (1977) 50 ff; cf further id, Einige juristische Überlegungen zur Neuordnung der gesetzlichen Unfallversicherung, in: Festschrift für Gerhard Weißen-
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possible to go back to the fault principle because an insurance claim is not excluded even where there is intentional self harm (§ 88 ASVG) or unlawful behaviour (§ 175 subsec 6 ASVG).52 On the other hand, it is decisive whether the personal injury is, in terms of 26 location, time and causation, closely linked to the commercial activity, voluntary assistance, schooling or study. That is to say that accident insurance is not applicable where the sphere of risk was only the stage for the event which caused the injury and not its cause.53 The ‘Theory of the Fundamental Condition’ (Theorie der wesentlichen Be- 27 dingung) has long been established as the key criterion of attribution in accident insurance.54 Only if the cause which arises out of the risk sphere of accident insurance is seen to be fundamental in the light of all possible contributory causes, the cause will be attributed and the accident insurance is liable to pay.55 According to jurisprudence a condition is only fundamental if ‘without it 28 the event would not have occurred at all or would have occurred at a substantially different time or to a lesser extent’.56 This formula is significant in cases of the employee’s predisposition to injury (Anlageschäden). These are cases of damage to health which arise in the course of a protected activity but which would, however, have occurred in any event.57 According to the formula cited, in such cases of intervening causation, the personal injury is only attributable if, without the circumstances arising out of the accident insurance risk sphere, it would have occurred significantly later or to a significantly reduced extent.58 Austrian jurisprudence, therefore, principally regards certain injuries not as a result of an accident because, according to medical opinion, they can only be caused by internal factors. For example, a slipped disc where there has been no direct
52 53 54 55 56 57 58
berg (1980) 417 ff. However, see also EA Kramer, Das Kausalitätsproblem im österreichischen und schweizerischen Unfallversicherungsrecht, in: FS Floretta (1983) 683 ff (in particular 690 ff), who, with reference to the Theory of Fundamental Conditions (Theorie der wesentlichen Bedingung) argues convicingly that insurance law should draw upon the criteria for attribution developed in tort law; concurring H Koziol, Österreichisches Haftpflichtrecht I (3rd edn 1997) no 3/17 fn 57. Tomandl/Tomandl (fn 1) 2.3.2.4.1.2. To the point Tomandl/Tomandl (fn 1) 2.3.2.4.1.3; concurring OGH 10 Ob S 62/90 = Entscheidungen des OGH in Sozialrechtssachen (SSV-NF) 4/52. See further H Barta, Kausalität im Sozialrecht (1983); Kramer (fn 51) 683 ff (in particular 686 ff); Tomandl/Tomandl (fn 1) 2.3.2.4.1.4 with further references. Tomandl/Tomandl (fn 1) 2.3.2.4.1.4; Brodil/Windisch-Graetz (fn 4) 98. OLG Wien 16 R 30/61; OLG Wien 13 R 196/67; OGH 10 Ob S 3/88 = SSV-NF 2/6. Brodil/Windisch-Graetz (fn 4) 102; Tomandl/Tomandl (fn 1) 2.3.2.4.1.4. See Tomandl/Tomandl (fn 1) 2.3.2.4.1.4.A.
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application of force to the spine,59 a hernia inguinalis where there is predisposition60 or a heart attack where there is no unusual or particularly heavy work.61 On the other hand, suicide is recognised as a work accident if it was committed whilst mentally incapacitated and if this condition was caused by a protected accident or work-related illness.62
B.
Compensation trigger
29 Accident insurance compensation is triggered by work accidents or workrelated illnesses. The two alternative insurance cases result in the same compensation.63 According to § 174 no 1 ASVG, the insurance claim for a work accident commences when the accident occurs and, according to § 174 no 2 ASVG, the claim for a work-related illness commences at the start of the illness64 or, if it is more favourable to the insured, when his/her work capacity begins to reduce. The social insurance carrier has to choose the date which is most favourable to the insured.65 30 According to the definition set out in § 175 subsec 1 ASVG, work accidents are those accidents connected, in terms of place, time and causation, with the insured activity. Judicial decisions and the academic literature see the accident element of the statutory definition as an event, limited in time – such as an external influence, an unusual burden or deviant behaviour – which causes a physical injury.66 The event needs to be neither unexpected nor unforeseeable and the controllability of the employee is irrelevant. Furthermore not only a singular damaging event, but also a series of sudden events which affect the insured person count as a work accident. A close connection in time between the accident and its health effects is not a condition.67
59 60 61 62 63 64 65 66
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72
OLG Wien 31 R 223/80 = SSV 20/94. OGH 10 Ob S 278/91 = SSV-NF 5/140. OGH 10 Ob S 123/88 = ZAS 1990/8 (critical comment T Tomandl). OGH 10 Ob S 19/91 = SSV-NF 5/6; 10 Ob S 224/98h = ZAS 2000/20 (G Wachter). W Schrammel in: Tomandl (fn 1) 2.1.2.2.1.B. According to § 120 no 1 ASVG, an anomalous state of physical or mental health which requires treatment constitutes the start of an illness. Brodil/Windisch-Graetz (fn 4) 104. OGH 10 Ob S 123/88 = SSV-NF 2/112; 10 Ob S 131/90 = SSV-NF 4/85; 10 Ob S 150-152/ 94 = SSV-NF 9/17; 10 Ob S 224/98h = SSV-NF 12/89; see also Tomandl/Tomandl (fn 1) 2.3.2.2. Brodil/Windisch-Graetz (fn 4) 90; Tomandl/Tomandl (fn 1) 2.3.2.2; OGH 10 Ob S 90/01k = DRdA 2002/36 (W Brodil).
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If the damage to health is unconnected to an accident but turns out to be 31 an illness, insurance benefits are only provided if it is a work-related illness.68 According to § 177 subsec 1 ASVG, work illnesses are those illnesses listed in Appendix 1 ASVG and which arise out of the performance of an insured activity in a business described in column 3 of the Appendix (abstract work-related illnesses, abstrakte Berufskrankheiten). In addition, an illness not set out in Appendix 1 to the ASVG can qualify as a work-related illness according to § 177 subsec 2 ASVG if the insurance carrier determines, on the basis of solid scientific evidence, that the illness is exclusively or predominantly caused by the use of dangerous substances or radiation during work undertaken by the insured (concrete workrelated illness, konkrete Berufskrankheit). In order to be effective, such a determination requires the agreement of the Federal Ministry for Labour, Health and Social Affairs (Bundesministerium für Arbeit, Gesundheit und Soziales). Claims for benefits regarding illnesses which do not qualify as work- 32 related illnesses are dealt with according to the regulations which govern health insurance.
C.
Scope of protection
1.
Personal injury
Physical injuries arising out of work accidents or work-related illnesses are 33 covered by the statutory accident insurance. Non-pecuniary losses, other than compensation for loss of integrity under § 213a ASVG,69 are not covered by statutory social insurance benefits.
2.
Sexual harassment
Part of the academic literature takes the view that sexual harassment70 34 could come within the protection of accident insurance if it qualifies as
68 69 70
Brodil/Windisch-Graetz (fn 4) 103. Further no 52 ff below. On this M Windisch-Graetz, Sexuelle Belästigung am Arbeitsplatz, in: U Floßmann (ed), Recht, Geschlecht und Gerechtigkeit (1997) 357 ff; G Hopf, Belästigung in der Arbeitswelt, in: Festschrift Bauer/Maier/Petrag (2004) 147 ff; id, Belästigungsschutz neu, Österreichisches Recht der Wirtschaft (RdW) 2004/548; S Gahleitner, Der Schutz vor Belästigung im Arbeitsverhältnis, Zeitschrift für Arbeits- und Sozialrecht (ZAS) 2007, 148; H Hess-Knapp, Sexuelle Belästigung jugendlicher ArbeitnehmerInnen, insbeson-
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an accident within the meaning of § 175 subsec 1 ASVG.71 To meet this condition there must be a physical injury which could be triggered by a single assault such as a sexual assault or rape. The same can be true for a single serious act of gender-related harassment which leads to a recognised psychiatric illness.72 In this context, however, it is more often continued harassment which leads to psychiatric damage.73 Because continued harassment can obviously also qualify, in work accident terminology,74 as a series of sudden events, the temporal limitation test does not preclude insurance cover in such cases.75 35 Furthermore, a close connection with the gainful employment is required.76 Because the harassment cannot clearly be attributed to either the work sphere or that of private life it seems to be decisive whether the employment significantly facilitated the harassment or indeed, enabled it.77 If this is not the case and the sexual assault could just as easily have taken place in the sphere of private life, a close connection with the gainful employment is lacking and the harassment does not qualify as a work-related accident.78
3.
Dignitary injuries
36 The same basic rules which apply in respect of sexual harassment also apply to injury to human dignity or other infringements in the personal sphere.
4.
Property damage and pure economic loss
37 Property damage and pure economic loss are not covered by the special rules of the ASVG and are thus not included in the statutory accident insurance scheme. Therefore, any claims for damages in this respect are dealt with under the general compensation rules.79
71 72 73 74 75 76 77 78 79
74
dere von Lehrlingen, und die Rechtsfolgen, DRdA 2009, 163 ff; K Posch in: R Rebhahn (ed), Kommentar zum Gleichbehandlungsgesetz (2005) (in the following: Rebhahn) §§ 6–7 no 1 ff. According to Rebhahn/Posch (fn 70) §§ 6–7 no 67 ff. Ibid, §§ 6–7 no 68. Ibid, §§ 6–7 no 69. See 10 Ob S 224/98h = ZAS 2000/20 (G Wachter) as well as no 29 ff above. Rebhahn/Posch (fn 70) §§ 6–7 no 69 f. See no 25 ff above. Also in this respect Bundessozialgericht (Federal Social Court, BSG) 26.6.2001, B 2 U 25/ 00 R = Neue Juristische Wochenschrift (NJW) 2002, 388. Rebhahn/Posch (fn 70) §§ 6–7 no 71. See no 11 ff above.
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D.
Heads and levels of benefit
In respect of accident insurance one must primarily distinguish between 38 benefits in kind and cash benefits:80
1.
Benefits in kind
a) Accident related medical treatment (Unfallheilbehandlung, §§ 189–194, 197 ASVG) The object of accident related medical treatment is to use all appropriate 39 means in order to cure or at least reduce damage to health, physical injury or any reduction in economic capacity or ability to deal with essential personal affairs caused by the work accident or work-related illness as well as to prevent any worsening of the damage (§ 189 subsec 1 ASVG). It includes medical care and medicine as well as care in a hospital, convalescence centre and other facilities (§ 189 subsec 2 ASVG). The medical treatment is to be provided as often as necessary and is continued as long as an improvement in the consequences of the work accident or workrelated illness or an increase in economic capacity is to be expected or where the treatment is necessary to prevent a worsening of the condition (§ 190 ASVG). It has to be noted that the right to accident related medical treatment only arises when and to the extent that the disabled person does not have the right to receive a corresponding benefit under a statutory health insurance scheme (§ 191 subsec 1 ASVG).
b) Rehabilitation measures (Rehabilitationsmaßnahmen, §§ 198–201 ASVG) By using medical, workplace and, as far as necessary, social interventions, 40 rehabilitation should improve the disabled person’s abilities to such an extent that they can regain the ability to play an appropriate part in professional, economic and community life permanently if possible (§ 172 subsec 2 ASVG). Any rehabilitation measures by the insurance carrier require the agreement of the disabled person (§ 201a ASVG).
80
Furthermore, benefits to which the insured has a legal right, subject to certain conditions (obligatory benefits, Pflichtleistungen), can be distinguished from those which the insurance carrier can provide at its discretion (voluntary benefits, freiwillige Leistungen). In addition, statute (§ 173 ASVG) differentiates between benefits granted in case of physical injury and those granted in case of the death of the insured person (Brodil/ Windisch-Graetz (fn 4) 104).
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c) Auxiliary aids (Hilfsmittel) 41 The disabled person has the right to such prosthetics, orthopaedic aids and other auxiliary aids which are necessary to ensure the success of the medical treatment or a reduction in the consequences of the work accident or work-related illness (§ 202 subsec 1 ASVG).
2.
Cash benefits
42 The accident insurance provides cash benefits in addition to benefits in kind. The assessment basis for employees81 is the total amount of general contributions plus special payments subject to contributions in the year prior to the insurance event (§ 179 subsec 1 ASVG); for details of the basic contribution principles see no 64 ff below. In particular, the accident insurance provides for the following cash benefits:
a) Short-term cash benefits 43 If an insured person is in institutional care, a claim for a daily (Taggeld) or childcare allowance (Familiengeld) can arise. Daily or childcare allowance is only supplementary to an employment law claim for continuation of pay or sick pay (§ 195 ASVG).82 44 § 199 ASVG provides for a right to a temporary allowance (Übergangsgeld) if and for so long as the insured is in workplace rehabilitation. This amounts to 60 % of the assessment basis and is increased if there are dependents. 45 The insurance carrier has the discretion to extend disability payments (§ 212 ASVG) if there is no right to sick pay under a health insurance scheme. This benefit can also take the place of a disability pension if it is anticipated that the insured person will not claim this pension for longer than one year.
b) Disability pension (Versehrtenrente) 46 Disability pension forms the core of the insurance benefits provided for by law. This cash payment is intended to compensate the insured for any reduction in economic capacity which persists despite the accident related medical treatment and other measures undertaken.83
81 82 83
76
The assessment basis for the self-employed, persons under 30 year of age, schoolchildren and students is governed separately by statute (§ 180 ff ASVG). Brodil/Windisch-Graetz (fn 4) 106. Brodil/Windisch-Graetz (fn 4) 106.
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According to § 203 subsec 1 ASVG, a claim for disability pension arises if 47 the reduction in the economic capacity of the disabled person caused by the work accident or work-related illness exceeds 20 % for more than three months after the insurance event. It is due for the duration of the period in which the economic capacity is reduced by a minimum of 20 %. On the other hand, where there is a concrete work-related illness within the meaning of § 177 subsec 2 ASVG,84 a claim for disability pension requires that the reduction in economic capacity be at least 50 % for more than three months after the insurance event. It is due for the duration of the period in which the economic capacity is reduced by a minimum of 50 %. The term economic capacity according to § 203 ASVG is considered by the 48 judiciary a person’s ability, based on all their knowledge, mental and physical abilities, to earn a living exploiting all of the work opportunities available to them across the whole spectrum of economic life.85 In assessing it, account is to be taken of the insured’s ability to acquire new skills and to undertake new occupations. According to judicial decisions, young people, in particular, are required to undergo retraining appropriate to their abilities and to change their occupation.86 The degree by which economic capacity has decreased is assessed by 49 comparing the median earnings level achievable prior to the accident with what is possible to earn after the accident.87 The evaluation is based on an abstract assessment.88 Whether the insurance event actually leads to a reduction in income is irrelevant.89
c) Care allowance (Pflegegeld) All those who require care receive a full pension from the accident 50 insurance (§ 3 subsec 1 no 1 Federal Care Allowance Act, Bundespflegegeldgesetz, BPGG) as a supplementary allowance on application or granted by the authorities of their own motion. It does not depend on who undertakes the care and whether it is provided on a paid for or unpaid basis.90 According to § 1 BPGG, care allowance compensates for the additional expenditure incurred in respect of care needs at a flat rate so as to ensure,
84 85 86 87 88 89 90
See no 29 ff above. OGH 9 Ob S 23/87 = SSV-NF 1/64; 10 Ob S 214/92 = SSV-NF 6/96. OGH 10 Ob S 161/95 = SSV-NF 9/81. Tomandl/Tomandl (fn 1) 2.3.3.2.3.2. OGH 9 Ob S 23/87 = SSV-NF 1/64; 10 Ob S 14/89 = SSV-NF 3/22; 10 Ob S 352/90 = SSVNF 4/142. OGH 10 Ob S 78/93 = SSV-NF 7/52; 10 Ob S 161/95 = SSV-NF 9/81. T Tomandl, Grundriss des österreichischen Sozialrechts (6th edn 2009) no 240.
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as far as possible, the necessary care and assistance required by the person in need of care and to increase their chances of living a self-determined life according to their needs.91 51 It is a condition of the payment of benefits that, for an anticipated period of six months, there will be a continuous requirement, on health grounds, for more than 50 hours of care and assistance per month (§ 4 BPGG). There are seven grades of care allowance depending on the number of hours and the degree of care required each month. Which grade is to be applied is determined by the grading regulations of the federal ministry responsible for social insurance.92 At the lowest level 1, one would currently receive E 154.20 per month and at the highest level 7, E 1,655.80. Those in need of care are required to undertake all reasonable measures to reduce or remove their care needs.93
d) Compensation for damage to integrity (Integritätsabgeltung) 52 According to the dominant, though questionable, legal view the employer’s liability privilege also prevents an employee from claiming compensation for personal injury against the employer where the social insurance has no obligation to provide comparable benefits to the injured employee.94 This has, in particular, the consequence that employees lose their claims for damages for pain and suffering (Schmerzengeld, § 1325 ABGB) and compensation for disfigurement (Verunstaltungsentschädigung, § 1326 ABGB). As a result of media reporting of particularly dramatic work accidents there is increasing public incomprehension of this significant detrimental impact on the employee’s legal position which has prompted employee organisations and, eventually, the legislator to act. Based on § 213a ASVG compensation for damage to integrity (Integritätsabgeltung) was implemented within the framework of the 48th amendment to the ASVG95 in 1990 to deal with particular cases of hardship.96 Compensation for damage to integrity is 91 92 93
94 95 96
78
Care allowance, therefore, is not intended to result in the particular beneficiary receiving an increased income (W Pfeil, Bundespflegegeldgesetz (1996) 37). Currently BGBl II 1999/37 (latest version BGBl 2008/469). Tomandl (fn 90) no 240; see also OGH 10 Ob S 27/96 = SSV-NF 10/26 (A care requirement, and thus a claim for the grant of care allowance, is only temporary if the disability which caused it can be cured by an operation which it is reasonable to expect the person to undergo); 10 Ob S 2333/96b = SSV-NF 10/99;10 Ob S 111/97i = SSV-NF 11/52; 10 Ob S 134/97x = SSV-NF 11/57. Further details under no 110 ff below. BGBl 1989/642. For further details J Dörner, Die Integritätsabgeltung nach dem ASVG (1994); R Reischauer, Neuerungen im Bereich des Arbeitgeber-Haftungsprivilegs im Zusammenhang mit Kfz-Verkehr und Integritätsabgeltung (§§ 213a and 332 ff ASVG), DRdA 1992,
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intended to cover non-pecuniary losses and exhibits certain similarities with civil law damages for pain and suffering and disfigurement.97 Compensation for damage to integrity is paid to insured persons who have 53 suffered a significant and permanent impairment to their physical or mental integrity as a result of a work accident or work-related illness which was caused by the employer’s grossly negligent disregard of the industrial safety regulations (Arbeitnehmerschutzvorschriften) if its consequences mean they are already entitled to a disability pension (§ 213a subsec 1 ASVG). Payment is made as a lump sum, may not exceed double the (annual) maximum assessment basis98 (Höchstbemessungsgrundlage) and is graduated according to the severity of the damage to integrity (§ 213a subsec 2 ASVG). In practice the level granted is based on the AUVA regulations. Since compensation for damage to integrity is only due if the work 54 accident or work-related illness is caused by the employer’s grossly negligent disregard of industrial safety regulations, the group who are entitled is limited to employees because only they come, both factually and personally, within the ambit of such regulations.99 Industrial safety regulations within the meaning of § 213a ASVG are those norms which warrant sanctions and which serve to protect working time, personal security and safety measures, for example, the Employee Protection Act (ArbeitnehmerInnenschutzgesetz, ASchG), the Working Time Act (Arbeitszeitgesetz, AZG), or the Maternity Protection Act (Mutterschutzgesetz, MSchG).100
317 ff; E Karner, Der Ersatz ideeller Schäden bei Körperverletzung (1999) 42 ff; Tomandl/Tomandl (fn 1) 2.3.3.2.3.4.E. 97 See Reischauer, DRdA 1992, 317 ff (in particular 324 ff); to its legal nature also OGH 10 Ob S 39/98b = SSV-NF 12/30: Compensation for damage to integrity has colonised the area of conflict between the civil liability regime and social insurance. Its purpose is to offer, via a cash payment, a certain compensation for physical pain, suffering and reduced vitality as well as reduced enjoyment of life. 98 According to § 178 subsec 2 ASVG, the assessment basis is an annual amount of up to 360 times the maximum daily accident insurance contribution basis applied in the year before the insurance event occurred (under § 108 subsec 1 ASVG this contribution basis has to be determined and announced annually by the Federal Minister for Social Security, Generations and Consumer Protection (Bundesminister für soziale Sicherheit, Generationen und Konsumentenschutz) and in 2012 it amounts to E 141; compare no 64 ff below) plus possible supplementary payments which might be considered according to § 179 ASVG up to a maximum of sixty times this daily maximum assessment basis. 99 Brodil/Windisch-Graetz (fn 4) 109. According to § 4 subsec 4 ASVG independent contractors similar to employees are also covered because § 4 subsec 2 ASVG puts them on a par (Brodil/Windisch-Graetz (fn 4) 109). 100 Reischauer, DRdA 1992, 325; OGH 10 Ob S 84/95 = DRdA 1996/30 (R Mosler); 10 Ob S 2338/96p = DRdA 1997/38 (M Windisch-Graetz).
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55 There is a debate about who must commit the breach. The employee’s employer and colleagues are certainly covered.101 It is, however, unclear what happens if employees themselves disregard the industrial safety regulations.102 56 Because § 213a ASVG only refers to grossly negligent breach of industrial safety regulations neither merely negligent nor intentional breach is covered. Mere negligence is not covered based on cost (cf employer’s liability privilege) and intentional actions are not covered because the employer is liable in respect of the employee in any event (§ 333 subsec 1 ASVG).
e) Benefits in case of death 57 If a work accident or work-related illness causes the death of the disabled person the accident insurance will, in the first instance, cover part of the funeral expenses (§ 214 subsec 1 ASVG). 58 Of greater significance are the pensions granted by the ASVG in such cases. According to § 215 subsec 1 ASVG, the widow/widower is granted an annual pension of 20 % of the assessment basis until their remarriage. § 215 subsec 2 ASVG provides that this pension is increased to an annual amount of 40 % of the assessment basis if the beneficiary has lost half of their economic capacity or if the widow or widower has reached the age of 60 or 65 respectively. 59 According to § 215 subsec 3 ASVG a divorced former spouse also has a right to this pension, unless and until they enter into a new marriage, provided that they had a claim for maintenance from the insured. In such cases the pension will be at the same level as the maintenance up to a maximum of 20 % of the assessment basis. 60 Since the initial implementation of the Registered Partnership Act (Eingetragene Partnerschaft-Gesetz; EPG) surviving registered partners have, in principle, the same legal rights to a pension as surviving spouses. 61 Furthermore, the children103 of the insured whose death was caused by a work accident are also eligible for benefits. According to § 218 subsec 1
101 OGH 10 Ob S 321/98y = SSV-NF 12/150. 102 Brodil/Windisch-Graetz (fn 4) 109. 103 According to § 252 subsec 1 nos 1–4 ASVG, children, within the meaning of § 218 ASVG include: the insured’s children from a marriage; legitimised and adopted children; the illegitimate children of a female insured; the illegitimate children of a male insured where paternity has been accepted or determined by judicial decision (§ 163b ABGB); further stepchildren – but only if they permanently live in the same household as the insured person. All must be under eighteen years of age.
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ASVG, they are entitled to an orphan’s allowance up to the age of 18. Thereafter such an allowance is provided only on special application. According to § 218 subsec 2 ASVG, a minor half-orphan is entitled to 20 % of the assessment basis and a minor complete orphan to 30 %. Under § 219 subsec 1 ASVG parents, grandparents and siblings are also 62 entitled to parent’s or sibling’s pensions, which added together amount to 20 % of the basic assessed amount if the insured person generally provided for them. § 220 ASVG provides that all the survivor’s pensions may together not 63 exceed 80 % of the assessment basis and are to be reduced proportionately within this limit. Parents, grandparents and siblings are only entitled to a pension under § 219 subsec 2 ASVG insofar as the widow/widower’s pension and the orphan’s allowance have not exceeded the limit.
E.
Funding systems
1.
Funding through contributions
In accordance with the basic principle behind the discharge of the employ- 64 er’s liability, accident insurance for persons who are not self-employed is financed by contributions from the employer who thereby not only obtains insurance cover for its employee but at the same time ‘buys freedom’ from liability. On the other hand, self-employed workers pay accident insurance contributions (self-financing, Eigenfinanzierung). No-one pays contributions in respect of the other categories (schoolchildren, students and persons engaged in altruistic activities) which is why the burden for them falls on employers and the self-employed.104 In this way social insurance is funded on a pay as you go basis, meaning that 65 the running costs for a period are covered by the income for the same period.105 The amount of contributions, which has to be paid, depends on the income 66 up to a maximum known as the maximum assessment basis (Höchstbeitragsgrundlage). No contributions are, therefore, payable in respect of income which exceeds the maximum assessment basis. Conversely, there are also minimum contribution levels for the self-employed which apply if the self-
104 Cf Tomandl/Tomandl (fn 1) 2.3.1. 105 Tomandl (fn 90) no 292.
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employed person has no or little income because it is intended that the insurance relationship should also continue during such periods.106 67 According to § 44 subsec 1 ASVG and in concrete terms, the basic contribution level is based on income earned during the contributions period excluding any special payments. Under § 49 subsec 2 ASVG these include, for example, 13 or 14 month payments (ie holiday allowance), Christmas or vacation money, profit share or bonus. In respect of compulsorily insured employees and apprentices, income earned is to be interpreted as remuneration within the meaning of § 49 ASVG, ie cash and benefits in kind to which they are entitled because of the employment relationship or apprenticeship or which the employee or apprentice received in addition from the employer or a third party107 by reason of the employment relationship. § 44 subsec 2 ASVG states that the contributions period is basically the calendar month which is assumed to be a standard 30 days. 68 According to § 108 subsec 1 ASVG, the maximum assessment basis is to be set and announced annually by the Federal Minister for Social Security, Generations and Consumer Protection (Bundesminister für soziale Sicherheit, Generationen und Konsumentenschutz) and in 2012 amounts to a monthly sum of E 4,230. This amount is adjusted annually to adapt to economic change via the so-called revaluation coefficient (Aufwertungszahl) which reflects changes in pay levels. 69 A certain percentage of the basic contributions level is allocated to the different types of social insurance – both employer and employee make contributions to the health, social and unemployment insurance schemes. The employer alone is obliged to contribute to accident insurance and the amount due in respect of accident insurance is 1.4 %. 70 In practice, all social insurance contributions are basically levied by the appropriate health insurance fund and only then passed on to the actual recipients.
106 Ibid, no 94. 107 According to the jurisprudence of the Supreme Administrative Court (Verwaltungsgerichtshof, VwGH) benefits provided by third parties must – in order to qualify as remuneration which is subject to contributions – be consideration for services rendered by the employee within the framework of the employment relationship even if the employee is not contractually obliged to provide these services (VwSlgNF 13.471 A).
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2.
Financial equalisation (Finanzausgleich)
In Austria health, accident and old age insurance is not provided by a single 71 social insurance carrier but by (currently) 22 independent, autonomous bodies governed by public law and with their own legal personalities. The distribution of social insurance between different carriers is determined by categories of persons. For reasons of social equity social insurance does not allow for contributions based on risk.108 Because people who present a higher risk in respect of social insurance pay the same level of contributions based on the same income, differences in income and costs arise between the individual insurance carriers. These differences are to be equalised within the framework of a financial equalisation process carried out between the insurers and with government grants.109
a) Inter-insurer equalisation The 22 current social insurance carriers together form the Association of 72 Austrian Social Insurance Carriers (Hauptverband der Sozialversicherungsträger Österreichs) which maintains an equalisation fund for the district insurance funds (Gebietskrankenkassen) to which each must divert 2 % of the contributions they receive. This fund is then used to equalise the individual insurance fund’s differing income and costs.
b) State grants State grants play a particular role in respect of old age insurance because it 73 could not be financed out of contributions alone. In terms of accident insurance the federal government provides a grant equivalent to one third of the contributions only in respect of farm workers.110
F.
Administration and adjudication of claims
In Austria cases relating to social insurance law will, at the first instance, 74 be heard by the social insurance carrier and administrative law will be applied because these organs are engaged in implementing social insurance.111 Thereafter, appeals which relate to administration and those
108 109 110 111
Tomandl/Tomandl (fn 1) 0.5.1. Tomandl (fn 90) no 293. § 31 Social Security Act for Farmers (Bauern-Sozialversicherungsgesetz, BSVG). Tomandl (fn 90) no 320.
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which relate to performance are to be distinguished. Whilst cases which relate to administrative issues112 follow the procedure for administrative cases and will eventually be heard before the Supreme Administrative Court (Verwaltungsgerichtshof, VwGH), cases relating to performance issues113 are heard in the Social Courts (Sozialgerichte) and, in the final instance, before the Supreme Court (Oberster Gerichtshof, OGH).114 Claims for compensation brought by employees are claims in respect of performance so only the process for cases in respect of performance is of relevance here. 75 Cases concerning the provision of benefits are instituted at the appropriate social insurance carrier upon application or, in the case of accident insurance, also by the authorities of their own motion.115 76 To make the procedure easier and faster the legislator has significantly limited the obligation to issue an authoritative decision. A decision must be issued in all cases where the claim for the benefit is rejected, wholly or in part, and the claimant has specifically requested a decision (§ 367 subsec 1 no 2 ASVG). Insofar as an obligation to reach a decision exists, the insurance carrier may not determine the case in any other way. 77 Accident insurance decisions must be issued within six months. If the social insurance carrier cannot comply with this time limit, it must pay the benefits in advance if they would otherwise be payable on the merits of the case.116 78 The decision issued by the social insurance carrier becomes formal res judicata immediately because there is no legal means of challenging it. It can only be quashed by the Social Court as a result of a legal action. If an action is not raised in time, the decision will also have the force of substantial res judicata. If that is the case, § 101 (retrospective establishment of the legal situation where there has been an incorrectly calculated payment of cash benefits to the detriment of the insured) and § 107 ASVG (claim for the repayment of benefits paid incorrectly) and, as the case may be, the resumption of the action or the restoration of the former situation,
112 According to § 355 ASVG, administrative issues are all matters of public law which are not subject to special regulation and which do not already qualify as performance issues according to § 354 ASVG. § 355 ASVG includes the determination of the duty to insure, the determination of participation in the insurance cover and responsibility, matters relating to contributions, etc. 113 According to § 354 ASVG, performance issues are those matters which relate to the determination of the existence, scope and cessation of a claim for insurance benefits, etc. 114 Tomandl (fn 90) no 320. 115 Ibid, no 322. 116 Ibid, no 322.
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allow for the decision to be quashed pursuant to the Administrative Procedures Act (Allgemeines Verwaltungsverfahrensgesetz, AVG).117 If an action is brought in time the decision loses its legal effect118 in respect 79 of the claim and a wholly new case begins. There are significant constitutional concerns119 about these successive claims in the Social Court in respect of the social insurance carrier but the practice has been accepted by the Constitutional Court (Verfassungsgerichtshof, VfGH).120 The case can be presented in the Social Court or to the social insurance 80 carrier.121 Such a claim regarding benefits can take place only in two instances: firstly, if the social carrier has issued a decision, a legal action can be taken within four weeks; secondly, if an application for benefits is not decided within six months, a suit can be filed for an indefinite period of time (claim based on delay, Säumnisklage).122 In Vienna the Employment and Social Court has primary jurisdiction at 81 first instance. Elsewhere the Regional Courts act as Employment and Social Courts (subject-matter jurisdiction; § 1 Employment and Social Court Act, Arbeits- und Sozialgerichtsgesetz, ASGG) at the first instance and must indicate this additional responsibility in their decisions. In matters of social insurance law, where the claim is heard depends on the domicile or usual residence of the insured (local jurisdiction; § 7 subsec 1 ASGG). The composition of the court has special characteristics because the 82 Employment and Social Courts act as a tribunal. At the first instance there is a tribunal of three made up of a qualified 83 judge and two lay experts (§ 11 A subsec 1 ASGG).123 In cases involving 117 Ibid, no 322. 118 If the social insurance carrier has accepted in its decision that the claimant is entitled to a benefit then, notwithstanding the fact that the decision has become legally ineffective, it must continue to provide that benefit on a temporary basis until the final determination of the legal process (§ 71 subsec 2 ASGG). 119 R Walter, Verfassung und Gerichtsbarkeit (1960) 117 f; E Loebenstein, Reform der Sozialversicherungsgerichtsbarkeit, Österreichische Juristen-Zeitung (ÖJZ) 1968, 5 ff; P Oberndorfer, Grundprobleme des Verwaltungsverfahrens in der österreichischen Sozialversicherung, ZAS 1973, 216. 120 VfSlg 3424/1958. 121 According to § 84 Arbeits- und Sozialgerichtsgesetz (ASGG), the action then counts as having been presented to the competent court. Only in respect of matters relating to § 65 subsec 1 no 3 ASGG is there no possibility of presenting the claim to the insurance carrier. Furthermore, where the conditions set out in § 39 subsec 2 no 2 ASGG apply, the action can be presented in the party’s district court of domicile, usual residence or occupation. 122 In this respect H Fasching/T Klicka in: Tomandl (fn 1) 6.4.2.2.1.2. 123 According to § 11b subsec 1 ASGG, if one of the invited lay experts does not attend an oral hearing to hear arguments, the chair can conduct the hearing alone if the parties expressly agree.
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employees one lay expert comes from the employer-side and one from the employee-side (§ 12 subsecs 1 and 3 ASGG). These are honorary appointments124 for periods of five years each (§ 17 subsec 1 ASGG: they can be reelected) and the lay experts are selected by the electoral bodies of the statutory organisations which represent the interests of employers and employees (§ 19 ff ASGG). They are independent (§ 16 subsec 1 ASGG) and their participation is intended to enrich the court’s decision-making with greater realism.125 84 The Higher Regional Courts (Oberlandesgerichte, OLG) have jurisdiction in employment and social security matters at second instance and their decisions are also made by a special tribunal made up of three qualified judges and two lay experts (§ 11 subsec 1 ASGG). Appeals can be brought against all judgments without restriction. If the OLG grants the relief claimed, that judgment is immediately enforceable. A benefit granted by the appellate court is to be provided during the continuation of the case even if there is a further appeal (such further appeal – a so-called Revision – does not have a suspensive effect in matters of performance) so that the three levels of appeal do not cause the insured a disadvantage.126 85 It should be noted that there are also special rules relating to representation. At the first instance there is no obligation to be represented by a lawyer (§ 39 subsec 3 ASGG), but the judge has an enhanced duty to direct the case (§ 39 subsec 2 no 1 ASGG). In addition, right of representation before the courts of first and second instance is extended to include the agents of special interest groups (§ 40 subsec 2 no 1 ASGG).127 86 The Supreme Court is the court of third and final instance and, like the OLGs, it also decides cases as a tribunal of five (§ 11 subsec 1 ASGG). There are few limitations to the right of appeal (Revision) on a matter of law.128 Above all, a full appeal on a matter of law is always available in respect of recurrent benefits. The same is true for the so-called Revisionsrekurse.129 124 Pursuant to § 32 ASGG, lay experts only have the right to claim for the refund of travel and overnight expenses as well as compensation for time lost. 125 Tomandl (fn 90) no 324. 126 Tomandl (fn 90) no 325. 127 In particular the Chamber of Labour (Arbeiterkammer, AK) and the Chamber of Commerce (Wirtschaftskammer, WK). 128 Only the limitations set out in § 502 subsec 1 Code of Civil Procedure (Zivilprozessordnung, ZPO) apply according to which the decision must require the determination of a question of law which is of significant relevance to the integrity, certainty or development of the law. On the other hand, according to § 502 subsec 5 no 4 ZPO the value limits set out in § 502 subsecs 2 and 3 ZPO do not apply in employment and social security disputes. 129 Cf § 528 ZPO.
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Pursuant to § 77 subsec 1 ASGG130 in matters of social insurance law the 87 costs of the proceedings are generally met by the social insurance carrier regardless of the outcome. These costs include not only the insurance carrier’s own costs but also witness and expert131 fees as well as the insured’s costs insofar as these were necessary for the purposes of pursuing or defending the claim. Only if the insured’s case fails in its entirety will he/she receive only an equitable reimbursement of costs.132 In addition, the insured may have a claim under § 79 ASGG for damages for lost time.
G.
Rights of recourse of workers’ compensation institutions
1.
General
Social insurance law and the general liability law can confer comparable 88 benefits in cases of physical injury if the event which causes the injury triggers both an obligation to provide benefits under social insurance law and an obligation to compensate under the general liability law. § 332 ff ASVG provides two different methods of coordinating the two areas of law:133 either the statutory transfer of the right to claim compensation to the social insurance carrier (§ 332 ASVG) or the exclusion of claims for damages against the employer which in particular circumstances is linked to the social insurance carrier’s independent right to recourse (§ 333 ASVG).
a) Recourse by virtue of statutory assignment (§ 332 ASVG) If the injured person receives benefits from their social insurance, basi- 89 cally this does not affect the claim for compensation against the person who caused the injury because benefits are not set off.134 Instead, § 332 ASVG means that there will be an assignment by operation of law. The injured person’s claim for compensation is already transferred to the 130 See also § 93 ASGG. 131 Expert witnesses are generally necessary in legal matters relating to social insurance (for example, medical expert witnesses for disability pensions, expert witnesses to evaluate the (non) existence of the right for a person to reject a position on the basis of their qualifications, Berufsschutz) and the cases thus involve significant costs. 132 Furthermore, according to § 77 subsec 3 ASGG, the insured must pay, on an equitable basis, for procedural costs incurred by the insurance carrier which he causes through mischief, delay or misguided actions. 133 See Schwimann/Neumayr (fn 17) § 332 ASVG no 1 ff. 134 On this point Koziol (fn 51) no 10/40.
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social insurance carrier at the time of the injury insofar as the social insurance carrier is obliged to provide the injured person with social insurance benefits. Provisions comparable to § 332 ASVG are contained in § 190 Social Security Act for the Self-Employed (Gewerbliches Sozialversicherungsgesetz, GSVG), § 178 Social Security Act for Farmers (Bauern-Sozialversicherungsgesetz, BSVG), § 64a Social Security Act for Public Notaries (Notarversicherungsgesetz, NVG) and § 125 Social Security Act for Civil Servants (Beamten-Kranken- und Unfallversicherungsgesetz, B-KUVG). 90 The assignment by operation of law only covers those claims for compensation which relate to the damage which the social insurance benefits are also meant to cover (principle of congruence, Kongruenzprinzip). Accordingly, it is a prerequisite of the transfer of the financial claim that the person with the claim for damages also be the same person who is the social insurance beneficiary (personal congruence, persönliche Kongruenz), that the compensatory function of the damages claim and the social insurance benefit be consistent (factual congruence, sachliche Kongruenz) and, that the timeframe of the damages claim and the social insurance benefit be consistent (temporal congruence, zeitliche Kongruenz).135 This is intended to insure that the injured person’s claim for damages is neither improperly limited nor that there be double recovery of damages. 91 If the injured person’s claim for damages is reduced on the basis of their contributory negligence (§ 1304 ABGB), the question arises whether the (reduced) claim for compensation always transfers to the social insurance carrier or whether it remains with the injured person if the insurance does not cover the full loss. The existence of a preferential quota of damages (Quotenvorrecht) can be derived from the wording of § 332 ASVG:136 the social insurance carrier can claim full compensation for the benefits it provided from the person who caused the damage insofar as these are covered by the claim for compensation reduced by the element of contributory fault. The injured person only retains a potential claim in respect of damage not covered by the social insurance carrier’s obligation to provide benefits.
135 Further details in Schwimann/Neumayr (fn 17) § 332 ASVG no 37 ff; Tomandl/Krejci/ Böhler (fn 19) 3.2.3.3.3 ff. 136 W Selb, Das Quotenvorrecht der Sozialversicherungsträger (1969) 28 ff; H Krejci, Kongruenzlehre und Quotenvorrecht nach § 332 ASVG und § 1542 RVO, ZAS 1974, 5 ff; E Kunst, Die Beziehung zwischen Schädiger und Sozialversicherung im österreichischen Recht I, ZAS 1970, 129 ff; Koziol (fn 51) no 12/112; Tomandl/Krejci/Böhler (fn 19) 3.2.4.3. OGH 2 Ob 188/54 = SZ 27/68; 2 Ob 178/04x = ecolex 2005/40; 2 Ob 269/ 04d = ZVR 2006/86; 2 Ob 205/07x = ZVR 2008/110 (C Huber): no analogous application outside social insurance.
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Section § 67 Insurance Contract Act (Versicherungsvertragsgesetz, VersVG) 92 also envisages an assignment by operation of law in the area of private insurance. The assignment does not occur at the time of the damage but only when the insurance has provided benefits. Furthermore, unlike social insurance, there is no insurer’s preferential quota of damages. Instead, § 67 VersVG specifically requires that the transfer of the claim for compensation may not occur if this is to the detriment of the insured. In these circumstances the interests of the insured come first.137 The insured can claim those losses not covered by the insurance from the person who caused the damage and the claim for compensation is only transferred to the insurer insofar as it, added to the insurance benefits, exceeds the losses incurred by the injured person.
b) The insurance carrier’s own right to recourse (§ 334 ASVG) If the damage is the consequence of a work accident or work-related illness 93 for which the employer or equivalent is responsible, liability in respect of the injured person is generally excluded (§ 333 ASVG); thus, an assignment by operation of law does not come into consideration. However, the social insurance carrier which is under an obligation to provide benefits is, in part, granted its own right to recourse (§ 334 ASVG). This is considered in more detail below.
2.
Recourse against the employer
Insofar as the employer caused the work accident deliberately or by gross 94 negligence the social insurance carrier has the right under § 334 subsec 1 ASVG to be compensated for of any social insurance benefits paid out. In the case of gross negligence the economic circumstances of the employer are to be taken into account and the social insurance carrier can waive the right to recourse in total or in part (§ 334 subsec 5 ASVG). When slight negligence is present a right to recourse is excluded just as it is if the social insurance carrier provides compensation for damage to integrity under § 213a ASVG. The right to recourse pursuant to § 334 ASVG is not a secondary right like 95 the right to an assignment by operation of law. Rather, it is a genuine right which does not qualify as a claim for compensation.138 The scope of
137 Koziol (fn 51) no 12/112. 138 To this and what follows Tomandl/Krejci/Böhler (fn 19) 3.3.4.2.
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the right to recourse pursuant to § 334 ASVG is, therefore, not based on the damage suffered by the insured but rather on the expense incurred in providing the social insurance benefits. 96 The insured’s contributory fault does not reduce the social insurance carrier’s claim to recourse against the employer (§ 334 subsec 3 ASVG). In this respect the employer, which is subject to the recourse claim, is in a significantly worse position than it would be under the general compensation rules.
3.
Recourse against a colleague?
97 If an employee injures a work colleague, the injured person’s claim is transferred to the social insurance carrier insofar as the insurance carrier is obliged to provide benefits. The general rule of assignment by operation of law pursuant to § 332 ASVG is applied. § 332 subsec 5 ASVG, however, creates a particularity insofar as the social insurance carrier has no right to recourse from an employee who has caused damage through slight negligence. In this way, if an employee is slightly negligent, liability immunity is created in the guise of a rule relating to assignment by operation of law. This is rather unusual139 in terms of systematic stringency and, consequently, can be viewed as a legislative fallacy.140 98 This legal construct does not affect the legal position of the injured person. Because the liability immunity is achieved by limiting the social insurance carrier’s right to recourse it only affects those claims for compensation which have been transferred to the social insurance carrier. Because damages for material loss as well as for pain and suffering and for disfigurement are, in principle, incongruent, they are – apart from damage to integrity under § 213a ASVG – not covered by social insurance and, therefore, do not transfer to the social insurance carrier.141 The injured person is, consequently, free to hold the person who caused the injury fully to account in respect of these claims.142
139 140 141 142
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Tomandl/Krejci/Böhler (fn 19) 3.2.2.6. Koziol (fn 13) 233. Ibid, 233 f with further references. If the employer were to be liable for the damage under §§ 1313a, 1315 ABGB, the employee who caused the damage and who is being held to account for it by the injured colleague could, by virtue of § 2 in conjunction with § 3 and § 4 DHG, transfer the obligation to compensate wholly or partly to the employer. With reference to the employer’s liability privilege, leading jurisprudence does not allow the employee who caused the injury to take this route and consequently, his legal position is markedly
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Finally, it should be noted that the exclusion of the right to recourse under 99 § 332 subsec 5 ASVG has no effect if the accident is caused by a vehicle for which there is enhanced liability. In such cases the social insurance carrier can take recourse against the liability insurer up to the value of the insured amount. This counter-exception to the general rule in § 332 subsec 5 ASVG is justified – as is the exception to the employer’s liability privilege according to § 333 subsec 3 ASVG – by the argument that the liability insurer should not be privileged at the expense of the social insurance carrier.
4.
Recourse against third parties
Insofar as the social insurance carrier is required to provide benefits which 100 are congruent with the claim for compensation which the injured person has against a third party, an assignment by operation of law arises at the time when the injury occurs by virtue of the general rule in § 332 ASVG. The social insurance carrier can claim recourse from the third party and in doing so its preferential quota of damages is to be taken into account.
H.
Interaction with general social welfare provision and private insurance
1.
Relationship between health and accident insurance
Because there is no strict separation of risks based on their cause143 under 101 Austrian law there can be overlaps and occasionally multiple responsibilities between the various classes of social insurance. Essentially, the needs of the insured person will be met by a single class of insurance (external representation) whilst the burden is divided internally between the participating social insurance carriers so as to retain, in principle, the separate financing of the risks.144 Thus, in cases of work accidents and work-related illnesses there can be 102 dual responsibility between health and accident insurers which produces an obligation to equalise between them.145 In doing so a distinction must be made between two categories of cases:
less advantageous in comparison with the general rules of liability (to this critically Koziol (fn 13) 234 f with further references). 143 See W Selb/W Schrammel in: Tomandl (fn 1) 5.1.1.1. 144 Tomandl/Selb/Schrammel (fn 143) 5.1.1.1. 145 Cf ibid, 5.1.2.1.
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103 On the one hand there are cases where dual responsibility may arise which is undesirable for practical reasons: the insured should neither be able to claim from both social insurance carriers nor should it be within their power to choose which carrier should be obliged to provide cover. A statutory division was, therefore, made according to which one carrier always stands back (see §§ 139 subsecs 1 and 5, 191 subsec 1 and 204 ASVG). This division is effective externally but does not anticipate the internal division. There are special rules which deal with that. The health insurance carrier bears the cost for medical treatment and any recurring payments for the first four weeks. Thereafter the cost is borne by the accident insurance carrier. A health insurance carrier which has borne costs after these first four weeks can demand a refund of those costs from the accident insurance carrier.146 If, on the other hand, the accident insurance carrier becomes involved in the provision of medical treatment as a result of the accident and consequently provides benefits from the outset, it can claim a refund from the health insurance carrier for the first four weeks (cf § 316 subsec 1 ASVG). 104 On the other hand there are cases in which there is basically no dual responsibility but the ‘wrong’ insurance carrier has provided benefits. This can happen relatively easily because at the time an accident or illness occurs it is often unclear whether they are work related.147 If an insurance carrier provides benefits and it subsequently becomes clear that, contrary to the original assumption, the case is or, as appropriate, is not a work accident (work-related illness), the insurance carrier which is not responsible has a right to recourse against the insurance carrier which is actually responsible (§§ 315 and 316 subsec 2 ASVG). The assessment of whether the matter is a work accident (work-related illness) can, consequently, be delayed.148 105 Finally, it should be noted that the reciprocal offset does not have to be undertaken separately in each individual case but instead is made in lump sums. The level of these lump sums is agreed between the two participating carriers or, as the case may be, set by the Federal Minister responsible for social insurance.149
146 147 148 149
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Ibid, 5.1.2.1.1. Ibid, 5.1.2.1.2. Ibid, 5.1.2.1.2. Tomandl (fn 90) no 296.
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2.
Relationship between Social Insurance and Minimum Insurance
It has been recognised that social welfare benefits, intended to ensure that 106 those in need live with dignity, are, by their nature, subsecidiary.150 The same is true of the means-tested minimum insurance which replaced social welfare benefits.151 It is only provided if it is not possible for the person in need to provide for 107 themselves or if they cannot be expected to do so and further, they do not receive sufficient benefits from any third party. The principle of subsidiarity is demonstrated, in particular, by the fact that the social security carrier (now the minimum insurance carrier) can demand a refund of any benefits paid.152 If it provides benefits to a person who has a right to claim under social insurance, the social insurance carrier must, in principle, refund these costs (cf generally § 324 and in respect of accident insurance § 326 ASVG). The insurance carrier then deducts the amounts which it has paid out to satisfy the social security carrier’s (now the minimum insurance carrier’s) claim for a refund from any cash payments made to the benefit of the person entitled to claim (§ 329 ASVG).153
I.
Interaction with employers’ liability
Where the employer’s liability privilege applies, compensation claims for 108 personal injury made by employees against employers which have not acted intentionally will fail (§ 333 ASVG).154 The courts also consistently apply the employer’s liability privilege to those compensation claims for which there are no equivalent social insurance benefits.155 In this way the injured person loses their claim for damages for pain and suffering (§ 1325 ABGB) which compensates for immaterial loss as well as damages for disfigurement (§ 1326 ABGB) which compensates for a less advantageous (professional) advancement. Since the 48th amendment to the ASVG in 1990 this unsatisfactory legal position has been slightly improved by
150 See Grillberger (fn 1) 132. 151 Cf in respect of minimum insurance RV 677 BlgNR 24. GP 1; EBRV 677 BlgNR 24. GP 7. 152 See in relation to this EBRV 677 BlgNR 24. GP 18. 153 The deduction in respect of repayment of benefits paid may not, however, exceed the value of half of each individual payment due. 154 For further details in respect of this see no 110 ff below. 155 For quotations see Koziol (fn 13) 221 and Tomandl/Krejci/Böhler (fn 19) 3.3.3.
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§ 213a ASVG, which provides compensation for damage to integrity if a serious adverse effect on physical or mental integrity is caused by a grossly negligent failure to comply with industrial safety regulations. This remedy is intended to deal with non-pecuniary losses.156 Material losses, on the other hand, do not fall within the ambit of social insurance from the outset so that the employee can continue to claim compensation directly from the person who caused the injury.157 109 The co-worker’s liability privilege does not worsen the legal position of the injured employee because it is only the social insurance carrier’s right to recourse which is limited (§ 332 subsec 5 ASVG).158 Insofar as the social insurance carrier does not provide any benefits, the injured person retains a direct claim against their co-worker, which is the case in respect of damages for pain and suffering (§ 1325 ABGB), compensation for disfigurement (§ 1326 ABGB) as well as for material loss.159 Neither the employer’s liability privilege nor the co-worker’s liability privilege are to be applied if the insured accident was caused by a vehicle for which there is enhanced liability. The injured person’s claim for compensation or, as the case may be, the social insurance carrier’s right to recourse is limited to the value of the insurance in such cases (§ 332 subsec 5; § 333 subsec 3 ASVG).160
III. Employers’ Liability A.
Classification
1.
General fault-based liability and the employer’s liability privilege
110 According to general liability rules, the employer is liable to its employee (§ 1293 ff ABGB). It bears an obligation, based on the fiduciary duty which arises out of the employment relationship, to safeguard and take reasonable care161 (§ 1157 subsec 1 ABGB, § 18 Employees Act (Angestelltengesetz, 156 See no 41 above. 157 Koziol (fn 13) 220; Schwimann/Neumayr (fn 17) § 333 ASVG no 17; OGH 2 Ob 35/57 = JBl 1957, 455; 2 Ob 303/62 = EvBl 1963/91; 2 Ob 158/65 = SZ 38/96; 8 Ob 274/75 = SZ 49/15. 158 For further details see no 7 ff as well as no 97 ff above. 159 See Koziol (fn 13) 233 f; Schwimann/Neumayr (fn 17) § 332 ASVG no 152. 160 See no 97 ff above and no 118 below. 161 If the duty of care for one employee conflicts with the duty in respect of another then which takes priority depends on the worthiness of protection (F Kernbichler, Haftungsprivileg des DG und des DN – ein unlösbarer Widerspruch, ÖJZ 2010, 43).
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AngG))162 of its employees. The culpable breach of this duty gives rise to contractual compensation obligations. In this case, account must be taken of the reversal of the burden of proof pursuant to § 1298 ABGB.163 Insofar as the employer requires special knowledge in order to carry out its obligations it is deemed to be an expert according to § 1299 ABGB.164 Accordingly, when assessing culpability, it is not, as under § 1297 ABGB, the subjective knowledge and ability of the employer which is taken into account but rather an objective test is applied which is why the employer has to take responsibility for all work and subject-specific knowledge and skills.165 The employer is held liable for damage to his employees not only according to the rules of contractual but also to those of tortious liability, although tortious liability is of little relevance to the current subject.166 According to the outlined basic principles, the employer is obliged to 111 compensate the employee for material losses which are caused culpably. In the case of contractual liability not only material losses but also pure economic loss has to be compensated. The extent of compensation depends on the severity of the fault according to the ‘structured concept of damage’ (gegliederter Schadensbegriff) outlined in §§ 1323, 1324 ABGB:167 in the case of slight negligence only actual losses are to be compensated, whereas damages for loss of profit are only granted if gross fault (gross negligence or intention) is present. On the other hand, § 333 f ASVG provides for an employer’s liability 112 privilege with reference to personal injury which represents a significant modification to the rules presented above. The employer is only obliged to compensate the employee (or their dependents) for personal injury arising out of a work accident or work-related illness where it caused the injury
162 On this EA Kramer, Arbeitsvertragliche Verbindlichkeiten neben Lohnzahlung und Dienstleistung (1975); T Tomandl (ed), Treue- und Fürsorgepflicht im Arbeitsrecht (1975); K Spielbüchler in: H Floretta/K Spielbüchler/R Strasser, Arbeitsrecht I: Individualarbeitsrecht (4th edn 1998) 329 ff; J Pacic, Die Fürsorgepflicht des Arbeitgebers im Lichte der Rechtsprechung, ZAS 2010, 144 ff. 163 Unlike its application to principal and ancillary contractual obligations, the application of § 1298 ABGB to the duty to safeguard and take reasonable care is, admittedly, extremely controversial. For more details see E Karner in: H Koziol/P Bydlinski/R Bollenberger, Kurzkommentar zum ABGB (in the following: KBB) (3rd edn 2010) § 1298 no 3 with further references. 164 OGH 9 Ob A 54/88 = SZ 61/67; critically M Achatz, Die schadenersatzrechtlichen Konsequenzen eines fehlerhaften LSt-Abzugs, ZAS 1990, 124 ff and Spielbüchler (fn 162) 346. 165 See KBB/Karner (fn 163) § 1299 no 1 ff. 166 On the relationship between contractual and tortious compensation claims see Koziol (fn 51) no 17/8 ff. 167 KBB/Karner (fn 163) § 1293 no 3 ff.
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deliberately (§ 333 subsec 1 ASVG). Even in those cases the compensation obligation is reduced by the benefits provided by the statutory accident insurance. 113 This employer’s liability privilege is usually justified, above all, by the fact that the employer has to pay the insurance contributions and that statutory accident insurance was intended to discharge employer’s liability. In addition it is argued that this privilege avoids conflicts between employer and employee to the benefit of company harmony.168 Having said that, it should be noted that the employer’s liability privilege has its primary, material impact on the insured because the social insurance carrier obliged to provide benefits is granted a right to recourse against the employer which is significantly stricter than those recourse rights which normally exist within the general liability insurance framework.169 The social insurance carrier to which the employee makes a claim has a right of recourse against the employer not only where there is intention but also where there is gross negligence (§ 334 ASVG). Only compensation for loss of integrity pursuant to § 213a ASVG, which serves primarily to compensate for non-pecuniary loss, is excluded from the regress right. In cases of recourse based on gross negligence – unlike cases where there is intent – the economic circumstances of the employer are to be taken into account and the social insurance carrier can waive its right to recourse entirely or in part. In the case of slight negligence the social insurance carrier has no right to recourse. 114 Whilst the employer’s liability privilege leads only to a limited improvement in the employer’s position, the injured employee’s legal position is made significantly worse in comparison to the position under the general rules. According to the dominant, though questionable, legal view170 the liability immunity set out in § 333 ASVG includes claims for damages in respect of losses not covered by social insurance. This leads, in particular, to the injured person losing their claim for damages for pain and suffering (§ 1325 ABGB) and for disfigurement (§ 1326 ABGB). With the implementation of the 48th amendment of the ASVG in 1989 the legislator created a social insurance right to compensation for loss of integrity under § 213a ASVG in order to deal with cases of particular hardship. This compensation corresponds, in part, to damages for pain and suffering and for disfigurement but because of its very limited scope it does not represent a full substitute. It would have been better if the leading jurisprudence 168 Critically in respect of these arguments Koziol (fn 13) 221 f with further references. 169 See Tomandl/Krejci/Böhler (fn 19) 3.3.1. 170 For quotations see Koziol (fn 13) 221 and Tomandl/Krejci/Böhler (fn 19) 3.3.3.
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had only ever applied the employer’s liability privilege insofar as there was an obligation to provide congruent social insurance benefits; that is benefits equivalent to the claims available under the compensation rules.171 On the other hand, it is often pointed out that referring employees to the 115 social insurance carrier has numerous benefits for them.172 The employee does not need to prove that the employer was at fault and receives benefits irrespective of possible contributory negligence or the employer’s insolvency. Furthermore, the employment relationship is not damaged by the need to enforce a claim for damages. However, even if this is accurate, there is little merit in and hardly any justification for the fact that, even where the employer is grossly negligent, the injured employee is only granted social insurance benefits when more extensive claims would have been available to the employee under the general rules of compensation.173 The employer’s liability privilege applies not only to the employer but also 116 to the employer’s statutory or authorised representatives as well as to supervisors (Aufseher im Betrieb) because they carry out the employer’s functions. It is a characteristic of a supervisor that they have a certain managerial authority and thus acquire a duty of care towards other employees.174 It is difficult to itemise all the factors which distinguish a supervisor from other workers and thus the concept is subject of much dispute.175 According to case law, for an employee to qualify as a supervisor a ‘certain independence and responsibility for the interplay of people and technology’ is determinant.176 The judiciary generally construes this term relatively widely and in favour of the injured co-worker.177 Because
171 See V Steininger, Schadenersatz bei Arbeitsunfällen, in: Gschnitzer-GedS (1969) 398 ff, 410 f; Koziol, DRdA 1980, 374; Koziol (fn 13) 221; Tomandl/Krejci/Böhler (fn 19) 3.3.3; Schwimann/Neumayr (fn 17) § 333 ASVG no 14, who doubts that the leading juisprudential interpretation is objectivly justified and is thus constitutional; taking the same view Kernbichler, ÖJZ 2010, 44. 172 See M Drs, Arbeits- und Sozialrecht (2009) 139 f. 173 Koziol (fn 13) 222. 174 OGH 2 Ob 115/78 = SZ 51/128; 4 Ob 167/85 = DRdA 1987/21 (W Albert); 4 Ob 621/88 = JBl 1989, 319; 9 Ob A 298/01s = ZVR 2003/54; 9 Ob A 108/06g = DRdA 2007, 148; 2 Ob 61/07w = Österreichische Juristen-Zeitung, OGH Leitsätze (ÖJZ-LS) 2008/15; 8 Ob A 3/ 10i = ecolex 2010/218. 175 For more details see Koziol (fn 13) 228 ff as well as Tomand/Krejci/Böhler (fn 19) 3.3.2.2.3. 176 OGH 2 Ob 197/50 = SZ 23/320; 4 Ob 170/57 = ZVR 1959/29; 4 Ob 621/88 = JBl 1989, 319; 4 Ob 167/85 = DRdA 1987/21 (W Albert); 9 Ob A 108/06g = DRdA 2007, 148. 177 Brodil/Windisch-Graetz (fn 4) 113.
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the supervisor’s privilege cannot be satisfactorily explained it should, to the contrary, in any case be restrictively construed.178 117 Finally, it should be noted that the employer’s liability privilege under § 333 ASVG is also applied to those who are compulsorily insured (§ 4 subsec 1 nos 4, 5 and 8 ASVG) as well as those with partial accident insurance (§ 8 subsec 1 nos 3(c), (h) and (i) ASVG) and the carriers responsible for educational, rehabilitation and healthcare institutions. There is no obvious objective justification for the extension of the employer’s liability privilege to institutions which do not make contributions to accident insurance. The specific provisions are, therefore, constitutionally suspect.179
2.
Work accidents caused by vehicles for which there is enhanced liability
118 § 333 subsec 3 ASVG sets out an important exception to the employer’s liability privilege: it has no effect if the work accident was caused by a vehicle for which there is enhanced liability. In such cases § 333 subsec 3 ASVG leads us back to the general liability rules and indeed to strict liability as well as to fault-based liability.180 The level of compensation available, apart from cases of intentional injury, is limited to the insurance amount of the general liability insurance. This liability limit means that it is the risk pool of those who take up general liability insurance which bears the expense rather than the employer.181
B.
Elements of liability
1.
Fault-based liability
119 The employer is under a duty of care arising out of the employment contract. It must arrange working conditions in such a way that the life 178 Koziol (fn 13) 228, 230. 179 W Holzer, Dienstgeberhaftungsprivileg (§ 333 ASVG) und den Arbeitsunfällen gleichgestellte Unfälle (§ 176 ASVG), JBl 1982, 355; Tomandl/Krejci/Böhler (fn 19) 3.3.2.2.5. 180 OGH 9 Ob A 84/93 = DRdA 1994/11 (P Apathy) = ZAS 1995/6 (E Bernat); 9 Ob A 109, 110/ 93 = DRdA 1994/27 (BA Oberhofer); 8 Ob A 287/94 = DRdA 1995, 522; Reischauer, DRdA 1992, 318; P Apathy, Teilnahme am allgemeinen Verkehr (§ 333 ASVG aF) und Tätigkeit beim Betrieb eines Kraftfahrzeugs (§ 3 Z 3 EKHG), in: FS Schwarz (1991) 471 fn 32, 474; Tomandl/Krejci/Böhler (fn 19) 3.3.2.3.2. 181 W Mazal, Schmerzengeld für Dienstnehmer trotz Haftungsprivileg, ecolex 1990, 303; F Messiner, Die Haftung des Kfz-Haftpflichtversicherers nach Arbeitsunfällen gemäß § 333 ASVG, ZVR 1990, 38; OGH 2 Ob 64/94 = ZVR 1995/122.
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and health of employees are safeguarded and their material and immaterial interests are protected as much as possible (§ 1157 subsec 1 ABGB, § 18 AngG).182 The duty of care also gives rise, in particular, to the obligation to protect 120 the employee’s personal rights (§ 16 ABGB).183 In respect of sexual or other gender-based harassment, specific statutory provisions have been enacted: gender-based discrimination occurs not only where the employer directly harasses the employee but also if it culpably fails to provide appropriate assistance when there is harassment by a third party (§§ 6 and 7 Equality Act (Gleichbehandlungsgesetz, GlBG)).184 Insofar as the employer or supervisor carries out the harassment at the workplace itself, the employer’s liability privilege under § 333 ASVG does not, generally, prevent liability because the harassment is usually intentional. The employer will also be under an obligation to provide compensation if it does not carry out the harassment but instead intentionally fails to undertake the protection measures required.185 The contractual duty of care is made concrete in numerous employee 121 protection norms.186 The public law obligations of performance or omission which are imposed on the employer for the protection of the employee become part of the employment relationship via the duty of care and thus, become legally enforceable private law obligations.187 The Employee Protection Act (ArbeitnehmerInnenschutzgesetz, ASchG), which serves to prevent occupational accidents and illnesses, is of particular importance in this respect: the arrangement of working conditions must be in accordance with the latest technical and medical knowledge and measures to evaluate risks and to provide protection from them are required.188 In addition to the risk protection provisions – that is the technical employee protection rules which regulate the arrangement and usage of working space and operating floors, tools and other equipment – note should be taken in this context of the working time, child and youth as well as maternal protection rules. 182 Spielbüchler (fn 162) 330 f. 183 G Hopf, Belästigung in der Arbeitswelt, in: FS Bauer/Maier/Petrag (fn 70) 147 ff, 157 with further references. 184 On this Rebhahn/Posch (fn 70) §§ 6–7 no 1 ff as well as no 127 ff below. 185 See Rebhahn/Posch (fn 70) §§ 6–7 no 73 ff. 186 For details of the interplay between private employment contract law and the public employment protection rules, which is subject of dogmatic dispute but of little practical importance, see H Krejci in: P Rummel, Kommentar zum ABGB (3rd edn 2000) § 1157 no 15 with further references. 187 Spielbüchler (fn 162) 331. 188 More detailed F Schrank/W Mazal, Arbeitsrecht (4th edn 2008) 154 ff.
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122 Under the general rules of contractual liability, the employer is liable not only for its own unlawful and culpable acts but also for each culpable act of its agents (§ 1313a ABGB). In this context agents are persons engaged by the employer to carry out any contractual or statutory obligation it has in respect of its employees. In addition, pursuant to § 1315 ABGB, the employer bears responsibility if its employees are incapable or the employer knows they will act dangerously. 123 If the employer is a legal entity, it is not only responsible for its organs but also for its office holders (Machthaber; § 337 ABGB). These are people in responsible, managerial or supervisory functions.189 In addition, a legal entity also bears vicarious liability according to §§ 1313a, 1315 ABGB. 124 It can thus be said that an employer which expressly or impliedly delegates its employment contractual obligations to other employees is automatically liable if those employees culpably cause damage – although the employer’s liability privilege under § 333 ABGB certainly remains relevant.190 125 Of further relevance is that § 333 subsec 4 ASVG, as previously noted, extends the liability privilege to the statutory or authorised representatives of the employer and to the ‘supervisors in the factory’ (Aufseher im Betrieb) without making their privilege dependant on the employer’s actual obligation to assume liability.191 126 If the employee and the employer both carelessly create the conditions resulting in damage, the employee will be considered contributory negligent and, according to the general rule in § 1304 ABGB, this will result in a reduction in the compensation claim.
2.
Strict liability
127 If the employer is the holder of a motor vehicle or the operator of a train and if there is an accident arising out of the operation of these vehicles, it is strictly liable without fault under the Train and Motorised Vehicle Liability Act (Eisenbahn- und Kraftfahrzeughaftpflichtgesetz, EKHG). The em-
189 F Bydlinski, ‘Bananenprozeß’ und Schadenersatzrecht, ZAS 1966, 169 ff; id, System und Prinzipien des Privatrechts (1996) 144 f; R Ostheim, Organisation, Organschaft und Machthaberschaft im Deliktsrecht juristischer Personen, in: GedS Gschnitzer (1969) 317 ff, 330 f, 335; OGH 6 Ob 153/97m = SZ 70/150; 3 Ob 119/99t = ZVR 2000/90; 7 Ob 271/00d = JBl 2001, 525. 190 Spielbüchler (fn 162) 348. 191 Spielbüchler (fn 162) 348.
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ployer’s liability privilege is thus not applicable but compensation is limited to the insurance sum (§ 333 subsec 3 ASVG).192 It should be noted that a claim under § 3 no 3 EKHG will fail if the injured 128 person was engaged in the operation of the train or motor vehicle.193 § 12 (death) and § 13 f (physical injury or damage to health) of the EKHG 129 regulate the scope of compensation. There is an entitlement to costs of treatment, loss of income, costs relating to increased needs and damages for pain and suffering. Additionally, in cases of death, funeral expenses are to be met and dependents receive compensation. § 15 f EKHG sets a compensation limit. The injured employee’s contributory negligence also leads to a reduction 130 in damages in cases of strict liability. This is set out in § 7 EKHG which makes specific reference to the general rule in § 1304 ABGB.
3.
Liability for risks without fault
According to § 1014 ABGB, the principal must ‘reimburse [the agent] for 131 all losses connected with the performance of the assignment’. In this way § 1014 ABGB creates a liability, independent of fault,194 for all losses linked to the performance of the assignment. This is justified by the fact that the agent acts in the interest of the principal.195 The basic idea of § 1014 ABGB obviously also applies to those losses, typically linked to the performance of work tasks, which specifically result from the employee making its equipment available for the employer’s use.196 For this reason § 1014 ABGB is applied by analogy in employment law cases.197 However, liability for risk without fault is also based, in part, on a cumulative analogy with the DHG.198
192 With reference to this see no 118 above. 193 Cf no 158 ff below. 194 To this F Bydlinski, Die Risikohaftung des Arbeitgebers (1986); W Faber, Risikohaftung im Auftrags- und Arbeitsrecht (2001); H Fitz, Risikozurechnung bei Tätigkeit im fremden Interesse (1985). 195 P Bydlinski in: KBB (fn 163) § 1014 no 7. 196 Spielbüchler (fn 162) 335. 197 Bydlinski (fn 194) 2 ff, 16 ff with further references. 198 F Schrank, Betriebsrisiko und arbeitsrechtliche Wertordnung, ZAS 1985, 8 ff, 12; T Tomandl, Grundlagen und Grenzen der verschuldensunabhängigen Arbeitgeberhaftung, ZAS 1991, 37 ff; Schrank/Mazal (fn 188) 222.
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132 The employer’s liability for risk encompases, for example, damage to an employee’s car used, by agreement, for work-related journeys.199 According to case law, defence costs relating to criminal proceedings arising out of business activities are to be reimbursed in an identical way.200 The same applies to costs incurred by employees in respect of claims made against them by third parties arising out of damage they caused them culpably in the course of carrying out their duties.201 The employee’s journey from home to work is, however, considered being a part of the employee’s personal life and the employer bears no risk in this respect.202 133 The employer’s liability privilege in § 333 ASVG means that, as a matter of principle, there is no compensation for the employee’s personal injuries.203 It is, however, disputed whether liability for risk is also to be rejected where the employer is accountable because the work accident was caused by a vehicle for which there is enhanced liability (§ 333 subsec 3 ASVG). In some cases the vehicle liability insurer has accepted204 and in some cases rejected205 liability for this risk. 134 Once again, there is agreement that the employee’s contributory negligence (§ 1304 ABGB) reduces its claim for damages based on the employer’s liability for risk, although the provisions of the DHG must be taken into account.206
199 OGH 4 Ob 35/82 = DRdA 1984/1 (P Jabornegg); 14 Ob A 7/87 = ZAS 1988/24 (F Kerschner) = DRdA 1989/26 (P Jabornegg); 9 Ob A 504/87 = DRdA 1991/2 (P Jabornegg); 9 Ob A 122/ 98a = SZ 71/172; 9 Ob A 2136/96z = DRdA 1997/28 (F Kerschner). 200 OGH 9 Ob A 326/99b = JBl 2000, 530 (F Kerschner). 201 OGH 9 Ob A 139/39 = DRdA 1991/12 (F Kerschner) = ZAS 1991/8 (BA Oberhofer); 8 Ob A 2051/96t = ZAS 1997/12 (T Tomandl). 202 OGH 9 Ob A 49/91 = RdW 1991, 301. 203 F Kerschner, Die Reichweite der Arbeitgeberhaftung nach § 1014 ABGB, in: T Tomandl (ed), Haftungsprobleme im Arbeitsverhältnis (1991) 65 f; KBB/Bydlinski (fn 163) § 1014 no 10. 204 OGH 2 Ob 203/02w = ZVR 2004/16; F Kerschner/E Wagner, Risikohaftung des Arbeitgebers bei Personenschaden des Arbeitnehmers? DRdA 2001, 570 ff; BA Oberhofer, Der Ersatzanspruch bei Schäden wegen Tätigkeit in fremdem Interesse, ÖJZ 1994, 732 f; S Kissich, Risikohaftung des Arbeitgebers analog § 1014 ABGB auch für Personenschäden, ZVR 2005, 187 ff. 205 OGH 8 Ob A 117/02t = ZAS 2004/91 (G Schmaranzer); 9 Ob A 36/03i = DRdA 2004/30 (G-P Reissner); P Apathy, Risikohaftung des Arbeitgebers für Personenschäden? JBl 2004, 755 ff; W Faber, Haftung für Personenschäden eines als Kfz-Lenkers eingesetzten Arbeitnehmers auf Grund § 1014 ABGB? JBl 2003, 669 ff; E Helmich, Arbeitsunfälle mit Kraftfahrzeugen – verschuldensunabhängige Dienstgeberhaftung für Personenschäden? ecolex 2003, 901 ff; interceding A Vonkilch, Haftpflicht für KfzSchäden von Dienstnehmern, Arbeitgeberprivileg und Haftpflichtversicherung nach der 48. ASVG Novelle, ZVR 2004, 40 ff. 206 P Apathy in: Schwimann (fn 17) § 1014 no 11; KBB/Bydlinski (fn 163) § 1014 no 8.
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C.
Scope of protection
Employers are only liable under the general liability rules for personal 135 injury sustained by employees if the employer’s liability privilege under § 333 ASVG does not apply. This is the case if the employer intentionally injures the employee or if the accident is caused by a vehicle for which there is enhanced liability. Compensation for personal injury is based on § 1325 ABGB (physical 136 injury) and § 1327 ABGB (death) and § 12 ff EKHG207 as appropriate. Unlike strict liability claims there is no maximum amount of compensation in fault-based liability. The ASVG does not encompass material losses which is why the general 137 compensation rules are always applied208 and compensation arises by virtue of § 1331 f ABGB or, as the case may be, § 1 in conjunction with § 16 EKHG.
D.
Heads and levels of damages
1.
Personal injuries
Where the employer’s liability privilege applies, the employer cannot be 138 held liable. The employer’s obligation to compensate is, therefore, not determined by the general rules relating to compensation for damage but only by the provisions of social insurance law. Even claims for damages for pain and suffering (§ 1325 ABGB) and disfigurement (§ 1326 ABGB) will fail.209 As previously described in detail, the injured employee has a claim for 139 cash and non-cash benefits against the accident insurance carrier.210 In terms of non-cash benefits, accident-related medical treatment, rehabilitation measures and auxiliary aids should be mentioned and in terms of cash benefits, disability pension and care allowance. Compensation for non-pecuniary loss is dealt with under § 213a ASVG within the ambit of compensation for loss of integrity.
207 See no 127 ff above. 208 Koziol (fn 13) 220; Schwimann/Neumayr (fn 17) § 333 ASVG no 17; OGH 2 Ob 35/57 = JBl 1957, 455; 2 Ob 303/62 = EvBl 1963/91; 2 Ob 158/65 = SZ 38/96; 8 Ob 274/75 = SZ 49/ 15. 209 On this and compensation for loss of integrity under § 213a ASVG see no 52 ff above. 210 To this see no 38 ff above.
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2.
Material damages
140 There is unanimity that the employer’s obligation to compensate for material loss is in no way affected by the employer’s liability privilege. This is correctly justified by the fact that material loss lies entirely outside the ambit of social insurance.211 Therefore, the general rules of compensation apply to material loss.
E.
Administration of claims
141 According to § 50 subsec 1 no 1 ASGG, disputes between employers and employees which arise out of the employment relationship are matters of employment law to which, according to § 1 ASGG, the Employment and Social Act is to be applied. Where there is a dispute employees must, therefore, make their claims in the appropriate Social Court in accordance with § 3 (subject-matter jurisdiction) and § 4 ASGG (local jurisdiction). The composition of the court is dealt with under no 74 ff above. 142 The special rules relating to representation in employment and social security matters as well as the less restrictive rules on access to the legal process can be found in no 74 ff above. 143 However, there are also differences in the rules which apply to employment matters as opposed to social security matters. If claims pursuant to § 50 subsec 1 ASGG are filed by individuals who were not professionally represented at the first instance (cf § 39 subsec 3 ASGG), there is no prohibition on introducing new facts (Neuerungsverbot) at appeal (§ 63 subsec 1 ASGG). If a party takes advantage of the right to introduce new facts (Neuerungserlaubnis) the opposing party can also introduce new facts in relation to the same claim (§ 63 subsec 2 ASGG). 144 Unlike in social security claims212 there are no special rules relating to costs in employment law matters and the general rules, which mean that the loser pays, apply.
211 OGH 2 Ob 35/57 = JBl 1957, 455. 212 See no 74 ff.
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F.
Rights of recourse
As previously explained, the social insurance carrier has a genuine right of 145 recourse against the employer where there is gross negligence or intent. In cases of gross negligence, the insurance carrier can waive its right to recourse in part or in full on the basis of the employer’s economic circumstances (§ 334 ASVG).213
G.
Interaction with social welfare systems and private insurance
Insofar as the accident insurance carrier is actually under an obligation to 146 provide benefits as a result of a work accident or work-related illness but the benefits are initially provided by the health insurance carrier, the latter has a right to recourse against the accident insurance carrier.214 If the injury is caused by a work accident or work-related illness for which 147 the employer is responsible then, in general, liability is excluded (employer’s liability privilege, § 333 subsec 1 ASVG). Insofar as the employer caused the work accident or work-related illness intentionally or by gross negligence, the social insurance carrier certainly has the right, pursuant to § 334 subsec 1 ASVG, to a reimbursement of the social insurance benefits provided. This is a genuine right of recourse right rather than a derived right.215 Where there is a general liability insurance regard should be paid to the 148 fact that, according to § 152 VersVG, the insurer has no obligation to provide any benefits if the insured intentionally caused the event which caused the damage.
H.
Insurance
As previously explained, Austrian accident insurance is essentially a 149 compulsory statutory insurance. The only exceptions in respect of accident insurance are voluntary insurance according to § 11 BSVG for those self-employed commercially active in farming and forestry and for their family members; as well as top-up insurance pursuant to § 20 ASVG for those economically active self-employed persons for whom it is reasonable given their low statutory assessment basis. Whilst voluntary insurance
213 On this in detail no 94 ff and no 110 ff above. 214 See no 101 ff above. 215 For more details see no 94 ff above.
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provides social insurance cover for people who are not subject to compulsory insurance, top-up insurance enables those who are subject to compulsory insurance to enhance the insurance protection to which they are entitled.216 Besides, there is, of course, always the option of taking out an additional private accident insurance. 150 Unlike personal injury, material losses are not covered by statutory social insurance. Consequently, the employer can become liable to compensate employees in this respect. However, it is usual for business liability insurance to be taken out to cover this risk. The holders of motor vehicles are subject to an obligation to take out compulsory liability insurance in the form of compulsory motor insurance. This applies to all vehicle holders irrespective of whether they are employers.
IV. Evaluation and Conclusions A.
Compensation
151 As the review of the many cash and non-cash benefits provided under the statutory accident insurance has shown,217 both the breadth and the extent of the benefits made available in cases of work accidents or workrelated illnesses is remarkable. Certainly, there are significant trade-offs in terms of non-pecuniary loss in respect of which social insurance law grants very restricted compensation within the narrow limits of compensation for loss of integrity (§ 213a ASVG).218 Of more profound concern is, where the employer’s liability privilege applies, that the insured’s claims are limited to those which arise under social insurance even though the insured would have had more extensive rights under the general rules of liability. This seems particularly questionable where the injury is caused by gross negligence; this will be considered in more detail below.
B.
Prevention
152 Every liability immunity and every insurance reduces the preventative effect of the law of compensation. Certainly, it has already been highlighted that the insured suffers the most negative material impact of the 216 For further details H Krejci/F Marhold/B Karl in: Tomandl (fn 1) 1.3.1.4 as well as 1.3.2 and 1.3.3. 217 See no 38 ff above. 218 On this no 52 ff above.
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employer’s liability privilege. In order to ensure that the employer continues to undertake the measures necessary to prevent accidents, the social insurance carrier is granted a right to recourse not only where there is intent but also where there is gross negligence. This is a significantly more stringent right to recourse than the one that is granted to general liability insurers.219 Furthermore, the methods used to calculate the employer’s liability to recourse are stricter. The legislator considers this strict approach to be a tool for prevention.220 It should be noted, as a point of criticism, that this preventative effect could also be achieved by maintaining the employer’s general liability and taking the assignment of rights by operation of law under § 332 ASVG into account.221
C.
Overall costs
1.4 % of the contributions basis is allotted to accident insurance222 which is 153 sufficient to cover the accident insurer’s expenditure so that it is, to a large extent, able to function without state support.223 There is state support of one third of contributions for the Farm Workers Accident Insurance.224 In 2007 statutory accident insurance covered the expenses of 187,483 154 victims of work accidents and work-related illnesses (including accidents involving schoolchildren and students). In 2008 it spent E 67 million on accident prevention, accident prevention consultancy services and first aid and E 536 million on pensions.225
D.
Interaction between workers’ compensation and private law
The interplay between the compensation and social insurance law regimes 155 has been explained in detail above. It has been shown that the employer’s liability privilege results in a significant worsening of the injured employee’s legal position. The employee’s claims for personal injury are lost even when the social insurance does not provide benefits to cover these losses. This is particularly disadvantageous in relation to compensation for non219 220 221 222 223 224 225
Tomandl/Krejci/Böhler (fn 19) 3.3.1. Kunst, SozSi 1977, 177. To this Tomandl/Krejci/Böhler (fn 19) 3.3.1. See no 64 ff above. Tomandl (fn 90) no 295. See no 73 above. All data has been taken from the homepage of the Federal Ministry of Health ().
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pecuniary loss because injured persons lose their claim for damages for pain and suffering (§ 1325 ABGB) as well as for disfigurement (§ 1326 ABGB) even though compensation for damage to integrity under § 213a ASVG does not provide sufficient compensation in this respect. 156 This disadvantage to the employee’s legal position is of even greater concern given that the internal justification for the employer’s liability privilege is problematic, as consideration of the rationale for it shows. The preferential treatment of the employer is supposed to be based, on the one hand, on the fact that the employer pays the insurance contributions and statutory accident insurance was intended to discharge employer’s liability (the financing argument, Finanzierungsargument) and on the other hand, that disputes between employer and employee are to be avoided in the interests of company harmony (the company harmony argument, Betriebsfriedensargument). Neither argument is entirely convincing. The financing argument cannot explain why the employer’s authorised representatives, supervisors and those responsible for educational, rehabilitation and healthcare institutions are freed from liability even though none of them pay accident insurance contributions. On the other hand, if company harmony was really decisive, the liability privilege would have to include material loss. The reasons provided hardly seem appropriate to justify an exclusion of liability in case of gross negligence226, especially when considering that a contractual disclaimer of liability for slight negligence would already be contrary to public policy.227 Consequently, it is hardly justifiable anymore that injured employees should have to rely only on social insurance when they would otherwise have had much more extensive claims under the general compensation rules.228 157 The concerns set out above are enhanced if one bears in mind that the employer’s liability privilege does not even substantially improve the employer’s legal position. The social insurance carrier’s genuine right to recourse is significantly stricter than the general liability insurer’s right to a refund.229 Given, furthermore, that it depends on the expenditure incurred by the social insurance carrier and does not take account of the employee’s potential contributory negligence, the privileged employer
226 In respect of the relationship between businesses and consumers – which, to all intents and purposes exhibits the same imbalance of power – explicitly § 6 subsec 1 no 9 Consumer Protection Act, Konsumentenschutzgesetz, KSchG. 227 In depth Steininger (fn 171) 369 ff; also see Koziol, DRdA 1980, 372. 228 Koziol (fn 13) 218. 229 Tomandl/Krejci/Böhler (fn 19) 3.3.1.
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may, in the end, be in a worse position than it would have been in had it been under an obligation to compensate based on the general rules.230
E.
Plans for reform
Austrian social insurance law is quite complex and the subject of numer- 158 ous statutory changes. This is also true of accident insurance law, the purpose of which has changed massively over time as a result of the continuous expansion in the categories of people insured. Nevertheless, the last significant changes in respect of employer’s liability 159 occurred 20 years ago in the 48th amendment to the ASVG. The 48th amendment to the ASVG made two important changes, both of which were welcome but were not broad enough. On the one hand, compensation for damage to integrity under § 213a 160 ASVG created a benefit which covered the insured’s non-pecuniary losses. It was intended to compensate for the situation that, on the basis of the employer’s liability privilege, injured employees lose their claims for damages for pain and suffering (§ 1325 ABGB) as well as for disfigurement (§ 1326 ABGB). However, the prerequisites for claiming compensation for loss of integrity are so restrictive that this remedy does not represent adequate compensation. On the other hand § 333 subsec 3 ASVG – according to which the employ- 161 er’s liability privilege does not apply in cases of accidents caused by vehicles covered by enhanced liability – deleted a constituent part of the claim, required until 1990 and known as ‘participation in general traffic’, and this significantly extended liability. The lawmaker’s objective was to give passengers and drivers engaged in work-related activities claims against the employer’s general liability insurance. Even so, there was a partial failure to achieve this objective given that § 3 no 3 EKHG, which excludes claims brought by those engaged in the operation of trains or motor vehicles, was obviously not taken into account. These two examples alone demonstrate that, despite the many amend- 162 ments made, Austrian accident insurance law definitely requires reform. There are however, no foreseeable plans for such an undertaking.
230 Koziol (fn 13) 222.
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F.
Overall quality of each system independently and in combination
163 Austrian accident insurance protects the insured in three aspects, namely in their role as an economically active person, schoolchild and student as well as any person involved in providing voluntary assistance to others. The General Insurance Organisation alone covers 3.2 million economically active persons as well as 1.4 million schoolchildren/students and numerous voluntary organisations and volunteers. Accident insurance provides, as a matter of principle, the same benefits in all these cases which can be seen from the impressive benefit figures cited under no 16 above. Despite its complexity, there is no doubt that Austrian accident insurance fulfils its function to a great degree. The same is true of Austrian compensation law which is founded on the basic principles of compensation and prevention and provides comprehensive protection for the injured person. Despite this positive evaluation it cannot, on the other hand, be denied that there is a need for reform not only of the law of compensation which is no longer up-to-date231 but also of social insurance law. Even if we can attest to the high standard of both areas of law, evaluated individually, the interplay of the law of compensation and of social insurance law is problematic. It is hardly justifiable, as set out above, that even where injury is caused by gross negligence, employees are only entitled to social insurance benefits when they would have more extensive compensation claims.
231 See on this point I Griss/G Kathrein/H Koziol (eds), Entwurf eines neuen österreichischen Schadenersatzrechts (2006).
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Employers’ Liability and Workers’ Compensation: Denmark Vibe Ulfbeck
I.
Introduction
A.
Basic system of compensation and liability
The primary regulation of work-related injuries is found in the Work- 1 men’s Compensation Act (Arbejdsskadeloven, ASL)1 which is a statute that specifically – but not exhaustively – deals with compensation for workrelated injuries. The idea behind the ASL is to have a joint, collective and social insurance 2 that guarantees compensation for work-related injuries regardless of whether or not it is possible to establish liability of the employer. Thus, the ASL imposes on employers a duty to take out a special liability insurance which covers work injuries. In addition, the ASL sets out the rules and conditions under which an injury can be recognised as an industrial injury that gives an employee the right to compensation under the Act. The Act is administered by the National Board of Industrial Injuries (Arbejdsskadestyrelsen, AST) which is an agency under the Ministry of Employment, that is, a public institution. The ASL provides for compensation of the injured party with regard to 3 specific types of losses and specific types of non-pecuniary loss. To the extent that a loss is not covered by the ASL, private law supplements the ASL. Private law also supplements the ASL in cases where the compensation is calculated differently (to a lower amount) under the ASL than under ordinary tort law.
1 Act no 848 of 9 July 2009 with later amendments.
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B.
Interaction with other institutions
4 As a starting point, the ASL takes precedence compared to social insurance and social security. Thus, as a general rule, the injured party cannot avail itself of a right to other social benefits if the need is in effect covered by rights under the ASL. For instance, the injured party cannot claim benefits under the Act on Social Pensions (Lov om Social Pension, LSP)2 or under the Act on Active Social Policy (Lov om Aktiv Social Politik, LASP)3 if, at the same time, the injured party can obtain compensation for reduced earning capacity under the ASL and this compensation is paid out as periodical benefits, (cf ASL § 29 and further no 41 below). 5 However, there are some exceptions to this principle of the precedence of the ASL. Thus, if the injured party is entitled to a retirement benefit under the Public Servants Act (Tjenestemandsloven, TML)4, then the compensation for loss of earning capacity under ASL is reduced, cf § 28. Also the Health Care Act (Sundhedsloven, SHL)5 has precedence over the ASL, (see further no 43 below).
C.
Empirical evidence
6 Empirical evidence as to workers’ compensation can be found on the AST’s website ( under statistics). Here it is possible to see how many cases are decided by the AST and how often the injured party is successful with a claim. The website also contains information on the different types of injuries and how they are dealt with in the administrative system. Finally, the website contains information on the speed with which claims are processed and resolved.
II.
Workers’ Compensation
A.
Scope of cover
7 The central concept for describing the scope of the ASL is the ‘employment relationship’, meaning that all employees who are employed by an employer to do a job for this employer on Danish territory are covered by the 2 3 4 5
Act no 1005 of 19 August 2010. Act no 946 of 1 October 2009 with later amendments. Act no 488 of 6 May 2010 with later amendments. Act no 913 of 13 July 2010 with later amendments.
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ASL according to § 2. It is not a requirement that there is a formal contract of employment. Informal employment relationships are covered as well. A difficult question can be how to distinguish between employees and independent contractors.6 In this respect, the central test is whether or not the ‘employer’ has the power to instruct the ‘employee’. If such right of instruction exists, the relationship is normally characterised as an employment relationship and the ASL applies. The ASL applies whether or not the employee is publicly or privately employed. Members of the family of the employer are covered if they carry out work to the same extent as the employer’s employees, (§ 2 (2)). Live-born children are also covered by the Act if they have a disease which was caused by the mother’s work during pregnancy, (§ 2 (5)).7 Danish jurisprudence shows that drawing a line between work-related 8 injuries and ‘private’ injuries can be difficult. There is a general tendency for the scope of situations that are covered by the ASL to expand. Thus, the ASL applies regardless of whether the job is paid or unpaid and coverage is not dependent on a specific duration of the work period. However, the injury must have occurred in the course of employment. As a starting point, therefore, accidents which happen while the employee is travelling to and from work are not covered by the ASL. Originally, this seemed to be a fairly clear line in case law. As examples the following can be mentioned U (Ugeskrift for Retsvæsen, Weekly Law Journal) 1976.625 H (Højesteret, Supreme Court), U 1991.962 H, FED (Forsikrings og erstatningsretlig domssamling, Insurance and Liability Law Reports) 1996.1283 Ø (Østre Landsret, Eastern Court of Appeal), U 2005.2056 H, as in these cases recovery was denied since the accident took place when the employee was travelling to and from work. However, in recent years, this attitude seems so have become more flexible. This is true in U 2003.758 Ø, U 2010.667 H and U 2010.963/2 V (Vestre Landsret, Western Court of Appeal). In particular, the two last cases are illustrative of some of the difficult questions arising out of the fact that an increasing number of people have flexible working arrangements. In U 2010.667 H a carpenter apprentice (C) was on his way to work in a car which had been put at his disposal by the employer. The car was full of tools that the employer did not wish to have at the work site, C was paid for the time he was on his way to work and normally C would pick up a colleague on his way to work. On this particular morning, C was involved in a car accident and was injured. The question was
6 Independent contractors are only covered if they have a special insurance arrangement according to ASL § 48 (2). 7 On rights of the foetus, see J Rønnow Bruun et al, Fosterets retstilling, U 1985B.180.
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whether this injury fell under the ASL as an industrial injury. The court placed emphasis on the fact that the driving as it was organised, was in the interest of the employer and had taken place according to his instructions. Consequently, the accident was covered by the ASL. U 2010.963/2 V goes even further in the direction of including transport to and from work. This case concerned an architect (A) employed by a telecom company (TDC). A had an arrangement so that he could work at home. One morning he was working at home preparing for a meeting which was to take place later the same day in a different city. As A left her apartment to go to the meeting she slipped and fell on the stairs just outside her apartment. She was severely injured and the question was whether this injury was covered by the ASL. The Western Court of Appeal ruled that it was and placed emphasis on the fact that A, according to the agreement with her employer, had been allowed to work at home and that, on that particular day, she had chosen to work at home rather than going to the office. Finally the court emphasised the fact that A had been working when the accident happened. The cases show that injuries which happen during transport to and from work in certain circumstances can be covered by the ASL. Still, however, transport to and from work in general does not seem to be covered. There must be some special justification for reaching this result. 9 Injuries suffered at work which are not closely related to the worker’s employment may also give rise to questions regarding coverage. Case law is illustrative of this. A series of cases have denied recovery under the ASL when the incident is less clearly work related. In two cases, FED 1999.285 Ø and U 1999.674 Ø, recovery under the ASL was denied because – in the specific circumstances – the employer had had no duty to instruct the employee. Thus, in FED 1999.285 Ø, the employer (A) had allowed the employee (B) to use A’s garage for the purpose of constructing a gigantic pepper mill for a colleague who turned 30. A was injured in the course of using the garage, but the court placed emphasis on the fact that the use of the garage had taken place on the initiative of B, not A, and that it had been used for private purposes in the interest of B. Consequently, A had had no duty to instruct B and consequently, the injury was not work related in the sense required under the ASL. Therefore, B’s claim failed. Similarly, in U 1999.674 Ø the employer, A, had permitted the employee, B, to use the garage outside working hours for the purpose of welding two barrels together. Recovery was denied for the same reasons as in FED 1999.285 Ø. Two other cases denied recovery for injuries that had occurred during soccer matches arranged in connection with work. In U 2008.2406/2H the match was arranged in connection with a party held by the firm and in FED 2000.551 Ø the soccer match was arranged by a 114
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union, which the injured employee was a member of, the purpose of which was to plan and organise trips and events of scientific relevance to amongst others the firm with which B was employed. The court held that the soccer match had primarily been a social event which was not work related to such an extent that the injury could be regarded as covered under the ASL: Finally, FED 1999.823 V is illustrative of the necessary connection between the injury and the worker’s employment. This case concerned a woman working within the field of childcare who looked after a number of children in her home. One day in the morning before any children had arrived, she went outside to have a look at the weather and road conditions and she fell. The court held that the accident had happened within working hours but that there was no natural and necessary connection between leaving the house and the childcare job. Consequently, there was no coverage under the ASL.8 According to sec 14, benefits for loss of earning capacity or permanent 10 injury can be reduced or lost if the injured worker has deliberately or by an unlawful act or omission contributed to the injury.9 Only the above mentioned types of contributory conduct can give rise to a reduction or loss of the right to compensation. The setting aside of ordinary caution rules is not enough. Reductions or losses of the right to compensation according to § 14 are rarely applied. When the rule is applied, the compensation is reduced by 25 %. The rule only applies to the injured party. If the accident causes death, there is no statutory basis for reducing compensation to dependents even if the deceased did in fact contribute to the accident. Accordingly, the dependents receive full compensation.
B.
Compensation trigger
In order to trigger compensation under the ASL there must be an indus- 11 trial injury. According to § 5, either an ‘accident’ or a ‘work-related disease’ is considered as an industrial injury. According to § 6, accidents are defined as ‘personal injury caused by an incident or influence that occurs suddenly or within a period of five days’. Previously, accidents were defined more narrowly.10 There had to be an influence on the employee that was ‘sudden’ and which had an ‘external cause’ and ‘independent of the will of the employee’. This meant that many cases were decided to the 8 In contrast, see U 1976.936 Ø and FED 2000.661 Ø. 9 This is in accordance with the International Labour Organization (ILO) Convention no 102 and the European Code of Social Security (1964-04-16). 10 See in general, L Rasmussen, Mod et realistisk arbejdsulykkesbegreb, U 1999B.421.
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detriment of the employee. For instance, it was not possible to recognise as industrial injuries cases in which hospital personal over a period of time (even a short period of time) developed back injuries, since there was no ‘sudden’ influence. Also the requirement that the influence had to have an ‘external cause’ was problematic. In general, this resulted in injuries which could be expected as ordinarily following from the work not being considered as accidents for the purpose of the ASL. It also meant that a large number of injuries were not recognised as ‘accidents’ for the purpose of the ASL because it was unclear whether the injury was caused by an external influence or whether it was due to ordinary processes of work. With the present concept of accident this is different. In general, more incidents are being recognised as ‘accidents’ for the purpose of the ASL. Today, it is irrelevant whether the ‘influence’ comes from an external source. Also the period of time under which there can be an influence has been extended so that influences which occur over a period of time in excess of five days are recognised. Finally, in administrative practice there has been a clear shift in the direction of recognising injuries which are the result of ordinary processes of work as industrial injuries under the ASL.11 12 As mentioned, the concept of an industrial injury also comprises workrelated diseases. According to § 7, work-related diseases are divided into two categories. According to § 7, sec 1, no 1), a disease is an industrial injury if it is medically documented that the disease is caused by a special impact from the environment that employees are more exposed to than those who are not subject to such exposure. A list of the diseases which fall within this category is published as a ministerial order to the ASL.12 In order for a disease to be qualified as a work-related disease, it has to be shown that there is medical documentation that in general there is a causal connection between the impact from the environment and the disease. Examples of currently listed diseases are certain types of back pain, psychiatric diseases, diseases generated by infections or the use of chemicals, and certain allergies. In cases of listed diseases, the injured party has a right to compensation, unless it is proved on a balance of probabilities that the disease was not caused by an exposure at work, (ASL § 8). 13 According to § 7, sec 1, no 2), also diseases other than those listed can trigger compensation under the ASL. In these cases, however, the causal connection between the exposure and the disease must be established by 11 12
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The online commentary Karnov: Karnov Group Denmark A/S (ed), Arbejdskadesikringsloven (in the following: Karnov), footnote 27, per § 6. The current ministerial order is order no 94 of 4 February 2009.
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the injured party in the specific case. Thus, the burden of proof is on the injured party and the bar is set relatively high. Consequently, it is not easy for the injured party to lift the burden of proof in theses cases.13 There is no clear distinction between the concept of ‘accidents’ and 14 ‘diseases’ under the ASL. With the extension of the concept of an accident to also cover influences which occurred over a period of five days, the distinction has been further blurred. It has been argued that the real difference between the two concepts lies in the fact that when there is an accident, the causal connection can often be established immediately, whereas in cases of diseases, it is always necessary to refer to medical knowledge and experience.14 According to the ASL § 1, compensation or damages can only be awarded if 15 the basic requirement of causation has been fulfilled. As a starting point, it is a requirement that the accident or the disease caused the loss (pecuniary or non-pecuniary) for which the worker claims damages or compensation. However, according to the ASL § 12 (2), a presumption rules applies. Thus, if it has been proved that an industrial injury has occurred and if it has been proved that a loss of earning ability or permanent injury or death has occurred, then it is presumed that the loss was caused by the industrial injury unless this, on a balance of probabilities, seems unlikely. In particular, this rule has a practical importance in cases in which the injured party already suffered from a disease prior to the injury.
C.
Scope of protection
Compensation for personal injury is the main objective of the ASL, 16 although the concept of personal injury is not defined in the ASL. To some extent it includes psychic injury (mental disease). The protection in relation to personal injury includes compensation for loss of earning capacity, according to § 17 and 17a, compensation for permanent injury, according to § 18, and to some extent compensation for medical care and rehabilitation expenses, according to § 15 (see no 20 below). Compensation for loss of dependency is covered by § 20. In contrast, it is not possible to obtain compensation for lost earnings and pain and suffering under the ASL. However, in these cases, tort law may offer relief, (see nos 65 and 67 below).
13 14
Karnov (fn 11) footnote 29, per § 7. Karnov (fn 11) footnote 26, per § 7.
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17 Sexual harassment and dignitary injuries may lead to a work injury covered by the ASL. However, often the sexual harassment or dignitary injury will only lead to loss of earnings, because the worker is not able to go to work for a period of time, or non-pecuniary loss in the form of ‘pain and suffering’. As these interests and other types of non-pecuniary loss are not protected under the ASL, the worker may have to sue under ordinary tort law to obtain compensation for non-pecuniary loss caused by sexual harassment or dignitary injury, (see no 70 below). Only if the harassment or dignitary injury is so severe that it leads to psychic injury (that is, personal injury) and/or a mental disease then the worker who has been subjected to sexual harassment or the injury may have a right to compensation under the ASL. If the harassment or injury leads to a loss of earning capacity (or permanent injury), the worker will be able to claim under the ASL. FED 2001.1636 V is illustrative. In this case, it was in principle acknowledged that sexual harassment at the workplace (a restaurant) had caused a psychic disease and that the victim of it was entitled to recover under the ASL. However, as there was no proof of a sufficient loss of earning capacity, the injured party had to sue under tort law for compensation for loss of earnings and pain and suffering. 18 Property damage is not covered by the ASL, only personal injuries. This means that if for instance a worker is injured and at the same time his clothes are damaged, the damage to the clothes will not be covered by the ASL, whereas his personal injury will be. 19 Likewise, pure economic loss is not covered by the ASL. To the extent, however, that pure economic loss is a consequence of a personal injury it is covered.
D.
Heads and levels of benefit
20 As to medical care and rehabilitation expenses, these types of expenses are dealt with in § 15, according to which the expenses are covered by the ASL when they are necessary to achieve the best possible result. There is no maximum amount but the expenses can only by covered to the extent that they are not covered by the SHL (the Health Care Act), (see further no 43 below). 21 Lost earnings are not covered by the ASL and must be sought through private law/the general rules of tort law, (see further no 65 below). 22 Loss of earning capacity is however covered and the compensation for this loss has to be calculated in each case on the basis of certain parameters. 118
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The relevant provision is § 17 ASL. First, the benefit depends on the extent to which the earning capacity is reduced. This is estimated in percentage points. According to § 17 (1) ASL, the percentage must be greater than 15 % in order to trigger compensation. Secondly, the reduction of the earning capacity is calculated by taking into account the salary of the injured worker before the injury and his possibilities to find a new job after the injury, taking into consideration his abilities, education and age. In addition, one specific type of non-pecuniary loss is covered by the ASL. 23 Thus, if a worker sustains permanent injury, he has a right of compensation according to § 18. The compensation is aimed at covering the everyday life complications which the worker experiences due to the injury. For instance, if the worker never retrieves full mobility of an arm or a leg, this likely will cause complications in his everyday life. The extent of the complications has to be estimated and the level of the permanent injury must exceed 5 % in order to trigger a compensation claim under § 18. The compensation is paid as a lump sum. The amount payable is set out in a ministerial order and the sums are adjusted on a yearly basis. According to § 18 (5), the compensation is to some extent reduced taking into consideration the age of the inured worker. Thus, if the injured worker was aged 40 at the time when the accident happened, the compensation payable is reduced by 1 % for every year the age of the injured party exceeds 39 years, (§ 18 (5)). If the injured worker was aged 60 at the time when the accident happened, the compensation payable is reduced by an additional 1 % for every year the age of the injured party exceeds 59 years. At 69 years there is no further reduction of the compensation. Compensation for loss of dependency is covered according to § 20 ASL. The 24 compensation is calculated by taking into consideration the extent to which the (now) deceased had provided for the dependent and the extent to which the dependent is able to provide for herself having regard to amongst other factors the age and educational background of the dependant. Also, according to § 19, the dependent (the deceased’s spouse) is granted a 25 ‘transition payment’ of DKK 115,00015 (E 15,466) even if she was not dependent on the (now) deceased’s income. Basically, benefits from the ASL are lower than damages measured in 26 accordance with the general rules of tort found in the Liability Act (Erstatningsansvarsloven EAL).16 In particular, the loss of earning capacity
15 16
The amounts in euros are calculated on the basis of the exchange rate from 12 March 2012: 1 DKK = 0.134 E. Act no 885 of 20 September, 2005 with later amendments.
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is calculated differently under the two systems. Both systems apply the yearly income of the injured party as a key figure but under the ASL the figure for the yearly income cannot exceed a certain limit. Consequently, the benefits paid out to compensate for loss of earning ability under the ASL are often lower than those paid out under the EAL. Making an exact comparison is difficult since a lump sum payment is the preferred type of payment under the EAL whereas the ASL to a large extent relies on periodical payments. 27 Under the ASL, the basic rule for loss of earning capacity of more than 50 % is that the benefit is received as a periodical payment, cf §§ 17 (5) and 17 (7). The benefit can, under certain conditions, be converted into a lump sum according to § 27. If the earning capacity is reduced by less than 50 % the compensation is normally paid as a lump sum.
E.
Funding systems
28 The system is based on a mandatory, employer-paid insurance scheme that covers all injuries that are accepted as work injuries. As for accidents, the insurance is taken out with a private insurance company. Diseases are covered by a special fund, Arbejdsmarkedets Erhvervssygdomssikring (the AE fund), which is a public institution. 29 According to § 50, it is mandatory for employers in the private sector to have insurance covering work accidents. Likewise, according to § 55, it is compulsory for private employers to contribute to the AE fund to secure coverage of the risk of disease. Thus, the system is financed by employers and workers do not contribute. 30 According to § 48 (5), only public institutions can self-insure. This means that a public institution which does not take out private insurance will still be considered to be insured for the purpose of the ASL.
F.
Administration and adjudication of claims
31 According to § 40, the public institution, the AST, runs the administration of the ASL and decides whether the ASL is applicable to a claim for compensation. The AST is an agency under the Employment Ministry. However, the AST is independent, meaning that it is not under the instruction of anyone when it decides cases. It is also not bound by the claims made by the parties. Consequently, it can award lower or higher compensation amounts than those claimed by the parties. 120
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On average, the AST receives around 3,000 cases per month and reaches a 32 decision on approximately the same number of cases. 90 % of the cases are decided within one year (2009–2010) and only a few cases (about 200) have presently been under consideration for more than two years (October 2010). According to § 44, the decisions made by the AST can be appealed to 33 another public institution, Ankestyrelsen (the Appellate Board, AS). The appeal must be made within four weeks after the decision has been received by the party making the appeal, (§ 44 (2)). Only certain persons have the right to appeal. According to § 44 (1), these are the injured person, or his/her dependent(s), the insurance company in cases concerning accidents and the AE fund in cases concerning diseases. In certain cases, also the employer can appeal a decision made by the AST. After the decision has been made by the AS, the parties can choose to bring 34 the case before the ordinary courts (use the general civil justice system), starting in the district court. It is a requirement that the possibility of administrative appeal (as described above) is exhausted before the case can be brought before the ordinary courts.
G.
Rights of recourse of workers’ compensation institutions
When the insurance company or the AE fund has paid out compensation 35 according to the ASL, the question arises whether the insurance company or the AE fund can bring a recourse action against the employer or a third party responsible for the accident or the disease. This question is dealt with in § 77 ASL. According to this provision, neither the insurance company nor the AE has a right of recourse against the tortfeasor. This applies whether the tortfeasor is the employer, a co-worker or another third party, for instance the manufacturer of defective equipment that has been used at the workplace. Thus, the idea behind the system is to channel the costs of industrial injuries to the insurance system and the fund. Even if the employer has not paid insurance premiums or made the 36 compulsory contributions to the AE fund, the AST must still compensate the worker, cf §§ 52 (1) and 57 (1). In these cases, the AST has the right to be refunded by the employer. Also in general, if the employer has not paid insurance premiums or its 37 contributions to the AE fund, the AST can demand that the employer pay an amount of money equivalent to the sums that he ought to have paid, cf §§ 51 and 57 (5). 121
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H.
Interaction with general social welfare provision and private insurance
38 In general, the ASL is the fund of first resort in the sense that, as a general starting point, the ASL takes precedence over most other sources of social benefits. Who in reality initially bears the cost may depend on the specific circumstances. Thus, it is not always clear to the party who is faced with a claim whether the injury is a result of a work accident and the injured party may not be aware of the implications of this. 39 However, under the Danish system, the ASL is the primary basis for claiming compensation in case of industrial injuries. This means that the right to obtain compensation under this system must be exhausted before the injured party can pursue other compensatory routes. Thus, as regards compensation for loss of earning ability and permanent injury, the ASL takes precedence. 40 For instance, if a worker in the course of his work is involved in a car accident, the liability of the car owner will be covered by compulsory liability insurance. Normally, the injured party would also have a right of direct action against the insurer. However, if the car accident constitutes a work injury then the injured party must claim compensation under the ASL. If the liability insurer – unaware of the work accident – compensates the injured party, then the liability insurer has the right to be reimbursed by the AST. 41 Likewise, according to § 29 ASL, the municipality will have a right of recourse against the ASL insurance company or the EA fund if the municipality, according to LSP or LASP, has paid out social benefits to the worker and it turns out that the benefits cover a period of time and a need for which – subsequently – a periodical compensation award for loss of earning ability has been paid out by the AST to the worker.17 ASL also takes precedence over Klage og Erstatningsloven (Patients Rights Act, KEL). Thus, if a worker who has been injured at work has to go to hospital for treatment and is the victim of medical malpractice so that the worker as a patient would normally have a claim under KEL, the coverage under the ASL takes precedence. Thus, in general, the ASL takes precedence. 42 However, there are some modifications to this system. Thus, if the injured party is entitled to retirement benefits according to TML, this Act takes precedence over the ASL. This means that the compensation for loss of
17
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The right of recourse does not apply if the compensation has been paid out as a lump sum.
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earning ability that could otherwise be obtained under the ASL is reduced correspondingly. Also, in Denmark, anyone domiciled in the country is covered by the SHL 43 (the Health Care Act) and has a right to certain services according to this Act. The SHL is one of the central pillars of the Danish social security system. Thus, if a worker has been injured at work and requires medical care, these expenses are prima facie covered by the SHL. The same is true of expenses related to rehabilitation. These expenses are only covered by the ASL to the extent that they are not covered by the SHL or private insurance, cf § 15 (1). In this respect, the Danish social security system must be seen as taking precedence over the ASL. In contrast, expenses covering equipment or aids necessary for rehabilitation are covered under the ASL regardless of whether these expenses could also be covered under other social security law rules or by private insurance. Likewise, other types of private insurance covering other interests in relation to personal injury accidents may be cumulated with compensation under the ASL insofar as benefits under the private insurance are paid out as a lump sum.
I.
Interaction with employers’ liability
The central question in this regard is whether the injured worker can claim 44 damages in addition to the ASL. This is regulated by § 77 ASL. According to this rule, the ASL takes precedence over tort law. Damages can be claimed in accordance with ordinary tort law but only to the extent that the loss is not covered by the ASL. This means that for instance compensation for loss of earnings and compensation for pain and suffering can be claimed under ordinary tort law as these interests are not covered by the ASL. Unless it is clear that the loss falls outside the scope of the ASL, the injured 45 party must start out by claiming under the ASL. Thus, § 77 states that the injured party’s claim against the tortfeasor is to be reduced to the extent the claim has been or can be compensated under the ASL. Previously, it was disputed whether this meant that the injured party was in fact prevented from bringing a claim under tort law and then subsequently claiming under the ASL and possibly paying back part of the damages received under the tort law claim. It was also disputed whether the injured party could simply choose not to claim under the ASL. In the decision U 1995.843 H,18 the Danish Supreme Court decided that § 77 implies that when a claim is
18
See also U 1996.674 H and U 1997.151 H.
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possibly covered by the ASL, the injured party is not entitled to sue under tort law until it has been decided whether his possibly corresponding claim under the ASL can be accepted. The requirement that the case under the ASL has to be ‘decided’ has given rise to some uncertainty. The question is to what extent the injured party must avail itself of access to appeal and access to have the case resumed before a claim can be brought in tort.19 46 Sometimes the compensation which can be claimed under the ASL is lower than the compensation that would have been available under ordinary tort law. In particular, this is true of compensation for loss of earning ability. In such cases, the injured party may claim under tort law after having exhausted the ASL system. However, the compensation paid under the ASL must be deducted from the compensation claimed under tort law. 47 According to § 77, the AST is not permitted to subrogate into the claim of the worker against the employer. The idea is to channel the economic consequences of the work injury to the insurance company and/or the AE fund. The underlying policy reasons are a wish to limit the number of cases before the courts and the fact that from an economic perspective, the AST would only benefit from recourse actions to a very limited extent.
III. Employers’ Liability20 48 The ASL covers workplace injuries regardless of who can be held liable. In order to achieve compensation for loss and/or injury not covered by the ASL, mainly loss of earnings and compensation for pain and suffering, the injured person must rely on private law, primarily tort law. When the injured party relies on tort law, he must claim damages from a tortfeasor. The tortfeasor could for instance be another co-worker, any third party or the employer himself.
A.
Classification
49 In spite of the contract between the employer and the employee, liability for industrial injuries is a matter of tort law. As a starting point, the
19 20
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This is discussed in B von Eyben, Forfølgning af erstatningskrav ved skader, som er eller kan være omfattet af arbejdsskadesikringen, Ugeskrift for Retsvaesen (UfR) 2005B.293. The primary work on employers’ liability is M Haug/F Schwartz, Ansvar for arbejdsskader (2003). As to personal injuries a current standard work is J Møller/MS Wiisbye, Erstatningsansvarsloven (6th edn 2002). See also B von Eyben, Kompensation for personskade I (1983) and B von Eyben, Kompensation for personskade II (1988).
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burden of proof rests on the injured party. Employers’ liability can be described as a special category in tort law in the sense that the employer has a special duty of care towards the employee which he does not have toward a third party. Consequently, the employer’s liability toward the employee is often described as stricter than ordinary tort law liability (see further no 52 below). The basic duty of the employer is to ensure that the necessary appliances and equipment are at the workplace and that the work is properly organised.
B.
Elements of liability
Similar to the ASL, the employer’s liability outside the ASL requires an 50 employment relationship in order for the ‘special’ liability rules to apply. The work can be paid or unpaid and coverage is not conditioned by a specific duration of the work period. Sometimes it can be difficult to decide whether there is an employment relationship for the purposes of these liability rules. In these cases, it is normally indicative whether the employer has been in a position to give the worker instructions. If the workplace or the injured party has more than one employer, the relevant employer will be the one with the power to give instructions and exercise control over the injured party. Thus, anyone employed on Danish territory may be entitled to recover under these rules if he/she is injured in the course of carrying out work. However, the injury must be suffered at work. For instance, neither accidents which take place while the worker is travelling to and from work nor injuries suffered at work which are not related to the job or the job instructions are covered. The employment task that leads to the injury must have been performed in the interest of the employer. The employer can be held liable either on the basis of its own acts or 51 omissions or on the basis of acts or omissions committed by its employees, The liability of the employer for its own acts or omissions is a fault-based 52 liability. In other words, it is not a strict liability or a no-fault liability. Only in one case, U 1989.1108 H, has an employer been held liable despite the absence of fault or negligence. The case concerned workers who had been working with asbestos for a long period of time and later contracted cancer. Some of the workers had died from the cancer and their dependents claimed damages. It was assumed that the cancer had been caused by the exposure to asbestos. The question was whether the employer was liable. The court found that the employer had not committed a fault since at the time the dangerous effects of asbestos were not commonly known. 125
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Consequently, it was not possible to base liability on fault on the part of the employer. Nevertheless, the court still reached the conclusion that the employer was liable, imposing strict liability. It is the general opinion that this case did not introduce a general rule of strict liability in industrial liability cases and that the precedential value of the case is limited. In no other industrial liability cases have the courts applied strict liability. In general, therefore, liability is fault based. When deciding whether the employer has acted negligently, the public law regulation in the Working Environment Act (Arbejdsmiljøloven)21 or the different safety regulations are often considered relevant. Thus, if there is an infringement of one or more of these provisions, there will normally be a presumption that the employer acted negligently. Against this background, the liability of the employer is often described as an objectified fault liability. 53 In addition to liability for its own acts and omissions, the employer may also incur liability for acts or omissions of its employees if these acts or omissions cause a co-worker to be injured. It is a requirement that the tortfeasor/employee acted negligently. It is also a requirement that he acted in the course of his employment. Thus, the employer is not liable for acts or omissions that are undertaken for private purposes by the tortfeasor/employee (see no 50 above). Finally, the employer is not liable for acts ultra vires. 54 The requirement of a causal connection must be satisfied. As a starting point, the burden of proof is on the injured party. However, there are a number of modifications to this starting point. 55 First of all, in the case of injury caused to a co-worker, it may be unclear who in fact caused the injury. However, although it is not possible to prove who the tortfeasor was, the employer is still liable. He incurs liability for so-called ‘anonymous negligence’. 56 Secondly, if a statutory provision, the aim of which is to create safety at work has been violated and an accident has occurred, there will often be a presumption that the infringement of the statutory provision has caused the injury. 57 The injured party’s contributory negligence can result in damages being reduced or denied, depending on the displayed negligence.22
21 22
126
Act no 1072 of 7 July 2010. See U 1975.1083 H and U 1982.50 H.
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C.
Scope of protection
Most industrial injury cases concern personal injury. Personal injury is 58 covered by the general rules of tort law. As under the ASL, the concept of personal injury comprises both physical and psychic injury. It is not a requirement that the personal injury has been caused by physical means. For instance, sexual harassment may give rise to a liability claim and a right of compensation if the harassment leads to psychic injury.23 The Liability for Damages Act (Erstatningsansvarsloven, EAL)24 sets out the types of compensation which can be claimed in case of personal injury. According to § 1, these include compensation for medical expenses, loss of earnings, loss of earning capacity, pain and suffering, permanent injury, and loss of dependency. In principle, it is also possible to claim compensation for property damage 59 under tort law in an industrial injury case. However, the cases are rare since the injured party seldom uses his own possessions during work. An example may be damage to clothing. Likewise, it is in principle possible to obtain compensation for pure 60 economic loss in an industrial injury case. However, most often, the economic loss will occur in the shape of loss consequential to physical injury and will be looked upon as such (rather than as ‘pure’ economic loss). Thus, issues of foreseeability will often have to be considered in this relation. As far as non-pecuniary loss is concerned, the starting point is the oppo- 61 site. Thus, as a general rule, it is not possible to obtain compensation for non-pecuniary loss under Danish tort law. However, certain exceptions apply. Firstly, in the case of personal injury it is possible to obtain compensation for pain and suffering in so far as the injured party has been sick (‘sick pay’), § 3. In addition, the inured party may claim compensation for permanent injury according to § 4, to the extent that the level of disability exceeds 15 %. Even if there is no personal injury, it may be possible to obtain compensation for non-pecuniary loss under § 26 EAL. According to this provision, a person who has been the subject of humiliating behaviour may claim compensation for this, provided it was sufficiently serious. Examples could be humiliation following sexual harassment or discrimination (‘dignitary injuries’).
23 24
On sexual harassment, see also no 70 below on non-pecuniary loss. Act no 885 of 20 September 2005 with later amendments.
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D.
Heads and levels of damages
62 If an injured worker claims compensation under ordinary rules of tort law, that is, the provisions in the EAL, the level of damages will be the same as in other cases of personal injury. Thus, the EAL sets out the general rules of compensation in cases of personal injury. 63 Most often, damages sought for work injuries concern loss of earnings, compensation for pain and suffering, loss of earning capacity and compensation for permanent injuries. But also costs of medical care, rehabilitation expenses and compensation for other types of non-pecuniary loss can be claimed. 64 According to § 1 (1) EAL, the injured party can claim damages for ‘treatment expenses’ and ‘other losses’. Treatment expenses cover medical expenses, meaning that expenses covering treatment at hospital, by private doctors (specialists), chiropractors, etc are covered. Also expenses covering medical care and rehabilitation assistance are covered by the Danish Liability Act. According to § 1, the party who is liable for personal injury shall pay recovery costs and other losses resulting from the injury. It is the actual costs that must be paid. 65 As regards loss of earnings, this is covered by § 2 EAL. According to this provision, compensation for loss of earnings shall be paid until the injured person can start work again. If it can be assumed that the injured person will suffer a permanent loss of earning capacity, compensation shall be paid until it is possible to assess the injured person’s future earning capacity either provisionally or finally. 66 According to § 5 EAL, the injured party can also claim compensation for reduction or loss of earning capacity. The extent to which the injured party has suffered a loss of earning capacity is assessed by the Board. The Board must take into account the possibility the injured party has to earn an income by carrying out such work that could reasonably be expected by the injured party when considering the abilities, education, age and possibilities of re-training and rehabilitation, cf § 5 (2). The loss of earning capacity is estimated in percentage points. If the percentage is less than 15, no compensation can be paid, cf § 5 (3). The compensation payable is calculated as a lump sum. The amount payable equals the annual salary of the injured party multiplied by the calculated percentage, multiplied by 10, cf § 5 (1). The total compensation payable cannot exceed DDK 7,892,000 (approx E 1,061,433) as per 2010.
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Non-pecuniary loss is also to some extent recoverable. According to § 3 67 EAL, the injured party can claim compensation for pain and suffering. The amount is DDK 170 (approx E 22.86) per day the injured party is sick. The total compensation cannot exceed DDK 65,000 (approx E 8,742) as per 2010. According to § 4 EAL, the injured party can also claim compensation for 68 permanent injury. The injury can be more or less severe, ranging from 100 % to 1 %. If the degree of the permanent injury is less than 5 %, no compensation is paid, § 4 (1, in fine). In all other cases, the degree of permanent injury is decisive for the amount of compensation payable. For every (percentage) degree of injury, the injured party is entitled to DDK 7,520 (approx E 1,011). This means that if the degree of permanent injury is 100 % then, as a starting point, the compensation payable is DDK 752,000 (approx E 101,137). However, the age of the injured party is also relevant when calculating 69 compensation. Thus, according to § 4 (2), if the injured party was 40 years old or older at the time of the injury, then the compensation is reduced by 1 % for every year the injured party is older than 39. If the injured party was aged 60, the compensation is reduced by an additional 1 % for every year the injured party is older than 59. After the age of 69 there are no further reductions of the compensation payable. Finally, according to § 26 EAL, the injured party is entitled to compensa- 70 tion if the tortfeasor wrongfully infringed a person’s freedom, peace, honour or integrity. In relation to work injuries, the provision has been applied with regard to infringements of a person’s honour and integrity. FED 2004.1158 Ø concerned infringements of the honour. During a conversation with an employer, an employee (A) used insulting expressions when talking about a co-worker (B). The employer passed on the content of the conversation to other employees and subsequently was ordered to pay compensation of DDK 20,000 (approx E 2,690) to B for infringement of his honour. As regards infringements of a person’s integrity, a number of cases have concerned sexual harassment at the workplace. The general picture seems to be that § 26 is not applicable when the harassment has been exercised by the employer. In these cases, the Act on Equal Treatment of Men and Women (Ligebehandlingsloven, LBL)25 applies instead. Compensation is awarded on the basis of § 14. U 1992.18 SH denied additional compensation on the basis of § 26 EAL since LBL was
25
Act no 734 of 28 June 2006.
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to be considered lex specialis.26 If the harassment has been exercised by a coworker, the co-worker can be sued on the basis of § 26.27 The level of compensation that is awarded under the LBL is higher than the level of compensation under the EAL. 71 Loss of dependency is covered by the EAL. According to § 12, a person who is liable in damages for another person’s death shall pay compensation for reasonable funeral expenses and compensation to those who suffered loss of dependency as a result of the death. Dependency also includes the value of the deceased’s work in the home. Damages to the spouse of the deceased is calculated as 30 % of the amount which the deceased would have been able to obtain, had he or she suffered a total loss of earning ability, § 13. However, the sum payable is as a minimum DDK 844,500 (approx E 113,583). Damages to a child of the deceased are calculated on the basis of the sum of the benefits which the deceased would have been obliged to pay had the deceased had a duty to pay such benefits, § 14. 72 Damages which the tortfeasor has to pay are paid as lump sums under the EAL. Payment of compensation and damages can be demanded one month after the tortfeasor has been able to collect the information that is required to determine the amount of compensation. 73 The amount yields interest from the time at which it can be demanded in accordance with § 1, at an annual interest rate equal to the determined reference rate plus 7 %.
E.
Administration of claims
74 If the case concerns a claim that falls outside the scope of the ASL (such as for instance a claim for damages for loss of earnings or a claim for compensation for pain and suffering), the injured party is free to apply general tort law. Tort law cases must be brought in the general civil justice system, starting in the district court. The injured party can appeal to an appellate court after a judgment has been made by the district court. Eventually, if permission is given, it is possible to bring the decision reached by the appellate court before the Supreme Court. 75 If the case concerns claims that can be brought under the ASL, the injured party must first exhaust this path to pursue the claim. Once the amount
26 27
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This has been criticised in legal theory, see P Breum/S Wolf, Seksuel Chikane, U 1995B.57, 62. Examples of such cases are U 2004.916 V, U 2009.1309 V, FED 2004.835 V.
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payable under the ASL has been decided in the administrative system, the injured party has the right to bring an action before the ordinary courts for the remainder of the claim. There are no statistics as to the speed of claims’ resolution with regard to 76 industrial injury cases in particular in the general civil justice system
F.
Rights of recourse
If an employee negligently injures a co-worker, the employer will nor- 77 mally be vicariously liable for the acts or omissions of the tortfeasor/ employee (see no 53 above). As a starting point the employer and the employee are jointly and severally liable in this situation. However, if the employer has liability insurance, which is most often the case, then according to § 19 (3) EAL, the liability of the employee is not upheld. Accordingly, the employer is also prevented from making a recourse claim. This rule does not apply if the employee has acted grossly negligently. In this case, the liability of the employee is upheld, despite the fact that the employer is covered by liability insurance. Whether the employer in this case might have a recourse action against the employee must be decided on the basis of § 23 (1). Under this rule, the employer can only have a recourse action against the employee if this can be considered reasonable taking into account the level of negligence, the position of the employee and other circumstances. As a starting point, the recourse action is excluded when the employee acted grossly negligently. If the injury is caused by defective material used at the workplace and the 78 employer is liable due to negligence on his side (for instance because he ought to have discovered the defect) and the manufacturer of the defective material is liable according to product liability rules, then the question of recourse may turn into a question of the apportionment of liability among two or several tortfeasors. If more than one tortfeasor causes harm, they would be jointly and 79 severally liable, according to § 25 EAL. This means that the injured party can choose from which tortfeasor to claim damages from. The tortfeasor who was chosen by the injured party to pay damages has a right of recourse against the other tortfeasors who were also liable but not chosen by the injured party.
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G.
Interaction with social welfare systems and private insurance
80 As to deductibility, different rules apply in relation to the different types of losses/compensation. In general, a principle of deduction applies in three cases. First of all, if the injured worker is entitled to damages for his treatment expenses under § 1 EAL, social benefits which cover this loss must be deducted in the claim against the tortfeasor. The same is true of private insurance benefits.28 81 Secondly, if the injured worker is entitled to damages for loss of earnings under § 2 EAL, social benefits covering this loss must be deducted. This means that if the employee is entitled to a sick benefit from the municipality, then this benefit must be deducted in the claim against the employer. Sometimes the employer is obliged to pay a salary to the employee during the sick period (sick pay). If this is the case, the worker will have suffered no loss of earnings and consequently, there can be no claim. Also insurance sums that by their character resemble damages for a loss must be deducted but not other types of insurance sums, that is, sums paid out pursuant to an insurance contract under which the amount payable has been fixed from the outset. Also benefits which are equivalent to those just mentioned must be deducted. 82 Thirdly, if dependents are entitled to damages covering funeral expenses according to § 12 EAL, then benefits paid out under the Danish Health Care Act (SHL) must be deducted. 83 In relation to damages for loss of earning ability and damages for loss of dependency, the general rule is that social benefits are not deducted. The only exception is benefits under the ASL which must be deducted according to § 77 ASL. 84 As regards recourse, the rules on right of recourse follow the rules on deductibility. Thus only to the extent a social benefit is deductible can the payment of such benefit form the basis of a recourse action against the tortfeasor (the employer). The relevant provision is § 17 (1) EAL according to which there is no right of recourse for social and public payments such as unemployment benefits, sickness benefits, benefits under ASL, pensions and other social benefits.29 The same is true in relation to pension benefits paid out by the state or a local authority or under a different pension scheme.
28 29
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Karnov (fn 11) footnote 3 per § h1. Maternity benefits can, however, form the basis of a recourse action.
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As a starting point, also insurance companies are barred from taking 85 recourse actions. Thus, benefits paid out under personal insurance cannot form the basis of a recourse action, irrespective of the nature of the insurance, cf EAL § 17 (1) EAL and § 22 (2) EAL. This means that although the insurance sum is such that it is deductible under EAL § 1 or § 2, the insurer still has no right to take a recourse action against the employer. The insurer only has a right of recourse if the insurance is qualified, not as personal insurance but as general insurance (‘damage insurance’), § 22 (1) EAL. There are two exceptions to this system. Sick pay benefits that have been 86 paid out according to the Sick Pay Benefits Act (Sygedagpengeloven, SDL)30 gives rise to a recourse action against the tortfeasor according to § 74 (1) in this Act. Likewise, according to § 17 (2) EAL, an employer, whether private or public, who has paid daily cash benefits or sick pay to an injured person or paid associated benefits has a recourse right from the party liable in damages on condition that the employer has suffered a proved economic loss by paying the injured person, according to sec 17 (2) EAL. Whether the employer has suffered a loss or not can be difficult to decide. If it was necessary for the employer to employ a substitute for the employee, then the salary paid out to the substitute will constitute an extra expense, ie a loss for which the employer can claim compensation.31 If on the other hand it was not necessary to employ a replacement, it will be more difficult for the employer to prove that it nevertheless suffered a loss.32
H.
Insurance
As mentioned above, it is compulsory for employers to take out liability 87 insurance in accordance with the ASL. In addition, a General Professional Liability Insurance (Erhvervsansvarsfor- 88 sikring) covering general commercial liability is available on the market. It is offered by most insurance companies. The General Professional Liability Insurance covers situations in which the employer is liable for damage or injury caused by the employer or its employees in the course of their work. Unless explicitly so provided, the insurance does not cover product liability. This means that if a defective product or a service is considered brought into circulation by the employer and it causes personal injury to
30 31 32
Act no 563 of 9 June 2006. See for instance U 1968.471 H. Illustrating are FED 1995.392/1 and FED 1994.1621 Ø.
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an employee, then there will be no coverage under the General Professional Liability Insurance.33 89 The General Professional Liability Insurance can come into play when the ASL is not applicable, for instance because the case concerns damages for loss of earnings or compensation for pain and suffering.
IV. Evaluation and Conclusions A.
Compensation
90 The advantages and disadvantages of the ASL have often been discussed. 91 Its advantages are that the ASL covers work accidents and diseases regardless of whether there is negligence on the part of the employer. In addition, the rules on burden of proof in relation to causation are favourable to the injured party. Thus, the injured party is relieved of the burden of proving negligence and to some extent also of proving causation. These are problems that are normally difficult to overcome for the injured party. 92 The collective and social insurance guarantees coverage of the suffered losses when the claim is brought before the public institution, AST, and the requirements fulfilled. 93 However, the ASL has some disadvantages. Firstly, although the concept of industrial injury has been clarified and expanded recently, it is still not easy to tackle the concept of an ‘accident’ for the purpose of the ASL. Secondly, and perhaps most importantly, the ASL does not cover all types of claims for compensation. Most noteworthy, damages for loss of earning and compensation for pain and suffering are not covered by the ASL. Since the ASL does not cover these claims, the injured party must use the general civil court system based on general private tort law, the EAL, in any case.
B.
Prevention
94 It is sometimes argued that the compensatory system has the disadvantage that it has no preventive effect. Thus, since the employer is covered by a collective insurance scheme, there could be concern that there is no incentive to avoid industrial injuries. In contrast, others argue that the
33
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There may, however, be coverage under special product liability insurance if the employer has taken out such insurance.
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preventive effect is obtained through public law rules and sanctions. In addition there is no evidence that the ordinary tort law rules would in reality have a preventive effect.
C.
Overall costs
There is no statistical evidence of the overall costs of the compensatory 95 system or the total amount of payouts to workers for industrial injuries. According to AST, the total amount of sums paid out in 2010 was 3.7 billion DDK.34 According to the insurance company, Forsikring og Pension, the insurance companies generally had a deficit throughout the period 1990–2003. Thus, for this period of time, the insurance companies paid out 2.4 billion DDK more than they collected in premiums.35
D.
Interaction between workers’ compensation and private law
As explained above, the ASL does not cover all types of losses. Even in cases 96 where the ASL does apply, the damages or the compensation payable under the ASL differ from the equivalent sums payable under the EAL. Accordingly, very often it is not enough for the injured party to pursue compensation under the ASL. In addition, it is necessary to sue under tort law to obtain full compensation.
E.
Plans for reform 97
There are no current plans for any fundamental reform of the system.
F.
Overall quality of each system independently and in combination
The general impression is that the compensatory system under the ASL 98 works well and achieves the intended objective of securing compensation for injured workers. Likewise, the ordinary tort law rules work in a satisfactory way by ‘filling gaps’. However, the interplay between the two
34 35
Information found on , (Arbejdsskadestatistik 2010, published 2011). Information found on .
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sets of rules can be complicated and time-consuming for the injured party. One of the reasons for this is that the level of compensation under the two systems is not the same. Another reason is that the possibility of claiming compensation under the ASL must necessarily be exhausted before a claim for damages under ordinary tort law rules can be initiated. This prolongs the procedure for the injured party. Basically, therefore, it would seem that the system could be improved either by harmonising the different levels of compensation in the two systems or by extending the scope of applicability of the ASL so that all types of losses can be compensated under this system.
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Employers’ Liability and Workers’ Compensation: England and Wales Richard Lewis
I.
Introduction
A.
The basic system of compensation and liability
An employee injured at work in the UK is able to claim not only no-fault 1 social security benefit from the state under the industrial injuries compensation scheme, but also damages from the employer if liability in tort can be established. Use of one system of compensation does not lead to exclusion from the other; there is no ‘employer privilege’ preventing an employee claiming from both workers’ compensation and tort. This chapter describes and compares both of these systems of compensa- 2 tion. In this regard it is very unusual and breaks new academic ground. Although in the UK there is a very extensive literature about the law of tort, there is very little written about workers’ compensation under the state scheme. In large part this is because lawyers are ever-present in tort claims whereas they are very rarely involved in applications for social security benefits. By comparing the two regimes, this chapter sets out a context for work injury compensation which has not been made in recent years. In particular, the comparative statistical analysis offers a new treatment. In many respects, albeit in this summarised form, this chapter provides a unique source. Entitlement to compensation under each regime is founded upon very 3 different bases. In general, whereas the state scheme requires only proof of a work-related injury irrespective of how it occurs, the tort claim is usually founded upon proof of another’s wrongdoing. However, this requirement to prove fault is commonly undermined in tort when employers are held strictly liable for breaches of duty placed directly upon them. When comparing the benefits offered, the differences are more apparent. 4 The state scheme provides benefit more quickly than the tort system pays 137
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damages, but it does not provide full compensation. A major difference is that the state scheme does not compensate for financial losses such as loss of earnings or the costs of care. Nevertheless claimants turn to this benefit, together with others in the social security system, as their first sources of support. In this sense, any later action begun in tort may be seen as merely supplementary to the benefit claim. However, it is only the tort system that aims to return the claimant as far as is possible to the position he was in before the injury, and only tort is able to compensate for financial loss. In awarding this full compensation, tort pays damages in the form of a lump sum which, in catastrophic injury cases, can amount to millions of pounds. It is then that the benefit claim may be seen as only peripheral to the tort award. 5 However, if we look at total expenditure and the number of recipients of compensation a different picture emerges. The annual expenditure upon each scheme is now approximately the same.1 On the one hand, there are twice as many new claims made in tort than under the industrial scheme;2 on the other hand, there are four times as many no-fault pensions in payment as there are annual awards of lump sums in tort. The schemes are therefore of similar historical importance, and although the significance of tort has increased, neither scheme should be seen as necessarily inferior to the other.
1.
Tort
6 Although the origins of tort liability lie in pre-medieval times, the first reported case of an employee suing his employer for personal injury was not until 1837.3 The claim failed, and few such actions were brought in that century and much of the next. There were many reasons why workers did not sue. It is true that the legal rules were very much against them: proving that another was at fault for their injury was fraught with uncertainty and, if wrongdoing was established, workers faced several draconian defences which enabled employers to avoid liability. Judges ‘quashed nearly every innovative attempt to create law favourable to workers’.4 1 No 132. 2 No 129. 3 Priestley v Fowler (1837) 3 Meeson & Welsby’s Exchequer Reports (M & W) 1; AWB Simpson, Leading Cases in the Common Law (1995) 128. Employees did sue for unpaid wages and other injustices. MA Stein, Priestley v Fowler and the Emerging Tort of Negligence (2003) 44 Boston College Law Review (BC L Rev) 689 at 725. 4 MA Stein, Victorian Tort Liability for Workplace Injuries [2008] University of Illinois Law Review 933 at 983.
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A more important obstacle than these legal rules which limited claims was 7 the ‘living law’.5 That is, the real difficulties for employees lay not so much in tort textbooks but in the realities of workplace power and relations, and in people’s attitudes towards misfortune. For example, many workers never thought of suing because they were not even aware that a wrong had been done to them. An accident was an everyday occurrence and part of their way of life, and the risk of injury was seen as in the hands of Fate rather than the employer. If workers were aware that a wrong had been done, they were often ignorant of the possibility of bringing a claim. Those who knew of the tort system found it very difficult to get legal advice. If they did sue, they faced the prospect of incurring legal costs. A more significant deterrent was the likelihood that a tort claim would lead to the loss of work-related benefits such as employer’s sick pay, or continued employment in an easier job, or medical treatment from work doctors. Suing an employer ‘often meant antagonising the most powerful men in the region and jeopardizing not only one’s employment prospects, but also one’s housing, church membership and even access to town poor relief’.6 Nor could workers easily endure the lengthy, complicated and uncertain litigation process itself. Their claims then were opposed by the best lawyers and by morally questionable defence strategies. The final difficulty faced by workers was that they often needed what tort 8 could not supply: urgent recompense to replace their wage loss. As a result, they were all too ready to accept any money that was on offer. In cases where the employer offered to pay some sickness benefit or provide medical care a receipt invariably had to be signed and this released the employer from any liability in tort. Workers were thus contractually barred from pursuing a claim. A similar result was achieved by legislation if a worker accepted worker’s compensation. By ‘electing’ to accept the nofault benefit the worker was required by statute to give up his right to sue for damages in tort. In reality the worker had little choice: no-fault compensation offered the certainty of an immediate fixed payment, whereas damages were but a remote prospect for an uncertain sum via an unpredictable route. Overall the tort system in the late nineteenth and early twentieth centuries has therefore been described as one of ‘noncompensation’.7
5 L Friedman, Civil Wrongs: Personal Injury Law in the late Nineteenth Century [1987] American Bar Foundation Research Journal (Am B Found Res J) 351, reflected in a British context in PWJ Bartrip/SB Burman, The Wounded Soldiers of Industry (1983). 6 JF Witt, The Accidental Republic (2004) 55. 7 Friedman [1987] Am B Found Res J 351.
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9 Gradually all this changed. Not only was there a shift in workplace power relations and the ‘living law’ such as to make tort claims more likely, but also the tort rules themselves were eased. For example, the defences were imposed less readily and their effects made less severe; and in 1948 the bar was removed so as to allow claimants to sue in tort as well as claim the nofault industrial injuries social security benefit. By then, not only did workers have a different perspective upon accidents compared to their nineteenth century counterparts, but they had also gained the assistance of trade union funded lawyers. As a result, from the second half of the twentieth century litigation substantially increased. By 1978 work accident claims had risen to constitute almost half of all personal injury actions brought. However, with the continued rise of road accident claims, work injuries have since declined in importance and now number less than one in ten of all tort claims. Nevertheless they still account for about 78,000 claims a year.
2.
Workers’ compensation
10 In the nineteenth century the failure of the common law to compensate injured workers on any scale was a major reason for the creation of a nofault system outside of tort. The Workmen’s Compensation Act 1897 imposed a duty on employers to make limited payments to the victims of industrial accidents irrespective of whether those injuries were caused by wrongdoing.8 Employers were left to arrange their own insurance to pay the cost of these claims. This scheme has been called the ‘pioneer of social security’ because it was the forerunner of broader welfare measures.9 Its basic structure lasted over fifty years until the state took full responsibility for all payments in 1948 and private insurers were then excluded from involvement with the scheme.10 Because of the new no-fault system which was being put in place, it was questioned whether access to tort for work claims should continue, but eventually the worker’s ability to sue at common law was retained.11
8 The nineteenth century history is traced in Bartrip/Burman (fn 5) and in Stein BC L Rev 689 at 725. 9 Social Insurance and Allied Services: Report by Sir William Beveridge (1942, cmd 6404). 10 National Insurance (Industrial Injuries) Act 1946. 11 For the debate about whether tort as an ‘alternative remedy’ should be retained see PWJ Bartrip, Workmen’s Compensation in Twentieth Century Britain (1987) ch 10 and Report of the Departmental Committee on Alternative Remedies (1946, Cmd 6860), chaired by Sir William Monckton.
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Since 1948, in spite of a series of reforms designed to reduce expenditure, 11 cut overlapping benefits and improve efficiency, the no-fault scheme has proved surprisingly resilient. In 1978 it was still paying out three times as much as the tort system in total, and there were seven times as many beneficiaries.12 It was not until 1995 that tort paid out more money per year than did the industrial scheme, and the scheme continues to compensate four times as many workers as tort each year. However, most of these beneficiaries first started receiving their pensions some years ago, and now tort compensates twice as many new claimants per year than the industrial scheme. In historical terms, therefore, the schemes can be seen as of comparable importance but it is tort that is the more significant nowadays.
3.
Why preferential compensation for workers?
There is a fundamental question which has influenced the history and 12 present position of work claims: can the preferential treatment given to workers compared to other injury victims be justified? The industrial injuries scheme privileges workers by making available benefit which cannot be claimed by those not injured in the course of employment. In tort, although the compensation is assessed the same whether or not a work injury is involved, liability is easier to establish in work cases because strict duties are commonly imposed upon the employer. The advantage given to workers in both of these areas has been challenged. In the landmark report in 1942 on the future of the welfare state it was 13 said that ‘a complete solution is to be found only in a completely unified scheme for disability without demarcation by the cause of disability’.13 However, three arguments on balance eventually led to the retention of the special scheme of compensation for work accidents. These were that – ■
many industries vital to the community were dangerous and it was desirable that those working in them should have special protection;
■
those disabled at work were working under orders; and
■
only if special provision were made could an employer’s liability at common law be restricted to the results of his negligence.
12 13
Report of the Royal Commission on Civil Liability and Compensation for Personal Injury (1978, Cmnd 7054), chairman Lord Pearson vol 1 para 772. Social Insurance and Allied Services: Report by Sir William Beveridge (1942, Cmd 6404) para 80: ‘If a workman loses his leg in an accident his needs are the same whether the accident occurred in a factory or in the street.’
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14 Each of these arguments looks outdated today. The first can be countered by noting that the preference applies to all industries not just the dangerous ones. In addition, the award of a limited pension after injury is now seen as little, if any, incentive to undertake risky work. There is a sharp contrast here with ‘danger money’ paid before any injury occurs. Against the second argument it can be argued that there is a great deal of individual autonomy at work, and accidents that occur because of a specific order are not common. The third argument has been entirely overtaken by events. Retaining the industrial scheme in no way has led to a reduction of liability at common law or to liability being confined to where there is fault. Instead tort claims have increased considerably, many of them based on strict liability. 15 In practice the preference was retained because of powerful political arguments and a desire to avoid antagonising the labour movement and the trade unions. The International Labour Organisation has concluded that the distinction between work and other accidents is increasingly anomalous and traditional practice is the main obstacle to change.14 One text describes the preference as ‘simply indefensible’.15 However, to replace the labyrinthine maze of benefits presently facing the disabled with a more comprehensive allowance is a difficult and expensive task. Although sympathetic to such an aim, an official report in 1990 concluded that there was still a case for retaining the industrial preference partly because of the fear that any comprehensive allowance would be too little to meet needs.16 The result is that, although the scope of the industrial scheme has been reduced in the last 25 years, it continues to operate alongside the tort system. Politically it remains a very difficult preference to remove.17 In this respect it has much in common with tort liability itself which continues to flourish in spite of criticism and the absence, in other countries, of such liability for work injury. There is no prospect in the UK of the tort liability rules being attenuated in any way, although proposed procedural changes may have profound effects.
14 15 16 17
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The Pearson Report (fn 12) vol 3 para 1009. P Cane Atiyah’s Accidents, Compensation and the Law (7th edn 2006) 355. Industrial Injuries Advisory Council, The Industrial Injuries Scheme and the Reform of Disability Income (1990, Position Paper No 5). S Jones, Social Security and Industrial Injury, in: N Harris, Social Security Law in Context (2000) 494.
England and Wales
B.
Interaction with other institutions
Both the tort and industrial injuries systems interact not only with each 16 other but also with other sources of compensation which derive either from the welfare state18 or from employers and other private organisations.19 The relationships are diverse and complex, and are considered under the particular headings below as they arise.
C.
Empirical evidence
There is a marked difference between the sources of information about 17 tort, on the one hand, and the industrial scheme, on the other. The voluminous materials describing the general principles of the law of tort can be contrasted with the paucity of information about the state benefit. Lawyers earn much money from claims for personal injury, and tort is a foundation subject studied in every law school. As a result there is a vast academic and practitioner literature in law journals, and new tort textbooks are produced every year. By contrast, lawyers have very little involvement with the industrial scheme, and it is very rarely examined by law students. The last book describing its operation was that published by the present author twenty five years ago.20 There is almost no periodical literature. As a result, information about the scheme and analysis of it derives predominately from official sources. The descriptions given here of the actual operation of these very different 18 systems of compensation relies upon empirical evidence gathered from a variety of sources, a few key ones being footnoted below. Some of these sources are official government reports about either the tort21 or the industrial injuries scheme,22 whereas others are the result of private
18 19 20 21 22
R Lewis, The Impact of Social Security Law on the Recovery in Tort of Damages for Personal Injury, in: U Magnus (ed), The Impact of Social Security on Tort Law (2003). R Lewis, The Relationship between Tort Law and Insurance in England and Wales, in: G Wagner (ed), Tort Law and Liability Insurance (2005). R Lewis, Compensation for Industrial Injury (1986). The Pearson Report (fn 12). Department for Work and Pensions, Industrial Injuries Benefit Quarterly Statistics, table 1.2 at Department for Work and Pensions, Benefit Expenditure Tables – Medium Term Forecast, at .
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research.23 A few key secondary sources on tort24 and the industrial scheme25 are also footnoted.
II.
Workers’ Compensation
A.
Scope of cover
1.
Workers covered
19 The industrial injuries compensation scheme only compensates those who are ‘employed earners’. This does not include those who are self-employed. This means that whereas the 25 million people in the UK who are employed by others under a contract of service are covered, about 4 million people who work for themselves are not.26 Although the selfemployed may be considered just as deserving of compensation, concern has been raised that if they were brought within the industrial scheme it would create uncertainty because of the greater difficulty in identifying whether they are in the course of their employment when they are injured. A narrower recommendation that at least those self-employed working in construction and agriculture be brought within the scheme has not been implemented.27 This is in spite of the fact that many of those engaged in these occupations are not really self-employed in any meaningful way. 20 The distinction between an employee and independent contractor is explored further below in relation to employers’ liability claims.28 If we compare tort liability we find that the primary common law and statutory duties are similarly only owed to employees and not to the self-employed,
23
24
25
26 27 28
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Empirical studies are extensively referenced in D Dewees/D Duff/M Trebilcock, Exploring the Domain of Accident Law: Taking the Facts Seriously (1996). For statistical analyses see, UK Personal Injury Litigation 2009, Datamonitor Report, December 2009 and International Underwriting Association of London, Fourth UK Bodily Injury Awards Study (2007). Atiyah’s Accidents (fn 15); WVH Rogers, Winfield and Jolowicz on Tort (18th edn 2010); S Deakin/A Johnston/B Markesinis, Tort Law (6th edn 2008); M Lunney/K Oliphant, Tort Law (4th edn 2010). Lewis (fn 20); NJ Wikeley/AI Ogus/E Barendt, The Law of Social Security (5th edn 2002); Bartrip (fn 11); JC Brown, Industrial Injuries (1982), the Department for Work and Pensions, Decision Makers’ Guide offers detailed analysis of the scheme in a series of publications at . Office for National Statistics, Labour Market Statistics . Industrial Injuries Advisory Council, Report (1993, Cm 2177). No 104 below.
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although at times the statutory duties can also extend to visitors and others. However, where the tort action is based on vicarious liability anyone who is injured can sue. In that respect tort has wider coverage because claimants can include not only those in business for themselves but also, for example, visitors to the workplace or members of the public injured on the roads or elsewhere by the negligent employee when doing his job. Employed earners under the industrial scheme are covered from their first 21 day at work, and they do not have to qualify, as they do for certain contributory benefits, by paying a minimum number of payments into the national insurance scheme. Those serving in the armed forces are not covered by the scheme, but are entitled to their own special benefits. There are territorial limits to the industrial scheme as with any regime of 22 social security. However, many of those injured abroad are now covered. These include those for whom national insurance contributions are paid; those in European Union countries, or countries with which Britain has a reciprocal agreement; and airmen, mariners and others.
2.
Spatial, temporal and other limitations
As we shall see below there are two basic routes to gaining entitlement to 23 benefit. A claimant must show that the injury is either a prescribed disease or a ‘personal injury caused … by accident arising out of and in the course of employment ….29 These last words, first used in the Workmen’s Compensation Act 1897, have been adopted by English speaking jurisdictions throughout the world. It has been suggested that the phrase has given rise to more litigation than any other in the English language.30 Its uncertain scope is not the result of poor legislative drafting, but is inherent in the phrase; it is caused by the very attempt to distinguish work injuries from others.
a) The accident must ‘cause’ the injury The claimant must show that the industrial accident is not only a neces- 24 sary condition which caused the injury (causa sine qua non) but also that it is a cause of some potency which contributes materially to the injury (causa
29 30
Social Security Contributions and Benefits Act 1992 s 94 (1). Departmental Committee Report on Workmen’s Compensation (Holman Gregory Report) (1920, Cmd 816) para 29.
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causans). However, the industrial accident need not be the sole or even the predominant cause of injury. For example, if a heart attack is suffered at work the crucial question is ‘was it the disease that did it, or did the work he was doing help in any material degree?’31 25 To further illustrate the issues that can arise we can examine how the scheme deals with susceptibility to injury before the industrial accident occurs. The pre-existing non-industrial condition or weakness could be treated in three distinct ways: ■
It could be held to be the only material cause of injury. This occurred where a degenerative disc condition gave rise to a spinal collapse which just happened to take place at work.32 No entitlement to benefit then arose.
■
It could be held not to be a material cause of injury at all. This happened in a case where the disc collapsed as a result of lifting something at work.33 Here there was full entitlement to benefit because the industrial cause was held to be the sole legal cause of injury.
■
Finally, it could be held to be a contributory cause of the injury among other, industrial causes. Here, there could be a reduction in the assessment of disablement to take account of the non-industrial condition.
26 If the injury is caused by coming into contact with the work premises, it has been held that the employment will be considered to be the cause even if the claimant fell as a result of high blood pressure, his artificial leg, his carelessness, or something else unexplained.34
b) The accident must arise ‘out of ’ employment 27 In order to exclude from the scheme injuries which result from ordinary risks faced by the public at large, this phrase requires accidents to be caused in some way by work. However, it has only rarely led to the refusal of benefit. Statute prescribes that certain causes of accidents are deemed to arise ‘out of’ employment provided that the accidents were also in the course of employment and the claimant did not contribute to them.35 This applies to accidents caused by:
31 32 33 34 35
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R(I) 13/81. R(I) 6/82. R(I) 19/63. R(I) 11/80. Social Security Contributions and Benefits Act 1992 s 101.
England and Wales ■
■
■
■
Another’s misconduct – such as an assault by strangers irrespective of whether the claimant was singled out because of his job Another’s skylarking or negligence – so that a claim may succeed if injury is caused by a fellow employee who is either a practical joker or simply careless Animals – as where a door to door agent fell over a dog at the property he was visiting36 Being struck by lightning or any object
c) The accident must arise ‘in the course of employment ’ Usually the relationship between the accident and the work is obvious. 28 However, difficulties can arise in a significant number of cases because of the varied nature of employment; there may be uncertainty as to what exactly the claimant was employed to do, or the discretion that he may have had to do it. The boundaries of when work begins and ends, or is interrupted, can be difficult to draw. The scheme attempts to do so by requiring that accidents arise ‘in the course of employment’.37 This phrase is notorious. One judge suggested that it has ‘been worth – to 29 lawyers – a King’s ransom’.38 It has accounted for over half the litigation upon the scheme. Although it may appear that the extensive body of caselaw interpreting the phrase only adds to the confusion, in fact many of the cases can be confined to their own facts and are of limited value as precedents. By contrast there are a few key decisions which repay study because they offer general guidance concerning the factors which should be considered when determining the scope of the scheme. Even these cases, however, emphasise that no single factor is to be taken as conclusive.39 Broadly, the course of employment gives rise to questions based upon the 30 time, place, and the activity being pursued by the claimant when he was injured. Three basic questions then arise: i) Did the accident occur during work hours? The limits of work cannot be defined by the written terms of contract 31 alone: some allowance can be made for the claimant to be at work both 36 37 38 39
R(I) 13/60. Lewis (fn 20) 50–89, Wikeley/Ogus/Barendt (fn 25) 726–743. Lord Denning in R v National Insurance Commissioner, ex parte Michael [1977] 2 All England Law Reports (All ER) 420. Nancollas v Insurance Officer [1985] 1 All ER 833.
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before and after the set hours in the contract. For example, a worker who arrived half an hour early to change into her work clothes and go to the canteen was held to be within employment at that time.40 By contrast, someone who arrived ninety minutes early to avoid the rush hour was outside the scheme.41 Refreshment breaks on the employer’s premises are almost always protected. Workers injured when ‘on call’ cause particular difficulties: are they standing by to be called back to duty and thus outside of the scheme, or are they performing their duty of standing by?42
ii) Did the accident occur at the place of work? 32 The precise place of work sometimes can be difficult to locate although it generally includes, for example, access to the area where the claimant has been or is about to work. A ‘public zone’ test helps to determine the limit: the claimant usually must be in the area from which the public are excluded. This was the case where a seaman, in boarding his ship, was injured on a private jetty which he had permission to use but not the public at large.43 Whether the employer owns the land upon which the accident happens is an important although not conclusive factor. The further away the claimant is in time and space from the hours and place of employment, the more likely it is that the risk is shared by the general public and is outside the industrial scheme. Although more difficulties arise where the claimant is peripatetic, claims can still succeed as where a social worker was injured descending a common staircase in a block of flats having concluded her visit to one of the properties.44
iii) Did the accident occur whilst the claimant was doing something which was part of his employment or reasonably incidental to it? 33 If so, the employment could be extended beyond the usual hours or place of work; if not, it could interrupt the employment and place the claimant outside the scheme. Relevant questions include whether the employee had implied permission and whether the employer knew what
40 41 42 43 44
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R v National Insurance Commissioner, ex parte East [1976] Industrial Cases Reports 206. R(I) 3/62. R v National Insurance Commissioner, ex parte Reed (1980) appendix to R(I)7/80. Northumbrian Shipping Co v McCullum (1932) 101 Law Journal Reports, King’s Bench New Series (LJKB) 664. R(I) 3/72.
England and Wales
was being done. The contract of employment itself is rarely helpful in determining the limit. The criteria for deciding the question have changed since workmen’s compensation first began: an accident can now be accepted as arising out of and in the course of the employment if the person is doing something which is reasonably incidental to their employment even though they may have been doing it for purposes of their own. What may be considered incidental to employment is better understood 34 when related to particular cases illustrating the relevant factors. The following examples have been chosen either because they involve the most common problems, or because they involve extensions of the course of employment which have been laid down by statute.
d) Interruptions or breaks in work If the claimant is injured whilst acting reasonably during a break in work 35 at his employer’s premises the accident is likely to be within employment. Permitted activities have included not only going to the toilet or the canteen, but also going to a union meeting,45 a day release class46 or even to play sport in certain circumstances.47 Relevant factors are:48 ■
The nature of the employment
■
The duration of the break
■
The place of the accident
■
Whether the employer consented to the activity
■
Whether the activity is in the employer’s interest.
By contrast, if the claimant acts unreasonably he could fall outside 36 employment. This happened where a factory worker was hit by a truck whilst in a queue to use a booth in order to smoke a cigarette.49 He was still in the queue even though his scheduled break had ended five minutes earlier. By deliberately going against instructions and not returning at the end of the break he was held to be avoiding work and to be outside employment. The decision appears harsh, but statements
45 46 47 48 49
R(I) 63/51. R(I) 2/68. R(I) 13/66 contrast R v National Insurance Commissioner, ex parte Michael [1977] 2 All ER 420. R(I) 4/67 (T). Re Culverwell [1966] 2 Queen’s Bench (QB) 21.
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made in the case also support a less strict approach: the judge considered that generally a claimant would be within employment if injured at his place of work and during work hours by a risk incidental to employment even though he may not be doing his actual work but, for example, chatting to a friend or smoking. Even a negligent or deliberately disobedient act would not necessarily remove the claimant from the course of employment unless he was doing something different from what he was employed to do.
e) Travelling and commuting cases50 37 There are almost as many deaths caused by the daily journey to and from work as there are at work itself.51 As an exception to the rules in almost all European countries, the UK does not include travelling to and from work as within employment.52 ‘Normally a person’s employment begins when he arrives at his place of work and ends when the person leaves it…’.53 The general approach is subject to a number of wide-ranging exceptions. Clearly, for example, those with occupations requiring them to travel, such as bus or delivery drivers will be in the course of employment. Other exceptions involve those: ■
Travelling in transport arranged by the employer. This is a statutory exception.54 The use of ordinary public transport will not suffice
■
Travelling on a specific journey as instructed by the employer
■
Travelling on the employer’s property or in areas where the public are denied access
■
Travelling in the course of a peripatetic occupation. Those who are door to door agents or home helps are therefore usually covered except when travelling to their first call of the day, or when on the way home, or if they deviate from their route for their own purposes
■
Employees who are still on duty because their responsibilities continue whilst travelling. Relevant although not conclusive factors in determin-
50 51 52
53 54
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R Lewis, Accidents Whilst Travelling and the Limits of Compensation for Industrial Injury (1986) 8 Journal of Social Welfare Law 193. L Pickup/SW Town, A European Study of Commuting and its Consequences (1983) 106. For European comparisons see the Mutual Information System on Social Protection in the EU (MISSOC) . R(I) 12/75(T). Social Security Contributions and Benefits Act 1992 s 99 (1).
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ing whether the claimant is only travelling ‘to’ duty as opposed to ‘on’ duty include: – Was the claimant being paid for time spent travelling? – Were travel expenses to be reimbursed? – Was the claimant carrying equipment or tools related to the job? – Was the claimant on call or required to report at intervals to his employer? – Was the claimant travelling by a direct route? Proposals to change the general rule that travelling is outside employment 38 were rejected by Government almost 30 years ago,55 and have not been reconsidered since. The main objection was that the risks being faced were no different to those encountered by the public in general so that, if travel were included, the concept of industrial preference would be placed under great strain. In addition, the limits of the scheme would be more uncertain and the difficulties in investigating claims would increase because the employer could not provide the direct evidence needed.
f) Acting in an emergency Employees may have to respond to unexpected events at work. If they act 39 reasonably in doing so they will not take themselves outside the course of employment even if they attempt to do something which they may not have been employed to do. These rules apply in situations far beyond those where the emergency services may become involved. For example, lorry drivers have been held to be within employment under the emergency principle even though all they were doing was moving other goods in order to deliver their own56 or assisting another road user who had broken down and was obstructing traffic.57 Statute also provides help for those injured in the more dramatic acts of 40 emergency.58 If the claimant is injured at or near his place of work whilst taking emergency action to avoid people being injured or property being seriously damaged, he will be deemed to be within employment. This enabled a milkman to obtain benefit when he was injured attempting to
55 56 57 58
Reform of the Industrial Injuries Scheme (1981, Cmnd 8402) para 66. R(I) 11/56. R(I) 11/51. Social Security Contributions and Benefits Act 1992 s 100.
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rescue children from a burning house. Under the statute there is no need for the act done to be only for the employer’s benefit.
3.
Effect of the victim’s contributory negligence
41 The industrial scheme is based on no-fault. This means, firstly, that neither the employer nor any of his employees has to be shown to be at fault for the claim to succeed; and secondly, the negligence of the claimant himself will not bar entitlement to benefit. In theory, therefore, the contributory negligence defence which applies to many tort claims has no part to play in the industrial scheme. 42 However, the position is not always quite so clear cut: if the claimant’s conduct creates a new or different risk from that which arises from the employment, and this risk is the real cause of the accident, then the injury will not arise out of and in the course of employment and the claim will fail entirely. This argument can have an even greater effect than contributory negligence does in tort for it may lead to the loss of all compensation. There is no way in which blame could lead to a reduction of the benefit to take account of the claimant’s wrongdoing; the concept of apportionment for contributory negligence cannot apply with the result that the claim either succeeds or fails entirely. 43 The rules can be illustrated by the denial of benefit to employees who left their place of work for their own purposes, as where an employee went off to explore another part of the building.59 However, in more recent times a less strict view has been taken of the scope of employment than was the case in the past. In particular, it is now required that the claimant’s conduct must create a new or different risk. This can prevent the denial of benefit as in the leading case where the claimant was injured by an explosion when he lit a cigarette near a place where, unknown to him, gas was escaping.60 The danger of such an explosion was present before the claimant used his lighter because there were other naked flames heating various machines near the escaping gas. It was held that the risk of explosion was clearly one of employment, and that, although the claimant had acted for his own purposes, he had not created a new or different risk from that which already existed. Benefit was therefore payable.
59 60
152
R(I) 45/59. R(I) 2/63(T).
England and Wales
Acting contrary to orders or rules A distinction is drawn between orders which define what work is to be 44 done, and those which merely describe how it is to be carried out. The former is more likely to limit the course of employment so that contravening clear orders concerning what work is to be done could prevent entitlement arising. However, there is a legislative provision which further protects claimants here because it deems accidents to be within employment if they would have been so had it not been for the claimant breaking regulations or orders.61 Thus a miner succeeded when he was injured after illegally hitching a lift underground. However, the claimant must still show that he was continuing to act for, or in connection with, his employer’s business. The difficult question to be asked is ‘ignoring the prohibition, was the claimant doing his job?’ Because of this the claim failed when a dock worker was injured moving an obstacle with a fork lift truck which had been left unattended by its driver.62 This decision has been considered harsh and has been distinguished from other cases on the basis that the prohibition against the unauthorised driving had been strictly enforced, and only this justified the refusal of benefit.63
B.
Compensation trigger
There are two routes only to obtaining benefit. The claimant must show 45 that his injury is either the result of an ‘accident’ or a ‘prescribed disease’. Traditionally accidents have been much more likely to be the basis for a claim. However, the nature of work has changed: when the industrial scheme was introduced in 1948 almost two thirds of jobs were in heavy industry whereas today 70 % of employees work in office and service industries. As a result, accidents are less common. However, with increasing scientific recognition of the effects of work upon health, diseases have become much more important so that there are now as many claims for diseases as there are for accidents.64 This is in stark contrast to the tort system where there are five times as many claims founded upon accident
61 62 63 64
Social Security Contributions and Benefits Act 1992 s 98. R v Deputy Industrial Injuries Commissioner, ex parte Bresnahan [1966] 1 Lloyd’s Law Reports (Ll Rep) 69. R(I) 1/70. Department for Work and Pensions, Industrial Injuries Benefit Quarterly Statistics, table 1.5. These cover the period to December 2009. Allowance is made for the exceptional increase in disease claims following the prescription of new conditions. .
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as opposed to disease.65 The traditional preference for traumatically caused disability by accident reflects the mistaken assumption that accidents are man-made whereas diseases are natural hazards.66 Ironically there is empirical evidence that it is the victims of disease rather than accident who are more likely to have serious medical needs and be left with a residual incapacity.67 46 At first sight there seem to be separate legal provisions dealing with each of the two forms of injury. However, as explained below, the dividing line is often unclear, and the scope of an ‘accident’ is not as limited as it may appear. Because of this, there are diseases which can be considered to result from an accident. In addition, for historical reasons, the meaning of accident has been strained so that, unexpectedly, it includes not only diseases but also other conditions which give rise to entitlement to compensation. 47 The ‘prescribed diseases’ can only be compensated if they appear on a legislative list. By contrast, accidents are open-ended and not confined by the words of a statute. An advantage of claiming for a prescribed disease is that there are statutory presumptions which can help satisfy the requirement to prove a work connection. There are no such presumptions to assist claimants in the case of accidents.
1.
Accidents
48 Although an accident has been defined as ‘any untoward event which is not expected or designed’,68 it is clear that an event need not be unforeseeable or exceptional in order for benefit to be paid. The claimant does not have to show that the strain which caused his back injury was unusual for the job or that it was an entirely unexpected risk.69 It is the result that must be unintentional not the act itself. Thus the farm labourer who deliberately handled frozen material throughout the day and then found that he had suffered frostbite was able to claim.70 Acts intended by other people to inflict injury are also covered by the scheme even though they are deliberate. For example, a schoolteacher who was beaten up by his
65 66 67 68 69 70
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See no 115 below. J Stapleton, Disease and the Compensation Debate (1986). D Harris et al, Compensation and Support for Illness and Injury (1984). Fenton v Thorley [1903] Appeal Cases (AC) 443. CI 5/49. CI 126/49.
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pupils was found to have suffered injury by accident.71 Unlike the wording in many private insurance policies, the scheme does not require that an accident result from an event external to the claimant’s body. It can therefore include an internal physiological change for the worse, such as a muscle strain or rupture. Accidents must be distinguished from, firstly, diseases compensated un- 49 der the prescribed list system described below and, secondly, conditions which, although developing as a result of a work process, cannot be attributed to an accident. This last distinction refers to a situation where, because of his work, the claimant’s condition becomes worse over a period of time and it may not be possible to identify any precise moment when physical deterioration occurs. An accident cannot then be found. Instead the wear and tear is the result of ‘process’ and, as such, is outside the scheme unless it constitutes a condition covered by the list of prescribed diseases. For example, injury to a hand caused by a pneumatic drill could be held to be neither an accident nor a prescribed disease.72 Although this distinction between accident and process is crucial, it can be a difficult one to draw and it depends on the facts of each case. Three factors are relevant: ■
■
■
71 72 73 74 75 76
Continuity – Does the injury result from continuous day to day exposure? If so, it is more likely to be process and outside the scheme, as where there was continuous exposure to dust over twenty years.73 Length of time – The longer the exposure needed to produce injury, the more likely it is to be held the result of process and outside the scheme. The claimant was therefore denied compensation where his injury was the result of exposure to various chemicals over a period of eighteen years.74 By contrast, an injury resulting from only three days spent stitching leather was held to be the result of accident.75 Particular event causing injury – If the claimant can point to a particular event at a precise point in time which caused injury, it is more likely to be considered an accident. The claimant could not do this and benefit was not payable where he suffered from a nervous disorder caused by general uncongenial working conditions.76 This contrasts with another case where the claim succeeded because each repeated explosion at the Trim School v Kelly [1914] AC 667. However, in 1996 carpal tunnel syndrome was listed as a prescribed disease for those using hand held power tools. Roberts v Dorothea Slate Quarries Ltd [1948] 2 All ER 201. R(I) 7/66. R(I) 43/61. Fraser v Secretary of State for Social Services [1986] Scots Law Times (SLT) 386.
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workplace was held to be an accident, and it was a series of these accidents which gave rise to the claimant’s neurosis.77 50 There are two arguments, in particular, which may be made by claimants in order to establish injury by accident. They illustrate the strain that has been put on the word, and the difficult and often artificial distinctions which have to be made: ■
The first argument is that injury can result from a series of accidents rather than a process. This enabled the claim to succeed where a hernia was caused by the continual operation of a stiff lever, each movement leading to a minute widening of a tear in the muscle wall and each amounting to an accident.78
■
The second argument is that injury has resulted from one accident which occurred during a process which may have worn down the body’s defences. This accident can simply be the final event – such as the breakthrough by which infection penetrates the skin. Even the onset of disease can then be an accident, as where a stray germ of anthrax entered the body via the eye.79 Infective skin conditions are often regarded as having developed by accident. Similarly, if a harmful process culminates at a point where a physiological change for the worse occurs, a claim may succeed. This happened where pressure on a nerve from a buckle on a knee over a period of ten weeks culminated in paralysis of the leg.80 This argument blurs the distinctions between accidents, diseases, and processes, with the result that the law can be extremely difficult to apply.
2.
Disease81
51 As described immediately above, it may sometimes be possible for injury by disease to be classified as an accident. However, this route cannot be taken if the disease is on the prescribed list specified by statute as directly falling within the scheme.82 Then the conditions set down by the list must be satisfied. The list contains not only diseases readily recognisable as such
77 78 79 80 81 82
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R(I) 43/55. R(I) 77/51. Brintons v Turvey [1905] AC 230. R(I) 18/54. N Wikeley, Compensation for Industrial Disease (1993); R Lewis, Compensation for Occupational Disease (1983) 5 Journal of Social Welfare Law 10. The list is contained in the Social Security (Industrial Injuries) (Prescribed Diseases) Regulations 1985 SI No 967.
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(for example, pneumoconiosis and certain forms of cancer) but also conditions which may result from certain types of work processes (for example, occupational deafness and cramp of the hand). The list is definitive of the diseases or conditions that may be compensated in the sense that if they are not on the list and are not the result of accident, no claim can be made for them even if they can be shown to have a work connection. The statutory list, begun in 1906, now runs to 72 diseases or conditions. It 52 is divided into four sections according to whether the cause is a physical, biological, chemical or other agent. If the disease is on the list, there is usually a statutory presumption to help establish the work connection. However, the presumption does not apply if the disease is listed for an occupation where proof in the individual case is specifically required. The list imposes five different types of conditions which limit the scope of 53 potential claims by – ■
The type of work done
■
The minimum period of exposure to the risk
■
The period of onset within which the disease must develop following exposure
■
The minimum level of severity of the disease
■
Whether or not the presumption applies that the disease has been caused by the occupation.
The list prescribes diseases only in relation to particular occupations where 54 workers are thought to be especially at risk: in theory, the risk of contracting such a disease should not be common to all people. In addition, the legislation requires that the attribution to particular employments should be established or presumed with reasonable certainty. However, these stringent requirements have been relaxed a little in recent years. For example, ‘reasonable certainty’ is now interpreted to mean that a disease may be prescribed as long as there is proof only on a balance of probability that there is a work connection.83 In addition, some afflictions common in the population at large have now been listed, such as deafness which was prescribed in 1975 although only in relation to very particular occupations. Similarly, bronchitis was added to the list in 1993, but was confined only to those who were coalminers. In spite of such evidence of a more liberal approach, in general it remains the case that there is reluctance to prescribe
83
Social Security Contributions and Benefits Act 1992 s108 as interpreted by the Industrial Injuries Advisory Council (IIAC) in its Periodic Report (1993).
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illnesses which are common in the population at large, especially arthritic conditions, upper limb disorders, stress84 and mental illnesses. As a result, overall, the recipients of benefit for prescribed diseases represent only the tip of the iceberg of occupational ill-health generally. 55 Occasionally the conditions laid down by the job descriptions are easily satisfied. For example, tuberculosis is prescribed very broadly for ‘any occupation involving contact with a source of tuberculosis infection.’ However, at other times the conditions are much more detailed and stringent, as where vibration white finger is prescribed for a list of very specific occupations. For example it is prescribed where there is ‘holding of material being worked upon by pounding machines in shoe manufacture.’ Time limits may also be imposed: for occupational deafness the claimant must have worked in the prescribed occupation for at least ten years, and must make the claim within five years of leaving it; for chronic bronchitis and emphysema the period for work is twenty years in a coal mine. 56 The list system has been gradually extended since it was first devised over a hundred years ago. However, the process of adding new diseases and occupations has been very slow. For example, it took thirty years from first investigation of vibration white finger before entitlement to compensation arose. Nor is prescription retrospective in its effect. The Recommendation of the European Commission that Member States adopt the European schedule of occupational diseases85 has not been supported.86 57 A fundamental objection to the system is that, if the disease is not on the list and an accident cannot be established, then no benefit can be claimed no matter how clear the work connection. Thirty years ago it was proposed that for diseases not on the list the claimant should be allowed to produce evidence to show that work was the cause of the disablement in his individual case.87 However, this proposal has never been enacted. More recently it has been noted that there is little evidence of the scale of the problem, and that it can be alleviated by including individual proof as a possibility when new diseases are listed.88 For example, when occupational asthma was listed as being caused by various agents, a further 84 85 86 87 88
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Industrial Injuries Advisory Council, Stress at Work as a Prescribed Disease and PostTraumatic Stress Disorder (2004) Position Paper No 13. 90/326/EEC, Official Journal (OJ) L 160, 26.6.1990, 39–48. Industrial Injuries Advisory Council, European Commission Recommendation – Occupational Diseases (1992) Position Paper No 8. Industrial Injuries Advisory Council, Industrial Diseases: A Review of the Schedule and the Question of Individual Proof (1981, Cmnd 8393). Industrial Injuries Advisory Council, Coverage under the Industrial Injuries Scheme for Injury by ‘Process’ (1995) Position No 9.
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general category was added which allowed recovery for ‘any other sensitising agent inhaled at work.’ Whereas about 200,000 people presently receive disablement benefit 58 because they have suffered an accident, about 58,000 do so because they have a prescribed disease. This reflects the historical importance of accidents, but does not indicate how disease has increased in significance in recent years. There are now as many new claims made based upon disease as there are for accidents with over a thousand made each month. Deafness, vibration white finger and pneumoconiosis account for half of the prescribed disease pensions which are presently in payment and generally reflect exposure to risk factors some years ago. Of new awards, diseases associated with asbestos now account for about 15 % of the total, about the same as for each of the other three main diseases. There are four questions to be determined in a prescribed disease claim: ■
■
■
■
59
The diagnosis question – is the claimant suffering from a prescribed disease? The disablement question – has the disease resulted in the claimant suffering a loss of faculty? The employment question – has the claimant been employed in an occupation listed in relation to the disease? Although it is not necessary for the claimant to have worked exclusively in one of the processes listed, the involvement should be more than merely trivial so that, in one case, two days in seven years work was insufficient.89 The causation question – is the disease due to the claimant’s occupation? Here in many cases the claimant can be helped by a statutory presumption: if he has worked in a relevant occupation in the month preceding the development of the disease, it is presumed that the disease is due to the nature of the employment unless the contrary is proven.
C.
Scope of protection
1.
Personal injury
The legislation specifies that ‘personal injury’ must be suffered. Although 60 this can include a relatively trivial harm, in most cases the scheme requires disablement to be assessed as at least 14 % in order for benefit to be paid.
89
R(I) 8/57.
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In effect, this means that the claimant must suffer the equivalent of the loss of an index finger in order to recover any benefit. 61 Injury is usually all too apparent. However, where the effect is less clear, the claimant must show that he has suffered some physiological or psychological change for the worse. He cannot simply rely upon an increase in pain to found entitlement. For example, although an internal injury such as a muscle pull or a rupture may be sufficient, if the claimant is already suffering from disc trouble and experiences an increase in back pain whilst lifting at work, he must show that there is a physical deterioration in the disc condition itself.90 The increase in pain alone will not suffice.
Mental injury 62 Personal injury includes injury to the mind as well as the body. However, stress related illnesses are not included on the list of prescribed diseases under the industrial scheme, and very few of them result in any form of compensation. In spite of the very widespread nature of mental illness and stress and the recognition that much of it is associated with work, there is little acknowledgement of this in the industrial scheme. It is clearly possible for a claim to succeed if a mental condition follows on from an accident at work which causes physical injury.91 In theory, even if the claimant does not suffer physically he may claim for a mental condition alone if it is the result of an accident caused by his job. On this basis, for example, benefit was paid where the claimant developed a neurosis after witnessing the death of another employee at work.92 However, in such a case the claimant must establish not only that there has been a specific disturbing event, but also that it constitutes an accident and is the cause of his condition. Because of this, it was doubted whether a fire officer could recover when he suffered a post-traumatic stress disorder as a result of attending a series of horrific fatal crashes unless he could identify the precise incidents which had specifically caused his mental state.93 It is not therefore surprising that most employees suffering the usual stress related illnesses find it almost impossible to claim.
90 91 92 93
160
R(I) 1/76. CI 4/49. R(I) 49/52. Chief Adjudication Officer v Faulds [2000] 2 All ER 961.
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2.
Other than personal injury
The industrial scheme offers no compensation for damage to workers’ 63 property or for pure economic loss. Nor does it cover dignitary injuries resulting from discrimination or sexual harassment. Scope for such claims lies outside of the industrial injuries scheme and is to be found especially in general employment and anti-discrimination legislation.94
D.
Heads and levels of benefit
The industrial scheme offers monetary compensation only. Medical care 64 and rehabilitation assistance are available free of charge under the National Health Service, but no special provision is made for those injured at work. Nor is the scheme linked to any retraining or support services to encourage a return to work. About £893 million is spent on industrial injuries benefit being about 0.5 % of total benefit expenditure.95 This represents a fall of about 12 % from the level of twenty years ago when about £984 million was spent. There are about 40,000 new claims made each year fairly evenly split 65 between prescribed diseases and accidents.96 Less than half of all these claims result in the payment of benefit, often because the minimum threshold of disablement is not reached.97 In 2009 there were 324,000 beneficiaries of payments under the industrial scheme, the great majority of them having first gained entitlement many years earlier, with many of them retaining entitlement to benefits which are no longer available to new claimants. As a result of the build up of pensions in the system, about two thirds of recipients are aged over 60. There are four times as many men than women. Of new claimants, women account for only 30 % of accident cases, and less than 10 % of disease cases. On average, claimants are assessed as suffering only minor disablement and receive about £48 a
94 95
96
97
Below nos 122–123. Department for Work and Pensions, Benefit Expenditure Tables – Medium Term Forecast Table 1b for 2009–10. . The total benefit expenditure was £ 155 billion. Department for Work and Pensions, Industrial Injuries Benefit Quarterly Statistics, table 1.5 up to December 2009 making allowance for a sharp increase for diseases when a new disease is prescribed. . No 60.
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week,98 this being about a tenth of the average weekly wage.99 The maximum award without any supplement in 2011 is £150–30p, and is less than a third of the median wage. 66 The benefit is paid exclusively by means of a pension; lump sums of up to about £4,000 which used to be awarded for minor injuries were abolished in 1986. Pensions increase in line with inflation and are often paid for life even though that period is uncertain. As a result their capital value can be high,100 although the pension cannot be commuted into a lump sum. A pension can be increased later if there is an unforeseen aggravation of injury. In these respects the pension is more flexible and offers a more certain future for claimants than the once and for all lump sum traditionally awarded in tort. However, in serious injury cases the recent development of periodical payment orders for damages in tort offers greater flexibility.101 67 Although twenty five years ago there were several different benefits available under the industrial scheme, today only disablement benefit remains. In effect, this is a payment only for non-pecuniary loss. It compensates for the effect of the work injury upon body or mind irrespective of whether it results in a reduction in earnings or in additional costs. The focus is upon injury only to person and not to pocket. There is one very limited exception to this: in cases of the most severe injury, affecting only one in a hundred recipients of disablement benefit, two supplements can be claimed to meet the need for care and attendance. 68 It is very important to emphasise that loss of earnings resulting from the industrial injury is not covered by the scheme. Reduced earnings allowance which used to compensate for this was abolished in 1990 (although 120,000 old pensions remain in payment and new entitlement for old exposure can still arise). The allowance used to account for 40 % of the expenditure upon the industrial scheme. It was withdrawn because of its extreme complexity and the high cost of determining the precise reduction in earnings. This was in spite of a maximum award being set which, in practice, prevented 90 % of claimants from obtaining their full loss. By contrast, in other European countries most of the benefits that are paid under workers’ compensation schemes are for loss of earnings.
Department for Work and Pensions, Industrial Injuries Benefit Quarterly Statistics, table 1.2: . 99 Office for National Statistics, Labour Market Statistics . 100 No 76. 101 Nos 126–127. 98
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Industrial death benefit which offered a very small preferential payment 69 to surviving spouses is another benefit which has been abolished. Since 1988 there have been no benefits payable to dependants under the scheme. The costs of private medical treatment or rehabilitation have never been recoverable under the scheme. Overall, therefore, no compensation is available for any pecuniary losses caused by the injury. Industrial deaths continue to decline and remain among the lowest in Europe.102 Although the industrial scheme now offers only disablement benefit, it must be remembered that the claimant remains entitled to other benefits available under the social security scheme irrespective of where injury occurred or how disability was caused. In particular, for short term absence from work claimants can obtain statutory sick pay (currently only £81 a week) and thereafter, in the longer term, employment and support allowance (up to £100 a week). There are also disability living allowances with additions to cover the need for mobility (up to £51 a week) and the need for care (up to £73 a week). There are also means tested tax credits for those partially incapacitated. Apart from general social security provision, most claimants will also benefit from sickness or disability monies available from their employer under their contract of employment. The level of provision here varies according to the employment, with the working class receiving the lowest payments. In many schemes the employee may receive the full wage loss but the duration of the payment will depend upon the particular work done. The range of welfare and other support available to injured people was considered in an earlier book in this series.103 In spite of this additional provision, the UK spends a lower proportion of its Gross Domestic Product on sickness, invalidity and occupational benefits than other European countries.104 This is partly offset by claimants also being allowed to sue in tort for their work injuries.
1.
Assessment
To gain entitlement to the industrial benefit it is not necessary to show 70 that the resulting disablement is permanent, but it must continue for at least fifteen weeks because entitlement usually does not arise until that
102 Health and Safety Executive, Statistics on Fatal Injuries in the Workplace 2010–11 . 103 Magnus (fn 18). 104 Eurostat, Social Protection Expenditure and Receipts 1990–1998 (2000, European Commission).
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length of time has passed since the accident or onset of the disease. Entitlement may then continue for as long as the disablement lasts. Payments can therefore endure through incapacity, unemployment and retirement, and end only on death. As a result, as discussed below, the pension can be very valuable if assessed in capital terms. 71 The extent of disablement is assessed with the help of medical authorities. It is expressed as a percentage with the maximum basic award being the pension which statute prescribes as payable for 100 % disablement. Percentages are rounded up or down to the nearest multiple of ten. The assessment is made by comparing the claimant to a person of the same age and sex who is of normal health. This assessment is therefore an objective one which ignores the claimant’s own personal or social circumstances, and no attempt is made to compare the claimant’s condition before and after the injury. Instead, the comparison is with a ‘normal’ person. In theory, this is very different from the much more subjective assessment which takes place in tort, although, in practice, the tort award is much more divorced from the individual than textbooks would lead us to suppose. 72 In arriving at their assessment the authorities are assisted by a crude statutory table. This deals almost entirely with anatomical losses and not the less visible injuries such as internal ones. In tort there are much more sophisticated non-statutory guidelines to assist assessment.105 By contrast the industrial injuries table indicates, for example, that loss of a thumb is assessed as 30 % disablement; loss of an eye is assessed as 40 % disablement; and amputation below the knee with a stump exceeding 9 centimetres but not exceeding 13 centimetres is assessed as 50 % disablement. However, these figures are not set in stone: the percentages can be varied if they do not provide reasonable assessments of the degree of disablement. The great majority of claimants suffer only minor injury. About two thirds are assessed at less than 24 % disabled, and this is then rounded so that by far the most common pension is that payable for 20 % disablement.106 73 The table can be criticised on several grounds. It pays too little attention to the functional effects of disablement: what does the disability prevent the claimant from doing? It offers little help with non-anatomical injuries so that low back pain, for example, is notoriously difficult to assess. The
105 Judicial Studies Board, Guidelines for the Assessment of Damages in Personal Injury Cases (10th edn 2010). 106 The average payment, taking into account the minority of substantially higher awards, is £ 48 a week and is equivalent to a pension slightly more than that payable for 30 % disablement.
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table is also biased in favour of minor injury and under-compensates severe disablement. A counterweight to this criticism is the important provision in the legislation which excludes lesser injuries from the scheme. Except in cases of certain industrial diseases such as pneumoconiosis, no entitlement to benefit arises unless the claimant is assessed as at least 14 % disabled. This is the equivalent to the loss of an index finger. Any other finger can be lost in an industrial accident and it will give rise to no entitlement to benefit.
2.
Rate of payment
The rate of the pension is directly proportionate to the percentage of 74 disablement assessed. In 2011 the maximum payment for 100 % disablement is £150 a week so that a 50 % assessment – equivalent to the loss of all four fingers on one hand – results in a pension of £75. However, as with many other compensation schemes, the payments disproportionately relate to minor injuries with the average pension being only £48 a week. By contrast, in cases of the most severe injury two further supplements to 75 disablement benefit may be paid. These are constant attendance allowance and exceptionally severe disablement allowance. However, only about 1 % of pensioners receive these supplements because entitlement depends upon establishing at least 95 % disablement. Although constant attendance allowance can increase the disablement pension by up to £120 a week, the real benefit to the industrially injured is in fact much lower. This is because there is another attendance allowance benefit available under the main social security scheme and this provides up to £73 a week and it is not available to those who receive the industrial allowance. The weekly preference given to those injured at work is thus about £47. About a third of those who receive constant attendance allowance may also gain entitlement to exceptionally severe disablement allowance if they can show that the need for such attendance is likely to be permanent. A further increase of £60 a week is then payable to very small numbers of people. Again benefits under the main scheme may reduce the overall value of the industrial preference. Recommendations that these two supplements should be abolished so as to leave industrial injury victims reliant upon the provision made in the main social security scheme have not been enacted.
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3.
Comparison of the industrial injuries pension with damages in tort
76 The value of an industrial injuries pension can be high if assessed in capital terms. This is particularly so because it can last for life and it is protected against inflation. In addition, it is tax free and generally does not lead to a reduction of other contributory benefits also being received under the main social security scheme. As a result the capitalised value of the pension can often compare very favourably with the lump sum awarded in tort, at least if attention is confined to the lesser injury cases. 77 By contrast, the income arising from the lump sum awarded in tort is taxed, and it has been found difficult to protect many claimants from the ravages of inflation. The assessment in tort is based upon achieving a rate of return from investment which, in practice, is impossible to obtain. The lump sum paid is invariably the result of a compromised deal out of court. Because of the uncertainties involved in litigation, this deal is likely to involve an agreement to accept significantly less than the sum which the strict rules applied by courts would allow. However, when it comes to catastrophic injury the industrial scheme cannot begin to match the multi-million pound awards or guaranteed pensions of tens of thousands of pounds available in the tort system. This is because the scheme offers nothing for care costs or for loss of earnings and pension entitlement, whereas these constitute the major elements of the damages awarded in tort where there is serious injury. 78 To illustrate the potential value of disablement benefit let us take the case of a typical recipient who has an assessment of close to the average awarded of 30 %. This could be awarded for the loss of an eye. The resulting pension is then £45 a week amounting to £2,344 a year. If this were being received at the young age of 21, the lifetime capitalised value of the pension would be £74,724.107 Even if the claimant were aged 60, the capital value of the pension would still be £42,946. By contrast the nonpecuniary valuation in tort for the loss of an eye is between £36,000 and £43,000.108 This comparison illustrates that, over the course of their lifetime, almost all workers suffering lesser injury obtain more for their nonpecuniary loss from the industrial injuries system than from tort. Under the industrial scheme the younger the worker the more valuable their
107 Government Actuary’s Department, Actuarial Tables for Use in Personal Injury and Fatal Accident Cases (7th edn 2011) table 1 using a 2.5 % discount rate for a loss for life for a man. 108 Judicial Studies Board (fn 105).
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total pension, whereas in tort age rarely affects the amount paid unless the claimant is very old. In making these comparisons it must be remembered that the industrial scheme, unlike tort, offers nothing for earnings lost or for care costs incurred. Let us take the comparison further by examining what would happen in 79 the case of the most catastrophic injury, such as quadriplegia or severe brain damage. The maximum basic pension which could be awarded by the industrial scheme is £150 a week, equivalent to £7,815 a year. (This ignores the two supplements that are also payable partly because they have lesser equivalents under the main social security scheme). For a 21 year old the capitalised value of the basic pension is £249,083. For a 60 year old it is £143,025. These figures, derived from actuarial tables, are not far out of line with the prescribed amount of between £212,000 and £265,000 awarded in tort for the most severe injury. However, again we must remember that the tort system would also take into account the financial losses and care costs incurred. This means that invariably in such a case, especially if a high income earner is involved, the award in tort would run into millions of pounds, and the difference with the industrial scheme would then be very apparent.
E.
Funding systems
In 1948 the old system of privately financed workmen’s compensation 80 gave way to the state-run industrial injuries scheme. Private insurance was replaced by public funding. A separate fund was created to pay for the new scheme. This was financed by compulsory contributions per employee; the parties could not choose to self-insure and opt out of the system. The initial proportion levied was 40 % each from both the employer and employee, with the remaining 20 % being contributed by the Exchequer from the general taxes it received. The set contributions did not distinguish between industries on the basis of their relative risk of causing injury: such rating was rejected as being unduly expensive to administer and contributing little to industrial safety.109 As discussed above, employees were covered from their first day at work; there was no requirement that they contribute a minimum number of contributions in order to be
109 The Pearson Report (fn 12) vol 1 para 902. Similar conclusions are reached in K Armstrong/D Tess, Fault versus No Fault for Personal Injury – Reviewing the International Evidence (2008) paper presented at the Institute of Actuaries, Australia.
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eligible for the benefits. The scheme thus had only a loose connection with the insurance principle. 81 The funding system remained in place for over 25 years, although the contribution proportions changed so that eventually employers were funding 57 %, employees 26 % and the Exchequer 17 %.110 Gradually the administration of the scheme was integrated within the general structure of social security. In 1973 this culminated in the abolition of the separate fund for industrial injuries.111 In part this was because of the general dislike of earmarked contributions and the difficulty and expense of working them out. In 1990 funding for the scheme was transferred to the Consolidated Fund so that the scheme is now wholly tax supported. This means that there is now no separately earmarked fund nor are there contributions which directly support industrial injuries compensation.
F.
Administration and adjudication of claims
1.
Claims and appeals
82 The industrial injuries scheme, being part of general social security provision, is administered by the Department for Work and Pensions (DWP). Claims are made to the DWP and a lay decision maker determines the claim without a hearing on the basis of all the evidence on paper, including advice that may be sought from doctors who have been especially trained in disability analysis. Adjudication in industrial injury claims is usually more complicated than in other social security cases, often because of the medical questions that may have to be resolved. Claimants are more likely to challenge the decision with the result that there were 7,300 appeals in 2009–10 from the 40,000 claims for benefit.112 83 Disputes take place outside the court structure for civil justice in general. Instead there is a right of appeal against the DWP decision to a First-tier Tribunal. This tribunal consists of a legally qualified judge who may sit alone or with up to two other people who have either financial, medical or disability expertise. A further appeal then lies to the Upper Tribunal and beyond, if permission is obtained, to the Court of Appeal.
110 Brown (fn 25) 84. 111 Social Security Act 1973 s 94. 112 Ministry of Justice, Tribunals Service Quarterly Statistics 2009–10, table 1.1c .
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2.
Tribunals not courts
Tribunals are very different from those traditional courts which determined 84 workmen’s compensation cases before the system was nationalised in 1948. ‘In no time at all workmen’s compensation descended from its lofty ideals of being a no-fault social service into a squalid legal battlefield between trade unions and insurance companies, with lying, cheating, and chicanery on all sides and astronomical expenditure on administrative, legal and medical costs.’113 It may be argued that tort claims today share many of these features. By contrast the tribunal system offers a cheap, speedy and more informal system of justice, and the involvement of lawyers is much less common.114 The tribunal judge takes a more active part in proceedings than a judge in the traditional civil court. The procedure is much less formal and witnesses are rarely called. The process of appeal typically takes from three to eight months, and the hearing lasts usually less than an hour. Claimants do not have to attend, although most do. This is partly because, in work accident cases, the majority are assisted by a lawyer or representative appointed by their trade union, although there is no legal aid available to pay for the cost. The tribunal service itself is free.
3.
Administrative cost
In 2007 the administrative cost of paying disablement benefit was said to 85 be only 2 % of the total cost of the scheme.115 In contrast, fourteen years earlier the cost was said to be 11 % of the benefit expenditure.116 Whatever the exact figure, it sharply contrasts with that for the tort system which consumes in operating costs 45 % of the total of damages paid and administrative expenditure. That is, for each pound spent on the tort system only 55 pence goes to the claimant.117 Whereas the administrative cost of the tort system is almost as much as the damages it pays out, the industrial injuries scheme is much more cost effective partly because it is based on
113 OH Parsons, A No-Fault System? Not Proven (1974) Industrial LJ 129. 114 J Baldwin/N Wikeley/R Young, Judging Social Security (1992). 115 Department for Work and Pensions, The Industrial Injuries Disablement Benefit Scheme – a Consultation Paper (2007) 4.19. The costs nevertheless are about 20 % of the cost of new claims. 116 Industrial Injuries Advisory Council, Periodic Report (1993) 28. 117 The Pearson Report (fn 12) vol 1 para 256. The Lord Chancellor’s Civil Justice Review (Cm 394, 1986) estimated that the cost of the tort system consumed 50 to 70 % of the total compensation awarded in personal injury cases. See no 138 below.
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no-fault, involves few lawyers, and uses the tribunal system rather than the traditional court structure.
G.
Right of recourse of workers’ compensation institutions
1.
Rights of recourse against the employer
86 The industrial injuries scheme is financed by the state. Workers’ compensation institutions as exist in other European countries are unknown in the UK and no rights of recourse therefore directly arise. Because these workers’ compensation institutions elsewhere in Europe provide collateral benefits to the injured, they are allowed subrogation rights to recover their payments from tortfeasors. They enforce these rights via bulk recovery arrangements whereby liability insurers agree in advance to reimburse a percentage of all claims under a certain amount. This avoids litigating individual cases and makes subrogation administratively workable and financially efficient.118 87 Bulk recovery agreements in favour of the state in respect of social security benefits do not exist in the UK because there is a comprehensive benefit recovery system in place as described below.119 The state is able to reclaim the social security benefits paid to a claimant in respect of an injury for which damages in tort are also paid. Unlike in other countries, each individual claim for personal injury is examined to determine whether benefit can be recovered from the compensator on the facts of the case. In the great majority of cases the compensator is the liability insurer of the employer although a few large employers and state organisations are allowed to self-insure and pay damages directly themselves. However, if no tort claim is brought, benefits cannot be recovered even though it may appear that an employer was responsible for the injury. The state has no independent right of recourse against a tortfeasor; its reimbursement is parasitic upon the tort claim.
118 W Pfenningstorf/D Gifford, A Comparative Study of Liability Law and Compensation in Ten Countries and the USA (1991) 134. 119 Nos 142–149 below.
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2.
Rights of recourse against a co-worker or third party
In theory, the state’s claim for reimbursement against the compensator 88 could include a claim against a co-worker who negligently caused the injury and personally paid the damages. However, in practice this never happens, and no recourse arises. Even though the basis of many tort claims rests upon the principle of vicarious liability, in practice the negligent co-worker causing the injury never actually pays the damages himself. It is always the responsibility of the employer or his insurer. There is even an agreement between insurers and the employers’ organisation that insurers will not subrogate and seek to recover the damages they have to pay from the negligent employee.120 A similar position arises in relation to reimbursement from third parties. 89 In theory, for example, it is possible that a negligent manufacturer could be liable for an injury at work resulting from the supply of defective equipment. However, the law makes the employer strictly liable in such a case with the result that, in practice, the employer would always be the party to be sued, although he might seek to join the manufacturer to the action. Again, therefore, the state is unable to seek reimbursement from any third party unless it actually pays damages directly to the claimant.
H.
Interaction with general social welfare provision and private insurance
1.
The sources of funding
The funds of first (and often last) resort are those provided by the state. 90 That is, the claimant usually will first seek social security benefit and free medical care from the National Health Service. It is also possible for a minority of claimants to benefit from various forms of private insurance. These include accident and disability insurance, permanent health insurance, and private medical insurance. More important for the victim of an industrial injury are the benefits usually provided by his employer. These include statutory sick pay, a low amount specified by legislation and currently £81 a week. In contrast occupational sick pay may cover the greater part or even all of any wage loss for a set period in accordance with the terms and conditions of employment. That is, the injured worker’s right to continue to receive wages will depend upon the terms negotiated
120 No 140 below.
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as part of the contract of employment. Some jobs may offer protection for many months absence from work and may replace in full the earnings that otherwise would be lost; other occupations will offer only limited repayment by allowing only a percentage of income to be recovered for a shorter period of time. In practice, the most generous protection is more commonly found as a part of the terms and conditions of work for those in middle class jobs, and there is much less support given to those in working class or manual jobs.
2.
Deductibility of benefits
a) Within social security 91 There are general provisions within social security law which are aimed at preventing over-compensation for the same contingency or need. The rules are complex and inconsistent.121 However, in general it can be said that the receipt of industrial injuries disablement benefit has a limited effect on other benefits received. Claimants can often retain their entitlement to contributory benefits in addition to their industrial pension. For example, it does not affect the receipt of incapacity benefit or a retirement pension. Nor is the benefit taxable so that it does not affect receipt of working or child tax credits. Overall this establishes the basis for the industrial preference which, as discussed above, can be very valuable in certain cases. 92 However, disablement benefit will result in the reduction or loss of certain means tested income-related benefits. These include income support, pension credit, housing benefit, and council tax benefit. Even though disablement benefit is not paid because of loss of income, it is taken into account in this way and may result in an injured worker being worse off than if a claim had not been made. Disablement benefit can also affect how much war pension is paid. Finally, receipt of industrial injury constant attendance allowance prevents there being entitlement to attendance allowance or disability living allowance under the main national insurance scheme.
b) Other than social security 93 There is no question of disablement benefit being taken into account to reduce the compensation which the claimant or his employer may have arranged via a private insurance scheme. Nor will any occupational pay-
121 Wikeley (fn 81) 259 ff.
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ments for sickness or disability be affected. Private arrangements or benevolence are to be left out of account. Nor can any employer or private insurer claim from the industrial injuries fund any reimbursement of the benefits it provides. However, the disablement benefit paid can be recovered by the state from the compensator if there is a successful claim for damages in tort as explained next.
I.
Interaction with employers’ liability
The claimant in the UK is allowed not only to claim industrial injury benefit 94 under the social security scheme, but also to sue the employer in tort. There is no employer privilege which exempts the employer from liability. The two types of claim are entirely separate so that there is no question of the social security claim being brought in the same proceedings as the tort claim. The compensation is sought from different funds, the one public and the other private, and they involve very different procedures, personnel and adjudication. A notable difference is that only about 1 % of all tort claims are determined by a judge, the rest being settled out of court for a compromised sum. By contrast all benefit claims are determined and never compromised. Before 1948 claimants were faced with a difficult choice: they could either 95 obtain industrial benefit or damages in tort. They could not do both. For a variety of reasons claimants overwhelmingly opted for, or were pressed into receiving, the no-fault social security benefit.122 This left the tort system to play only a very limited role in the industrial field.123 There was judicial criticism of the ‘deplorable’ and ‘extremely shabby’ tactics used by insurers to prevent tort claims from being pursued.124 Eventually the employer privilege was abolished by statute,125 and in the last sixty years or so tort claims for work accidents have flourished. Until 1990 the state had no right to recover any of the social security benefits 96 it paid to a claimant who later succeeded in a tort action. Legislation then set up the Compensation Recovery Unit able to claw back most of the benefits paid by the state to accident victims up to the date of the settlement of their damages claims. This scheme is described in more detail below.126
122 WA Dinsdale, History of Accident Insurance in Great Britain (1954) 161. 123 Bartrip (fn 11) ch 10. 124 Deane v H F Edwards & Co (1941) 34 Butterworth’s Workmen’s Compensation Cases (BWCC) 183. 125 Law Reform (Personal Injuries) Act 1948. 126 Nos 141–149 below.
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III. Employers’ Liability A.
Classification
97 The liability of employers to employees for personal injury has traditionally been seen as lying within the law of tort. Although an action in contract is theoretically possible, it is rarely pleaded because in virtually all cases there would be no difference in result. The rules that are applied are part of the general civil law of obligations, although special provision has also been made at times for work accidents alone. One example of this is where statute provides that employers must insure against their liability. 98 Liability founded upon breach of statutory duty is the most important example of where, in effect, special provision has been made. Although the broad principles of such liability derive from the general law of tort, in practice the litigation is dominated by employers’ liability claims: judges have held that violation of health and safety legislation will usually be enough, of itself, to found breach of duty in tort. By contrast, they have refused to allow road traffic legislation to be used to define the tort standard in the same way. As a result, the rules developed for breach of statutory duty have created a particular liability regime for work accidents. Notably this involves the imposition of what is often a stricter form of liability than that based upon proof of fault. In addition, for example, the defence of voluntary assumption of risk has been held inapplicable in a breach of statutory duty claim. The result, in practice, is that the basis of liability for work accidents is often very different from liability for other causes of injury.
B.
Elements of liability
99 In broad terms, there are three bases for imposing liability upon an employer. In order of development, these are where the employer is liable – ■
for the breach of duty by another employee who was acting in the course of employment (vicarious liability)
■
for breach of a primary duty owed directly by the employer to the injured employee, the duty being placed on the employer by judges (breach of common law duty)
■
for breach of a primary duty placed on the employer by Parliament (breach of statutory duty).
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The result is that liability is sometimes based upon fault (especially where 100 vicarious liability or breach of common law duty are involved), and sometimes it is strict (where statutory duty is involved). These different potential liabilities can be confusing. There is some uncertainty, for example, about the scope of strict liability. As a result, practitioners regard this area of law as more complicated than that involving road accident claims.127
1.
Vicarious liability
Although originating in medieval times, vicarious liability was not relied 101 upon by an employee to sue his employer until the nineteenth century. The first reported case was in 1837 when an action against a butcher for the negligence of another employee in overloading his cart resulted in injury to the claimant.128 Liability was rejected because the claimant and the negligent employee were both employed by the butcher, and it was not thought appropriate for the law to intervene in the work relationship. This ‘common employment’ defence was very harsh and considerably restricted the use of vicarious liability.129 Later in the century both Parliament and the judiciary recognised the 102 severity of the law and tried to limit the effect of the defence of common employment. The Employers Liability Act 1880 prevented the defence from arising in a few situations. In addition, judges found that an employer could be liable for breach of his own duty of care owed directly to the claimant and involving no other employee. Vicarious liability and the defence to it was not then in issue. Finally, judges directly limited the scope of common employment by finding, for example, that it did not apply if a worker was injured when facing the same risks as those run by the general public. This was the case where a bus driver was injured when in collision with another bus. Partly because of these limitations the defence gradually fell into disuse and more claims based on vicarious liability then succeeded. However, common employment was not formally abolished until 1948.130 Even after that date, in practice, for a while only a few workers brought claims in tort.131
127 H Genn, Hard Bargaining: Out of Court Settlements in Personal Injury Actions (1987). 128 Priestley v Fowler (1837) 3 M & W 1. 129 RA Epstein, The Historical Origins and Economic Structure of Workers’ Compensation Law (1982) 16 Georgia Law Review 775. 130 Law Reform (Personal Injuries) Act 1948 s 1 (1). 131 Bartrip (fn 11) ch 10.
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103 Vicarious liability requires that the fellow employee be held liable for causing the injury and this almost always involves proving that he was at fault. This is in sharp contrast with an action for breach of statutory duty where liability is often imposed irrespective of wrongdoing. Once fault is proven, vicarious liability requires that the injury be committed, firstly, by an employee as opposed to an independent contractor, and secondly, in the course of employment. Both of these requirements have already been discussed in relation to the industrial injuries benefit scheme,132 and the lengthy examination of the course of employment is equally applicable here. There are only minor differences. For example, the special statutory provisions in relation to the course of employment under the industrial scheme are not replicated in tort law, although this has little effect in practice.
a) Who is an employee? 104 The old test of whether the employer was in control of the worker retains some importance, but today judges look at a much wider range of factors to determine the relationship. These include, for example, the method of payment, what financial risks are taken, who owns the tools or work equipment, what degree of responsibility was taken, and what rights there are to dismiss or to delegate the work. The description of the relationship in the contract is of relevance but cannot provide the definitive answer partly because the parties have incentives to disguise the true position. Overall, judges in recent years have made employers liable for a wider range of workers to reflect the increasing complexity of employment practices and structures.133 105 Although generally employers are not vicariously liable for the acts of independent contractors, they may be liable if they have breached a primary common law or statutory duty placed upon them. For example, although they are not vicariously liable for the fault of an electrical contractor causing an appliance to become dangerous, they will be strictly liable for breach of the statutory duties to ensure that tools and equipment are safe for workers to use. Employers may also be liable for breach of other ‘non-delegable’ duties although the scope of these is uncertain.134
132 Nos 19 and 28–40 above. 133 R Kidner, Vicarious Liability: For Whom Should the Employer be Liable? (1995) 15 Legal Studies 47. 134 Rogers (fn 24) 20–21.
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b) What is the course of employment? The cases here are as numerous as they are in relation to the industrial 106 injuries benefit scheme and for the same reasons: the difficulty at the margin of defining the limits of work. Again the decisions often must be read as confined to their specific facts. An act will be found to be within employment if it is expressly or impliedly authorised by the employer, or if it is sufficiently connected with the employment such that it can be said to be reasonably incidental to it. Many of the cases deal with issues already discussed such as those relating to travelling in the course of employment, or acting in an emergency, or establishing where the time and spatial limits of work are to be found. As under the industrial scheme, a more expansive view has been taken of the course of employment in recent years. In particular, it has been held that liability can arise if the act in question is so closely connected with the employment that it would be just to hold the employer liable.135 This vague test further expands potential liability.
2.
Breach of common law duty
Partly as a means of evading the defence of common employment which 107 previously limited the scope for vicarious liability, judges imposed duties directly upon employers. There are four such duties. The employer must provide: ■
competent staff
■
adequate plant and equipment
■
a safe place of work, and
■
a safe system of working
These duties, originating in the nineteenth century, are now of limited 108 importance in practice because of the development of the statutory duties, discussed below. There are several reasons for this. Although they cannot be delegated to another, the common law duties require the employer, or his agent, to be shown to be at fault. In contrast, many statutory duties give rise to strict liability. In addition, the defence of voluntary assumption of risk cannot apply in a statutory duty case. The statutory duties are more precise, usually being set out in the legislation in considerable detail when compared to the vague generalities of the common law. They offer much clearer guidance concerning the factors affecting, for example,
135 Lister v Hesley Hall [2002] 1 AC 215.
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whether there is a safe place of work, or when liability might arise for manual handling, or using work equipment. As a result, in practice only the common law requirement to provide a safe system of work has much effect, and even then, in many cases, it is often included by lawyers in the pleadings only as a makeweight argument. However, the duty to provide competent staff may still have some value in extending liability beyond that imposed vicariously because it makes the employer liable even for staff acting outside the course of their employment, as where injury is sustained as a result of horseplay or deliberate assault by a fellow worker.
3.
Breach of statutory duty
109 Health and safety legislation, beginning at the very end of the nineteenth century, was primarily designed to regulate workplace risks by setting up an administrative system to inspect premises and direct measures to prevent injury. It was backed by various enforcement powers, and if necessary, the criminal law. However, the tort system soon adopted and, in many ways, warped this legislation so that nowadays its primary legal function is to enable injured workers to obtain compensation in tort. It does so by creating a presumption that violation of the criminal law in relation to health and safety amounts to a breach of the standard of care required in tort. In fact, the legislation has been more commonly employed in the civil law to create an action for breach of statutory duty than it has been used in the criminal law to punish offenders. 110 As the result of the implementation of various directives of the European Community the UK now has a very comprehensive and detailed set of regulations covering all aspects of work safety. In particular, a group of regulations enacted in 1992 had wide effect, partly because the rules they created are not specific to particular industries or trades as were the regulations they replaced. Instead the rules now apply to offices, shops, factories and other workplaces alike. Although they are now a very important source of civil liability and extensively used by practitioners, the regulations are not discussed in detail in tort textbooks and academic law journals pay them very little attention. 111 Whether a regulation imposes strict liability upon an employer depends upon how it is worded. Some duties are absolute and allow for no excuse, as where escalators are required to function safely.136 Other duties are
136 The Workplace (Health, Safety and Welfare) Regulations (1992) (SI No 3004) reg 19.
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subject to qualification, as where compliance is needed only ‘so far as is reasonably practicable’, a phrase which has given rise to a large body of conflicting decisions. Sometimes strict liability has been imposed and the claim has succeeded even though the dangers could not have been foreseen or even though the cost of taking precautions would have been prohibitive. At other times in interpreting ‘reasonably practicable’ liability has been denied because fault has been absent. Courts have failed to evolve any consistent approach to the problem of whether or not to impose strict liability. A major reason for this, according to one commentator, is that some judges have been influenced by the fact that there is already compensation without fault available under the industrial injuries scheme.137 However, in general we can say that the increasing scope of regulation in recent years has led to a stricter liability in tort for work injuries. In particular, the requirement that all employers must now formally ‘undertake a suitable and sufficient assessment of the risks’ which affect each employee has proved a valuable aid in establishing liability.138 Although liability may be strict, this does not mean that causation cannot 112 be used to defeat a claim. For example, it can be argued that the employer’s failure to assess the risk is not a cause of the injury suffered if the accident would have occurred anyway. A notable case in which causation was raised to defeat the claim involved an employer who was found not liable even though he was in breach of regulations by supplying safety boots with a small hole.139 The boots were intended to protect a milk tanker driver against the risk of falling objects. In fact, during freezing weather the driver had to dig out his vehicle from ice and snow. Water penetrated the boot and he suffered frostbite. It was held that this was not the risk against which the boots were intended to guard, and the kind of injury was not therefore protected. The causation argument, in effect, defeated strict liability.
4.
Effect of the victim’s contributory conduct
Unlike under the industrial scheme, the victim’s conduct can form the 113 basis for the partial defence of contributory negligence. This results in a reduction of the damages to be paid. Until legislation was passed in 1945
137 Atiyah’s Accidents (fn 15) 98. 138 The Management of Health and Safety at Work at Regulations 1999 (SI No 3242) reg 3. 139 Fytche v Wincanton Logistics Ltd [2004] 4 All ER 221.
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any fault on the part of the claimant would have led to the action being barred, but now the damages can be apportioned according to the parties’ share of responsibility for the injury caused so that the claimant will usually obtain most of his damages.140 Contributory negligence reduces damages in about a quarter of all tort claims whereas no such reduction can take place under the industrial scheme because it is not based on fault whether it be of the employer, another employee, or the claimant himself.141 114 In tort there remain several possibilities for avoiding liability entirely. First, as we have seen immediately above, causation arguments can be used to show that the employer’s breach of duty was not legally the cause of injury. Secondly, if the claimant’s conduct is such as to take him outside the course of his employment his claim is likely to fail because he will not be able to rely upon those duties of care which would be owed to him whilst doing his job.142 Finally, in very rare cases the defence of voluntary assumption of risk might apply to defeat the entire claim, although it has been held that this cannot be argued where a breach of statutory duty forms the basis for the action. Until the 1940s voluntary assumption of risk, contributory negligence and common employment comprised the ‘unholy trinity’ of defences which helped to ensure that very few claims by workers ever reached the tort system.
C.
Scope of protection
1.
Accidents and disease
115 Unlike under the state scheme, tort claimants seeking compensation for disease are not confined by a set list prescribing the illnesses or conditions covered and limiting compensation to particular employments. Instead they can sue upon proof that the disease was caused in the individual circumstances of their work. However, tort is similar to the industrial scheme in that both systems favour those injured by accident rather than disease. Those involved in accidents are more ready to attribute responsibility and sue for their injuries partly because the cause of their misfortune is clear. By contrast, victims of disease may not realise that they have been injured by another’s wrongdoing, and may find great difficulty in
140 Law Reform (Contributory Negligence) Act 1945. 141 Harris et al (fn 67) 91. 142 Discussed in relation to the industrial scheme at nos 41–44.
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attributing cause perhaps some years after their initial exposure to substances at work.143 As a result far fewer claims are made in tort for disease than for accident: in the three years from 2007 to 2010 there were 2.4 million claims made for all types of personal injury but only 49,000 of these related to disease, being about one in fifty of the total.144 Within that three year period there were 253,000 work injury claims, but diseases constituted only about one fifth. In fact, therefore, in spite of an openended system in tort, there are disproportionately fewer claims made for disease than under the closed list industrial scheme where new claims for disease now equal those for accident.145 In spite of these figures we can say that tort has increasingly recognised the 116 hidden effects of work upon health and this has been reflected in litigation statistics. For example, greater knowledge of the risks of repetitive manual movements, or of asbestos, or noise at work has at different times resulted in many new cases being brought. In particular, the claims of miners in respect of, firstly, respiratory disease, and secondly, the use of vibrating tools led to settlement schemes which were called ‘the biggest personal injury schemes in British legal history and possibly the world’.146 From 1999–2004 about 760,000 of these particular claims were registered. Under the respiratory disease scheme £2,300 million was paid out, and under the vibration scheme a further £1,700 million.147 Whereas the median award for vibration was £8,300, for respiratory disease it was only £1,500. The cost of administration was very high: lawyers’ costs under the respiratory scheme averaged £1,920 out of a total cost of £3,200 required to administer each claim.148 These settlements have all now been concluded and this accounts for the substantial fall in the number of disease claims in the more recent figures of actions brought in tort for personal injury.
2.
Personal injury
It is usually all too apparent whether or not the claimant has suffered an 117 actionable personal injury. However, a rare case in which the issue was 143 Stapleton (fn 66). 144 Compensation Recovery Unit reply to a Freedom of Information Act request, 14 April 2010. 145 No 58 above. 146 Department of Trade and Industry, Coal Health Claims . 147 House of Commons Parliamentary Debates, 25 June 2009, Written Answer at column c1110W. 148 National Audit Office, Coal Health Compensation Schemes, HC 608 session 2006–07.
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raised was where workers had been exposed to asbestos and had developed pleural plaques which were asymptomatic.149 They were denied compensation because the damage they had suffered had not made them physically worse off; the change in condition, of itself, was insufficient to ground the action. 118 Liability for personal injury includes any form of mental injury or distress if accompanied by physical injury. Even mere upset or minor disturbance causing a sleepless night can then be compensated. However, where there is no physical injury and only mental injury is suffered there are special rules which limit recovery. For example, entitlement depends upon proving that a recognised psychiatric illness has been suffered. Only the more severe forms of mental suffering will suffice.150 Again, therefore, the tort system is similar to the industrial scheme in strictly limiting these types of claim. However, it is true to say that they have increased in number in recent years, and vulnerable employees for whom no special provision is made are now better able to seek redress from tort if work is a cause of their mental breakdown.151
3.
Other than personal injury
119 Liability can extend to compensation for damage to workers’ property. However, it is not compulsory to insure against such loss as it is in the case of personal injury. Property loss, if any, in an employer’s liability case is usually very small indeed and it rarely figures in settlements. 120 An employer has no liability to reimburse pure economic losses. Thus the loss of wages resulting from temporary closure of a factory production line as a result of an accident cannot be claimed in tort by those who do not suffer physical injury. An employer owes no duty to protect his employee from economic loss caused by a third party for whom the employer is not responsible. Specifically, for example, he owes no duty of care to advise his employee to obtain personal accident insurance against special risks arising out of his posting overseas.152 121 The common law also does not provide any compensation for dignitary injuries resulting from discrimination or sexual harassment. However, scope for such claims can be found in general employment, harassment 149 150 151 152
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Rothwell v Chemical & Insulating Co ltd [2008] 1 AC 281. For details see Rogers (fn 24) para 5–61 ff; Deakin/Johnston/Markesinis (fn 24) 139–156. Hatton v Sutherland [2002] 2 All ER 1. Reid v Rush and Tomkins [1990] Industrial Cases Reports 61.
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and anti-discrimination legislation.153 For example, a claim can be brought in an employment tribunal if the employer has unfairly dismissed the employee, or his actions can be taken as constructively amounting to such a dismissal. The claim must be started within three months. Compensation is available for financial loss only and not for injury to feelings. The basic award depends upon the employee’s age and length of service but this is supplemented by a compensation award which offers recompense for the financial loss. However, it takes no account of injury to feelings. At present the upper limit for this compensation award is £68,400,154 although it is rare for a tribunal to award such a sum unless the employee is a very high income earner. To avoid these statutory limits in tribunals, an employee can apply to the courts for wrongful dismissal, although this is an unusual and more risky course of action. Under the Protection from Harassment Act 1997 a claim may be brought 122 in respect of conduct calculated to cause distress and judged to be oppressive and unreasonable.155 The conduct targeted at the claimant must occur on at least two occasions. It is viewed objectively, and need not amount to criminality.156 The Act is more generous than either tort or the employment legislation because it allows the claim to be brought anytime within six years of the conduct. In addition, compensation is available for mere anxiety and it is not necessary to show that a positive psychiatric injury has been suffered. Anxiety and distress alone would not attract compensation in tort or under the employment legislation. As in tort, proceedings under the Act are taken via the traditional court system rather than through an employment tribunal. There are then no financial limits on the damages that can be obtained so that £800,000 was awarded in one case.157 A more general basis for claiming on various grounds of discrimination 123 now lies under the Equality Act 2010. This offers protection against discrimination on the basis of sex, age, religion, disability and sexual orientation. Action against an employer can be taken for failure to take reasonable steps to prevent discrimination even if it is from a third party, such as another employee or even a customer. Although damages are unlimited, in practice compensation awarded for injury to feelings alone 153 S Deakin/G Morris, Labour Law (5th edn 2009); I Smith/G Thomas, Employment Law (9th edn 2007); N Bamford/M Malik/C O’Cinneide, Discrimination Law (2008). 154 Employment Rights (Increase of Limits) Order 2010 (SI No 2926) effective February 2011. 155 Thomas v News Group Newspapers [2001] All ER 246. 156 Veakins v Kier Islington Ltd [2010] Industrial Relations Law Reports (IRLR) 132. 157 Green v Deutsche Bank [2006] IRLR 764.
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do not exceed £30,000,158 and usually are very much lower. Further sums are payable for loss of earnings or as exemplary damages.
D.
Heads and levels of damages
124 Damages in employers’ liability cases are assessed in the same way as for any other type of personal injury; there are no special rules. Compensation can be obtained for both the pecuniary and non-pecuniary losses resulting from injury or death. The main heads of financial damage are lost earnings and pension losses, with the costs of care and rehabilitation accounting for the greater part of the award in the most serious injury cases. 125 Overall non-pecuniary loss accounts for a disproportionate amount of damages. It was two thirds of the total awarded thirty years ago,159 and it has remained at about that level. This extraordinary importance given to pain and suffering reflects the fact that most awards are for relatively small sums averaging less than £5,000.160 In these cases claimants suffer very little, if any, financial loss. They make a full recovery from their bodily injury and are left with no continuing ill effects. In most cases the accident does not result in any claim for social security benefit. However, a few claims are much more serious. In 2002 insurers estimated that 1 % of all cases in the tort system, whether or not involving work injury, resulted in a payment of £100,000 or more. These few cases were responsible for 32 % of the total damages paid out by the system.161 126 Damages in tort traditionally have been paid only in the form of a lump sum. This is in stark contrast to disablement benefit under the industrial scheme which can only be paid as a pension. Although a lump sum is obviously the most efficient way of disposing of the mass of small claims, it has attracted much criticism when proving insufficient in cases of long term injury. There are several reasons for the inadequate provision. For example, the once and for all payment cannot be reviewed to cater for a later unforeseen deterioration in the claimant’s condition, although there 158 Da’ Bell v National Society for Prevention of Cruelty to Children [2010] IRLR 318. 159 The Pearson Report (fn 12) vol 2 table 107. 160 The median figure was £2,500 in the survey of 81,000 cases receiving legal aid and closed in 1996–97 in P Pleasence, Personal Injury Litigation in Practice (1998) 40 fig 3.17. P Fenn and N Rickman (Costs of Low Value Liability Claims 1997–2002) report average damages of only £3,000 for employers liability accident claims, although this study of almost 100,000 cases related only to claims for less than £15,000. Department for Constitutional Affairs, . 161 Lord Chancellor’s Department, Regulatory Impact Assessment on the Courts Bill (November, 2002) table 1.
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is a very limited ‘provisional damages’ procedure which offers additional payment if a risk identified in a court order actually materialises. Again, the traditional lump sum payment cannot be supplemented if the claimant outlives the life expectancy projected when the award was made, or if inflation or market fluctuations erode the money. Because of these criticisms, a new way of paying damages has been developed: in some tort cases which involve future loss it is now possible to obtain periodical payments instead of the lump sum. Periodical payments in the form of ‘structured settlements’ have been 127 available since 1989 and have been increasingly used in cases of very serious injury.162 Following legislative intervention, a periodical payment order must now be considered by a judge in every case involving personal injury which comes to court if it involves future pecuniary loss.163 Periodical payments can then be ordered even if this is opposed by either or both of the parties.164 There is no longer any need to work out the lump sum equivalent of the periodical award. Instead the court assesses the periodical payments needed by the claimant irrespective of their capital cost. This is a major change in the way in which damages are assessed and paid. Another feature is that, as a guard against inflation, it has been agreed that the pension is to be increased in line with a much more favourable index than that used in calculating the present day value of a lump sum.165 As a result of this particular advantage there has been a significant increase in the number of cases involving periodical payments where serious injury is involved; it has become the way in which damages must be paid if certain claimants are to receive their full losses. In particular, to secure the long term cost of nursing care a periodical award must be sought. Again, however, for periodical payments no special provision is made for work injury cases.
E.
Administration of claims
Tort claims for work injury are dealt with by the usual courts administer- 128 ing civil justice. No specialised tribunals or procedures are involved. 162 R Lewis, Structured Settlements: the Law and Practice (1993); N Bevan/T Huckle/S Ellis, Future Loss in Practice: Periodical Payments and Lump Sums (2007). 163 Courts Act 2003 s 100. 164 R Lewis, The Politics and Economics of Tort Law: Judicially Imposed Periodical Payments of Damages (2006) 69 Modern Law Review (MLR) 418. 165 Thompstone v Tameside and Glossop Acute Services NHS Trust [2008] 2 All ER 537; R Lewis, The Indexation of Periodical Payments of Damages in Tort: The Future Assured? (2010) 30 Legal Studies 391.
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1.
Number and cost of claims
129 In 2010–11 work related injuries comprised about 8 % of all personal injury claims, being 81,000 out of a total of 987,000.166 This is almost twice the number of claims that are made for industrial injuries benefit, and in part reflects the high threshold of injury now required to establish a benefit claim. However, there are four times as many industrial disablement pensions actually in payment compared to the number of tort claims for work injury. These 324,000 pensions reflect the accumulation of entitlement to benefit in previous years. Therefore, although every year there are more people who receive industrial benefit than a tort award, this is only because the method of compensation of the benefit involves continuing payments in contrast to the single lump sum that is usually awarded in tort. 130 Although work-related tort claims may appear numerous in fact they have declined in recent years. In 1978 they were the most common type of action, accounting for 46 % of all personal injury claims.167 Now they account for only 8 % of all claims. The major reason for this is the continued rise of motor claims which now constitute four out of five cases.168 It has always been the case that a smaller proportion of those injured at work sue in tort compared to those injured by motor vehicles. In 1978 it was found that whereas one in four injured following a road accident made a claim, only one in ten did so following a work accident, and only one in 67 did so if they were injured elsewhere.169 In spite of stricter liability for work injuries it remains the case that there are many employees who do not claim. 131 The decline of work claims in the statistics reflects a decline in employment in traditional industries where often danger was ever-present; few employees are now involved in making iron and steel or in mining coal.
166 Work injury settlements, rather than new claims made, comprised about 11 % of the total in that year and numbered 98,000. Department for Work and Pensions, Compensation Recovery Unit – Performance Statistics . 167 The Pearson Report (fn 12) vol 2 table 11. 168 Motor claims account for 791,000 of the total of 987,000 claims in 2010–11, having risen from 102,000 in 1973. Such claims have increased by 40 % in the last three years alone. 169 The Pearson Report (fn 12) vol 1 table 5. The table also reveals that overall only 6.5 % of all accident victims are compensated by the tort system. However, if only serious injuries are considered tort becomes more important. Where an accident causes incapacity for work for six months or more, almost a third of claimants receive tort damages.
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Workplace injuries have fallen substantially in the last five years: in 2010– 11 there were 115,000 injuries reported to the Health and Safety Executive, 39,000 less than in 2005.170 The decline in tort actions in recent years also reflects the fact that a spike of claims under the special schemes of compensation for disease has now worked its way through the system and no longer affects the statistics. These schemes alone accounted for 760,000 tort claims in the five years from 1999 as discussed above.171 On average in the five years to 2008 insurers paid out about £1.5 billion a 132 year in employers’ liability settlements including legal costs. This contrasts with the cost of benefits alone under the industrial injuries scheme of about £800 million a year. There were about 186,000 settlements of work injury cases a year in tort during that five year period.172 The average amount per settlement was therefore about £8,000 Given that the claimants’ legal costs constitute over 30 % of the total, claimants received on average about £5,000 per claim,173 the equivalent of a little over three months average weekly earnings. Settlements have since declined to 98,000 in 2010–11, and now that the special schemes of compensation have ended, new claims themselves have fallen to only 81,000. It can therefore be anticipated that the total cost of the fewer tort claims now being made will fall to about the same level as the present expenditure upon the no-fault scheme. One factor which may affect this is that, although fewer tort claims are being made, the cost of each of them continues to rise: in the ten years from 1996 the cost of motor claims rose by over twice the rate of inflation.174
2.
Insurers and the administration of the tort system
Almost all defendants in tort are insured against their liability, including 133 employers who are required by legislation to be so. This has a considerable effect upon the administration of the tort system. The practices of insurance companies are essential to the understanding of how the tort system
170 Health and Safety Executive, Statistics 2010/11. . 171 No 116. 172 Association of British Insurers statistics for 2008 cited by the Department for Work and Pensions, Accessing Compensation (2010) para 31 . 173 Ibid para 42 at note 24. 174 International Underwriting Association of London (fn 23). The reasons are examined in R Lewis/A Morris/K Oliphant, Tort Personal Injury Claims Statistics: Is there a Compensation Culture in the UK? (2006) 14 Torts Law Journal 158.
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actually works. In 98 % of tort cases the claim is settled out of court,175 and the factors affecting the bargains that are struck may be very different to the strict rules of law that would be applied by a judge. Rough and ready rules are applied to dispose of claims as efficiently as possible, especially given the low sum of damages usually being sought. 134 Insurers process these routine payments and they decide which elements of damage they will accept or contest. It is unusual for them to contest liability, one study revealing that insurers’ files ‘contained remarkably little discussion of liability’, finding it initially denied in only 20 % of cases.176 As a result, eventually insurers make at least some payment in the great majority of personal injury claims, often because the costs are such that they are not worth contesting too vigorously. It has been suggested that about 95 % of work injury cases supported by trade union solicitors result in some payment to the claimant.177 Tort thus provides a structure for processing mass payments of small amounts of compensation; only very rarely does it stage a gladiatorial contest to determine whether a particular defendant was in the wrong. Contrary to the impression gained from tort textbooks, duty of care, causation of damage, and even breach of duty are generally not in dispute in employers’ liability cases processed by the system. 135 Classic empirical studies reveal that, in practice, the rules of law are much less important than the tort textbooks might lead one to suppose: it is insurance bureaucracy that dictates the course of the litigation, and determines whether, when, and for how much, claims are settled.178 The important centres of personal injury practice are insurers’ buildings, rather than courts of law, or even solicitors’ offices. Insurers decide, in particular, whether a case merits the very exceptional treatment of being taken to a court hearing. In effect, insurers allow trial judges to determine only one per cent of all the claims made. Only a few of these are appealed with the result that the senior judiciary are left to adjudicate upon a small fraction of what are, by then, very untypical cases. Insurers are of fundamental importance to the administration of tort claims for personal injury.179
175 The Pearson Report (fn 12) vol 2 table 12. Similarly Pleasence (fn 160) at 12 revealing that only 5 out of the 762 cases studied went to trial. 176 T Goriely/R Moorhead/P Abrams, More Civil Justice? The Impact of the Woolf Reforms on Pre-Action Behaviour (2002) 103. 177 Citizens Advice Bureau, No Win, No Fee, No Chance (2004) para 4.31. 178 H Genn, Hard Bargaining (1987), Harris et al (fn 67) and, in the USA, HL Ross, Settled Out of Court (1980). 179 R Lewis, How Important are Insurers in Compensating Claims for Personal Injury in the UK? (2006) 31 Geneva Papers on Risk and Insurance 323.
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In contrast, private insurers now have no part to play in the state-run 136 industrial injuries scheme. All claims are adjudicated, and there is no question of a claimant accepting a deal outside the tribunal for a lesser sum than that to which he is entitled. The discretion of those administering the system plays little part and, unlike in tort, almost all disputes focus upon basic entitlement to benefit rather than the amount due.
3.
The speed of settlement
Whereas benefit claims are resolved within three to eight months, tort 137 claims take much longer. Even though small sums are usually involved, the majority take between one and two years to process and settle.180 If a case goes to court the time taken is much longer, averaging between three and five years.181 The more serious the injury, the longer the time it takes.182 It has been observed that ‘if it were not for the social security system, which provides many claimants with benefits during the settlement process, the tort system would probably have collapsed long ago’.183
4.
The administrative cost of tort
The cost of operating the tort system amounts to 85 % of the value of tort 138 payments distributed to claimants.184 That is, for every pound received by
180 The Department of Social Security reported an average settlement period of 2.3 years for those tort cases where benefits were recouped from 1990–94, although in 28 % of cases the recoupment period lasted for between three and five years. See the DSS Memorandum of Evidence to the Social Security Select Committee (1995) HC 196 appendix B. Similarly, the median duration of a legally aided tort case where proceedings were issued was found to be 2.4 years by Pleasence (fn 160) 65 fig 4.21. The Pearson Report (fn 12) vol 2 table 17 found that 49 % of claims settled within a year and 80 % within two years of injury. 181 The Pearson Report (fn 12) vol 2 table 129, and similarly the Lord Chancellor, Report of the Review Body on Civil Justice (1988, cmd 394). 182 In a study of 153 cases where compensation of £ 150,000 or more was obtained in 1987 and 1988 the average time for settlement was 5 years 4 months. P Cornes, Coping with Catastrophic Injury (1993) 18. 183 Atiyah’s Accidents (fn 15) 283. 184 The Pearson Report (fn 12) vol 1 para 256. The Lord Chancellor’s Report of the Review Body on Civil Justice in 1986 estimated that the cost of the tort system consumed 50 to 70 % of the total compensation awarded in personal injury cases. Lord Justice Jackson found similarly very high costs in his Review of Civil Litigation Costs: Final Report (January 2010). Data collected for one survey showed that for 280 cases which had come before the District Court the claimant costs alone amounted to £ 1–80p for every £ 1 of damages paid. On average, costs exceeded damages for cases settled up to £ 15,000 in the ‘fast track’ procedure.
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the claimant, the greater part of another pound is consumed in costs. Put another way, for every pound spent upon the system in total, 55 pence goes to the claimant and 45 pence in costs. These costs include not only the legal costs on both sides which insurers have to meet, but also insurers’ costs in administering the system. The claimant’s legal costs alone are about 30 % of the damages awarded.185 139 The very high cost ratio contrasts with the very much lower figures given for administering industrial injuries social security payments.186 The industrial scheme is much more cost effective because it is based on nofault, involves few lawyers, and uses the tribunal system rather than the traditional court structure. However, both systems focus upon minor injury claims where costs are likely to be out of proportion to the compensation paid.
F.
Rights of recourse
1.
Rights of recourse against other employees
140 In theory in a case of vicarious liability an employer can reclaim any damages paid from the negligent employee who caused the injury.187 However, in practice this does not happen. This is because the legal decision which confirmed the subrogation right of the employer’s insurer to stand in the shoes of the employer was very soon overturned by a private agreement which prevented all insurers from reclaiming the damages from the negligent employee. When the legal decision allowing subrogation was made in 1957 it was immediately condemned not only by trade unionists but also by many employers. It was considered to be extremely bad for industrial relations. As a result, employers’ representatives met with insurers and privately agreed that an indemnity from the negligent employee would never be sought unless there had been collusion or wilful misconduct by the employee.188 The Association of British Insurers continues to maintain a committee to supervise this agreement.
185 186 187 188
190
International Underwriting Association of London (fn 23) para 7.21. No 85 above. Lister v Romford Ice and Cold Storage Co [1957] AC 555. The agreement was examined in detail in Morris v Ford Motor Co Ltd [1973] Queen’s Bench (QB) 792; R Lewis, Insurers’ Agreements not to Enforce Strict Legal Rights: Bargaining with Government and in the Shadow of the Law (1985) 48 MLR 275 at 282.
England and Wales
2.
Rights of recourse against third parties
An employer could seek to reclaim damages from any negligent third 141 party under the Civil Liability (Contribution) Act 1978. In effect this could also be done by the employer joining the third party to the action brought by the claimant, and seeking to apportion the damages among the joint tortfeasors. Negligent parties could include, for example, the suppliers of the defective equipment which caused the injury or the contractor also responsible for safety on the site. Where injury is caused by a motorist in the course of employment certain insurers have privately agreed that only the employer’s liability insurer will pay the damages and the motor insurer will not be liable.189
G.
Interaction with social welfare systems and private insurance
1.
Recourse of social security agency against the employer
Historically, the relationship between damages for personal injury in tort 142 and social security has been fraught with difficulty. However, a much clearer picture has emerged following the comprehensive benefit recovery system set up twenty years ago. This enables the state to reclaim the precise social security benefits paid for an injury in each case where any payment of damages in tort for personal injury is later made. Subject to certain limits, all benefits paid as a result of the tort can be recovered from whoever pays the damages. This scheme was outlined in an earlier book in this series,190 and it has been considered by the author in detail elsewhere.191 In the great majority of work injury cases the compensator required to 143 repay the benefits is the employer’s liability insurer. As exceptions to this, a few large employers and government organisations are allowed to selfinsure and pay damages directly themselves. However, if no tort claim is brought, benefits cannot be recovered even though it may appear that an employer was responsible for the injury. The state has no independent right of recourse against a tortfeasor; its reimbursement is parasitic upon the claim in tort brought by the injured employee. There are no bulk
189 E Whitmore, Employers’ Liability Insurance (1962) 158 and appendix vii. 190 Magnus (fn 18) 56–85. 191 R Lewis, Deducting Benefits from Damages for Personal Injury (1999).
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recovery agreements as there are in other EU countries which enable levies to be raised from insurers in a broad brush fashion. 144 The state had no such right of recourse until 1990. Legislation then established the Compensation Recovery Unit as a state agency to claw back the welfare benefits paid to accident victims up to the date of the settlement of their damages claim.192 In practice, this agency rarely needs to mount a separate recourse action to recover the benefit paid. This is because, in each case where damages for personal injury are to be paid, the compensator is first required to investigate the benefits which have been paid to the claimant as a result of the injury. A computerised system produces very accurate certificates of the amount of benefit in question. Then, on paying the damages, the compensator has a duty to repay the amount in the certificate to the Recovery Unit. This reimbursement has become routine, and is part of the administrative process involved in disposing of every successful tort claim. Industrial injury disablement benefit is specified as one of the benefits to be recovered and represents about 15 % of the total amount recovered by the state.193 In 2009–2010 that total was £139 million of which £75 million related to work injuries.194 Although work accidents account for less than 10 % of claims in tort they are therefore responsible for over half of the benefits recovered. 145 The period during which benefit can be recovered begins, in the case of an accident, on the day after it happened. In the case of a disease it begins on the day on which the first claim for benefit in respect of the disease was made. The period of recovery ends either five years after the recovery period began, or on the date when final compensation is paid, whichever is sooner. In practice this means that in the vast majority of cases the recovery period ends on the date of settlement of the case because most claims are concluded well within the five year cut-off period. The state cannot recover benefits which may be paid to the claimant in the future, that is, after the settlement agreement or court order. This limit means that the industrial accident victim who continues to receive disablement benefit for the rest of his life will receive compensation which may overlap with any provision also made by the tort system for his future loss.
192 Social Security Act 1989. Major revisions were made eight years later, the current legislation being the Social Security (Recovery of Benefits) Act 1997. 193 Based on a private reply to the author from the Department for Work and Pensions in 2006 and relating to 2004–05. Over £ 24 million in disablement benefit was recovered that year. 194 Department for Work and Pensions (fn 166) .
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2.
Reducing damages to take account of the benefits paid
Although the compensator has a duty to repay the benefits received in full, 146 in most cases the cost of doing so is reduced because the compensator is allowed to set off the benefits against part of the damages due to the injured person. The amount of damages paid is therefore reduced. As a result, in theory, the claimant then obtains no more than he has lost, the defendant pays in full, and the public purse avoids bearing the cost of financially supporting those injured by another’s wrongdoing. The scheme is attractive because it appears to avoid not only subsidising the defendant but also over-compensating the accident victim, at least during the period before his damages claim is settled. Although the compensator can set off the benefit he must repay to the 147 state against certain parts of the damages for which he is liable, he is limited in the extent that he can reduce the damages that must be paid to the claimant. In particular damages for non-pecuniary loss are ‘ringfenced’ so that no industrial injuries or any other benefit can be deducted from them. Although industrial injuries benefit itself in effect is a form of non-pecuniary loss, the recovery scheme allows only for it to be deducted from damages paid for income loss. The compensator’s ability to reduce damages places considerable pressure 148 upon claimants to settle their cases as soon as possible. The incentive for claimants is ‘settle today and keep tomorrow’s benefits; settle tomorrow and you will lose them’. In some circumstances the time factor can also be used as a bargaining tactic to persuade the compensator to accept the terms offered. The social security system thus has an effect not only upon the value of a tort claim but also upon the way in which it is administered and the speed with which it is settled.
3.
Recovering the cost of National Health Service treatment
The benefit recovery scheme has been extended to enable the cost of 149 hospital treatment provided under the National Health Service to be recovered.195 The scheme is parasitic upon the benefit recovery scheme, and requires the repayment of costs to be made at the same time that tort damages are paid to the claimant. Of course, this includes the cost of NHS
195 Originally under the Road Traffic (NHS Charges) Act 1999 and now the Health and Social Care Act 2003. R Lewis, Recovery of NHS Accident Costs: Tort as a Vehicle for Raising Public Funds (1999) 62 MLR 903.
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treatment for the victim of industrial injury. The payment due is based on a fixed charge related to the number of days of hospital treatment and the use of ambulances. The maximum recoverable in any one case is about £44,000. Compensators were required to pay a total of £195 million in 2010–2011196 this being 40 % more than the amount of social security benefit recovered that year.197 Health benefit recovery is therefore now more important than that for social security.
H.
Insurance
1.
The scope of compulsory insurance
150 It was not until 1972 that it became compulsory for an employer to insure against liability to employees injured in the course of their employment.198 Separate policies are issued instead of cover being combined within, for example, policies issued for public liability in general or for liability for motor vehicles. All employers are required to insure except for nationalised industries, health service bodies, local authorities and certain public bodies who are otherwise able to guarantee their liabilities. However, small family businesses are also exempt from obtaining employers’ liability insurance provided that the employees are all close family members. This has been the subject of criticism because this exemption is not granted in motor insurance when close family members are being carried in the vehicle. It is not obvious why a farmer should be compelled to insure his sons when being carried in his car, but not when driving a tractor in the fields or helping him with what may be other dangerous tasks involved in his work.199 Employers must be insured only up to £5 million, a sum which has not kept pace with inflation and is thought insufficient in the event of multiple claims in respect of a major accident. By contrast motorists must carry unlimited liability for causing death or
196 Department of Health, NHS Injury Costs Recovery Scheme – Amounts Collected . 197 Department for Work and Pensions (fn 166) . 198 Employers Liability (Compulsory Insurance) Act 1969 and the relevant regulations (SI 1998 No 2573); C Parsons, Employers Liability Insurance – How Secure is the System? (1999) 28 Industrial Law Journal (ILJ) 109. 199 RA Hasson, The Employers’ Liability (Compulsory Insurance) Act – A Broken Reed (1974) ILJ 79.
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personal injury. The cost of employers’ insurance in total is only about 0.25 % of the national payroll.200 Failure to comply with the statutory obligation to insure is subject to 151 sanctions in the criminal law. Employers can be fined up to £2,500 a day, but in practice the fines are low and enforcement is limited. The extent to which there is compliance with the duty to insure varies. One review suggested that only about 1 in 200 employers do not have the requisite cover,201 although an earlier survey found a much higher figure for noncompliance.202 If an employer fails to insure, there are no reserve funds available to meet the claim as there would be if injury were caused by an uninsured motorist. If the employer has insufficient funds of his own, the injured employee’s claim may then be worthless. Overall the insurance system does not protect workers nearly as well as it does motorists.
2.
Policy limits and insurance triggers
Although employers must be insured up to a minimum of £5 million for 152 each occurrence, in practice, insurers issue policies with limits of twice that sum. However, whether the loss in question is covered depends upon whether there are further restrictions in the policy because of clauses dealing either with the aggregate limit to liability or with how a series of claims are to be dealt with.203 Another problem is with ‘long-tail’ damage where liability issues arise many years after the policy was issued and the claimant was first exposed to the risk. What triggers liability under the policy and from what date? The answer is usually easy to provide in cases involving accidents because the exact point in time when the sudden event occurs which causes injury is generally easy to identify. However, where the loss occurs gradually, especially if the damage remains undiscoverable for many years, it can be much more difficult to decide whether there is insurance coverage and, if so, which insurer is liable. There have been
200 Department for Work and Pensions, Review of Employers’ Liability Compulsory Insurance: First Stage Report (2003) at 20. 201 Department for Work and Pensions, Review of Employers’ Liability Compulsory Insurance: Second Stage Report (2004). 202 The Small Business Service telephone survey of over 2,000 businesses in 2002 suggested that the figure was 1 in 14. 203 Explained more fully in R Lewis, Aggregation and Divisibility of Damage in England and Wales: Insurance, in: K Oliphant (ed), Aggregation and Divisibility of Damage (2009) 125.
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particular problems with claims for cancer or asbestos-related disease.204 Broadly there are three possible triggers for the insurance policy: first, when the claimant was initially exposed; second, when physical change first occurs, even if it cannot be discovered; and finally, when the injury becomes manifest. In the USA any of these three triggers has been considered sufficient to gain access to the insurance fund. This helps to ensure that there are no insurance gaps and claimants are more likely to receive compensation. However, in the UK this approach has been rejected as unnecessarily wide.205 The most recent case makes the insurer liable when injury was sustained rather than when the claimant was exposed,206 but much depends on the particular facts and the precise wording of the policy. As a result, in individual cases the extent of insurer liability remains certain.
3.
Apportionment
153 No matter what the trigger, there could be several insurers involved during the relevant period of exposure or development of the disease. There is then the problem of apportioning liability among them. There are various possibilities. For example, the insurers could each be held jointly and severally liable up to their policy limits. Alternatively, they could be held responsible only for a share of the damage based on the different lengths of time they were exposed to risk, or in proportion to the different financial limits in the respective policies. 154 In the key case it was held that the insurers were not liable in full for the damage caused but only to the extent of the probability that the employer they insured had caused the asbestos-related injury.207 This could have led to substantial under-compensation of those who had worked for several employers and who, for a variety of reasons, could not sue or enforce a judgment against one or more of them. As a result, the decision led to considerable protest from claimants, their trade unions and their lawyers. The Government immediately took action. For asbestos cases alone involving the disease mesothelioma, the court decision was effectively reversed
204 For discussion in relation to asbestos see C Lahnstein, D Maranger and N Roenneberg’s article in: Munich Re Group (ed), 7th International Liability Forum (2003). 205 Bolton v MBC Mutual Insurance Ltd [2006] 1 Weekly Law Reports (WLR) 1492. 206 Durham v BAI (Run Off) Ltd [2010] All ER (D) 88. Appeal to the Supreme Court is awaited. 207 Barker v Corus [2006] AC 572. This applies only where there are alternative and not concurrent causes which cause injury which is indivisible.
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by legislation208 which makes defendants liable jointly and severally for the whole of the damage. Asbestos claimants thus gain full compensation even if only one of the former employers has insurance coverage. However, apart from these asbestos cases, the proportionate damages approach adopted in the key case remains good law.
IV. Evaluation and Conclusions A.
Compensation
1.
Scope of each scheme
Both the industrial injuries scheme and employers’ liability in tort operate 155 alongside one another in the UK to provide injured workers with about £2 billion a year. About 120,000 new claims are now made each year under one or other of these schemes, with there being twice as many made in tort compared to the industrial scheme. These figures represent about one claim made for every 240 people in employment, although that figure does not allow for the fact that many of those injured are able to claim both tort damages and industrial benefit. There are various exclusions from the schemes. For example, both com- 156 pensate only if workers are injured ‘in the course of employment’ and their wrongdoing may affect entitlement. Both schemes have had only a limited role to play in compensating victims of disease and ill-health even though these are increasingly being related to work.209 In addition, it remains the case that for a variety of reasons many of those injured do not make a claim at all under either scheme. Nevertheless, at least in theory, the two schemes do cover many of the injuries suffered at work even if, in practice, the compensation they provide is less important than the social security system overall in meeting the needs of those who are disabled.
2.
Amount and purpose of compensation
A key distinction between the two schemes concerns the level of compen- 157 sation. It is possible for a tort claimant to receive damages of millions of pounds whereas the recipient of industrial disablement benefit can get
208 Compensation Act 2006 s 3. 209 Nos 58 and 116 above.
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only a small fixed pension. Even if we take account of the capitalised value of this inflation proofed pension, it will not compare with the highest awards in tort. However, in practice both schemes are flooded with small claims so that the average award in tort may not be so different from the long-term value of disablement benefit.210 158 The basis for assessing compensation under the two schemes appears very different. Whereas an objective approach divorced from the claimant’s particular circumstances is taken under the industrial injuries scheme, the tort system supposedly tailors its award to the precise losses suffered by the individual. Disablement benefit is fixed by using simple tables related to the degree of disability so that all in the same bracket get the same award irrespective of their real losses. The compensation must be in proportion to the maximum set. By contrast in tort, although there are conventional maxima, there are no such fixed legislative limits. Instead the aim is to return the claimant to the financial future enjoyed before the injury. This ambitious objective makes little difference in minor injury cases but, where there is serious injury, it results in complex computations. Although the approach adds to the expense of dealing with claims, it offers claimants full compensation for their injury, something which often cannot be obtained under the industrial scheme. 159 Full compensation in tort means that damages compensate for both pecuniary and non-pecuniary losses. In contrast, the industrial scheme pays nothing at all for financial losses so that there is no reimbursement for lost earnings or the costs of care. The industrial scheme is therefore very limited in the indemnity it offers. It also privileges what has been classified as a secondary, less important, form of compensation over the primary need for replacement of direct financial loss.211 In practice, however, this distinction between tort and the industrial scheme is not quite so clear cut because both systems deal mostly with small claims which cause little if any financial loss. This results in the damages actually awarded in tort being predominantly composed of non-pecuniary loss thus exposing it to the same criticism that can then be levelled at the industrial injuries scheme: both focus upon losses of secondary importance. 160 A final distinction between the two schemes concerns how the compensation is paid. Many problems are caused by awarding damages in tort as a lump sum on a once-and-for-all basis.212 To an extent these may be
210 Nos 76 and 125 above. 211 Atiyah’s Accidents (fn 15) ch 6. 212 No 126 above.
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avoided by periodical payments. Disablement benefit can only be paid in this form. The pension can be regularly increased to match inflation and will not run out only because the claimant lives longer than expected. However, in recent years in some serious injury cases tort damages have also been awarded in the form of a pension and the distinction now has a little less force.
3.
Fault and no-fault
At first sight it may appear that tort is very different from the industrial 161 scheme because it requires proof of fault whereas wrongdoing seems to have little part to play in a claim for benefit. In particular, the defence of contributory negligence reduces damages in about a quarter of all tort claims whereas no such reduction can take place under the industrial scheme. The fault principle has both its critics and supporters. Critics, for example, argue that it is an uncertain standard, difficult and expensive to apply. It often does not correspond to popular notions of moral responsibility for causing injury.213 Supporters of the benefit system therefore celebrate the absence of fault from the state scheme. However, again this difference between the two schemes is not as great as it 162 may seem: fault may not be the great divide. This is because, firstly, under the industrial scheme fault can be relevant in determining not only the course of employment but also causation issues. Secondly, in tort fault is often not required for employers to be liable because strict liability is imposed. We also know that, in practice, because of the uncertainty and the cost involved, fault is contested by insurers in only a minority of claims and only very rarely in cases of low value. In reality, both schemes are predominantly no-fault regimes for less serious injuries. As a result the difference between the schemes may not be as significant as it first appears.
B.
Prevention
Neither the tort nor the industrial injuries system has much effect upon 163 reducing the number of injuries at work.214 Both are poor in deterring unsafe practices. The industrial scheme is especially weak because it is now paid for by the state from general taxation and no separate funding 213 Atiyah’s Accidents (fn 15) ch 7. 214 Safety and Health at Work, Report of the Committee 1970–72 (1972, Cmnd 5034) (Chairman Lord Robens).
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system exists. Even in the past, when contributions were raised from employers, no account was taken of the relative risk posed by different industries because differential rating was thought ineffective in reducing claims.215 In contrast, the tort system does not involve state funds. It is paid for by employers alone with the cost in practice falling upon private insurers. On the surface there appears to be a risk relationship because insurers require differential premiums from employers. However, this has been thought a very ineffective means of influencing risky behaviour. Only half of all employers engage a sufficiently large number of workers in order to be rated according to their own accident experience. Instead most employers are classified alongside others of a similar kind and the premiums that they pay are then unaffected by accidents that occur at their particular workplace. More direct action by insurers in giving advice concerning risks can have some effect, but the scope for this is limited.216 More important incentives to avoid injury are the costs associated with the general disruption to the work process when an accident occurs rather than the price that has to be paid as a result of any action in tort. Both tort and the industrial scheme have been of some help in identifying the cause of injury but overall they have had little effect upon reducing the incidence of injury.
C.
Overall costs
164 There are considerable differences between the schemes with regard to their administration and efficiency in delivering compensation. The tort system is much less accessible and much more expensive to run than the state scheme. It is administered largely by private insurers using the traditional civil justice court system. Lawyers are closely involved, although most cases are settled well before formal legal proceedings are begun with only 1 % of cases being determined by a judge in court. In contrast, the industrial injuries scheme is run by the state via a more informal tribunal system. All cases are determined by an adjudicating authority and never settled as a result of a bargain. Lawyers are much less likely to play a part. As a result there is a major difference in the cost of delivering compensation: whereas the tort system costs 85 % of the compensation it pays out, the industrial scheme costs only 2 %.217 Claimant
215 No 80 above. 216 Dewees/Duff/Trebilcock (fn 23); Armstrong/Tess (fn 109) and Atiyah’s Accidents (fn 15) ch 17. For a more equivocal view see Rogers (fn 24) paras 1–29 ff. 217 Nos 85 and 138–139 above.
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legal costs alone in tort are over 30 % of damages paid and these must be borne by insurers. The difference in the systems also means that it takes more time for tort damages to be paid even in minor injury cases. When serious injury is involved this difference can be measured in years rather than months. Justice delayed then can often mean justice denied. Of course, these criticisms of tort can be countered by pointing to the 165 reasons for the delays and costs involved: the subjective assessment of damages in tort may be complex but it can offer much more compensation for seriously injured claimants than the simple mechanical objective formula used to arrive at the industrial pension; tort lump sums necessitate delay in order to assess the full effects of claimants’ injuries; and lawyers supposedly offer greater sophistication, accuracy and justice when determining entitlement. Nevertheless, the difference in administration and efficiency between the two systems here is very considerable.
D.
Interaction between workers’ compensation and private law
Both systems add to the complexity of the compensation structure overall 166 and necessitate special rules to deal with overlapping compensation from collateral benefits. The criticism is that a wasteful system involving duplicate payments presently exists. In the past twenty years a new state agency has been established to recover the social security and health costs of injuries which result in an award of damages in tort. This requires a detailed analysis of each claim paid and it results in additional cost. However, the state recovers over £335 million a year from the scheme and now has an interest in each tort claim brought. From the claimant’s viewpoint, where benefits are initially received they can be seen as merely short-term loans from the state to tide them over until they obtain their tort damages. However, the recovery scheme does help to minimise duplication of payment from the different sources and the possibility of over-compensation.218
E.
Plans for reform
There are no major plans to reform the substantive law relating to either 167 the industrial injuries system or tort liability for work accidents. However, there are considerable changes proposed to the way in which tort claims
218 No 146 above.
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Richard Lewis
generally are funded and costs allocated.219 These changes are expected to have a major impact upon the number and type of cases litigated.220 By contrast a wide-ranging Government consultation paper on the industrial injuries scheme in 2007 resulted in only very minor reforms.221
F.
Overall quality of each system independently and in combination
Why preferential compensation for workers? 168 The quality and effectiveness of each system has been examined in detail above. But a final question must be asked. Both tort and the industrial injuries scheme offer easier routes to compensation to those injured at work as opposed to elsewhere. Workers can even claim under both schemes. Is this preference justified?222 This fundamental question lies at the heart not only of the future of welfare state provision but also compensation for personal injury in tort. How efficient and fair are our systems of compensation? For those who favour equal compensation for the same loss or injury no matter what the cause – and at an administrative cost which is not out of proportion to the monies distributed – much remains to be done. 169 This article is very unusual in comparing the system of compensation established by tort with an area of provision made by the welfare state. In providing details of how each system actually operates in practice and in supplying the relevant statistical data, this article employs techniques which it is hoped may appeal to others involved in the work of the European Centre of Tort and Insurance.
219 Lord Justice Jackson, Review of Civil Litigation Costs: Final Report (December 2009) considered in K Oliphant et al, On a Slippery Slope (2011) . 220 R Lewis, Litigation Costs and Before-The-Event Insurance: The Key to Access to Justice? (2011) 74 MLR 272. 221 Department for Work and Pensions, The Industrial Injuries Disablement Benefit Scheme – a Consultation Paper (2007) and Department for Work and Pensions, Consultation Report (2007). 222 Nos 12–15 above.
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Employers’ Liability and Workers’ Compensation: France Florence G’sell and Isabelle Veillard
I.
Introduction
A.
Basic system of compensation and liability
The current system of compensation for workers’ accidents and occupa- 1 tional diseases (Accident du Travail-Maladies Professionnelles, AT-MP) was established by a Law of 9 April 1898 and completed by a Law of 25 October 1919 on occupational diseases1. These texts are based on a ‘social compromise’ between the interests of employees and employers. The system of occupational hazards coverage provides an automatic compensation of workers’ injuries by the social security agencies. In return, the amount of compensation is limited to a fixed rate. Workers can initiate legal actions for compensation against their employers only in cases of inexcusable or intentional negligence (art 451-1-1 of the Code of Social Security, Code de la Sécurité Sociale, CSS). In the public sector, the State Council (Conseil d’Etat) also laid down the principle of flat rate pensions in 1905. Public agents receive compensation in the form of a lump sum without having to prove their employer’s fault: in return, they cannot claim any other relief. The Law of 9 April 1898 followed the famous Teffaine case in which the 2 Court of cassation decided to create a new regime of no-fault liability based on art 1384 al 1 French Civil Code (C civ)2 in order to counterbalance the lack of compensation of work-related accidents which occurred in the absence of fault of the employer. Based on the concept of occupational hazards, this Act created a ‘presumption of liability’ (présomption de responsabilité) against the employer in case of accident, provided compensation of the damage in the form of a lump sum and encouraged 1 See . 2 Cour de cassation, Chambre civile (Cass civ) 16 June 1896, Dalloz périodique (DP) 1897, I, 433.
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Florence G’sell and Isabelle Veillard
employers to purchase insurance to private companies. The Law of 25 October 1919 extended the coverage of accidents to certain occupational diseases specifically defined in tables. After World War Two, a new Law no 46-2426 of 30 October 1946 provided that insurance of occupational risks would henceforth be mandatory and that such insurance would be granted by the Social Security that had been created in 1945. The compensation plan for work-related accidents was then incorporated in the Code of Social Security at art L 411-1 ff. In 1967, the National Fund of Social Security was replaced by three independent funds that now manage the four branches of the Social Security: illness (maladie), occupational hazards (accidents du travail-maladies professionnelles), family and old age (vieillesse). The National Fund of Health Insurance for employees (Caisse nationale de l’assurance maladie des travailleurs salariés, Cnamts) manages both the illness and the occupational hazards branches.
B.
Interaction with other institutions
3 During the 20th century, French courts created bespoke regimes of liability that are not related to the demonstration of any wrongdoing or are based on a presumption of fault. They have considerably eased the conditions of civil liability or administrative liability. Thus the use of these general rules of liability, which provide full compensation to victims, became more advantageous than the remedies provided by the system of compensation for workers’ accidents and diseases. Moreover, specific compensation regimes were created for certain victims of accidents and occupational diseases that have caused inequalities between workers. For example, art L 455-1-1 of the Code of Social Security provides that a worker/victim of a traffic accident can invoke the Law of 5 July 1985 on traffic accidents. Another example: the victims of asbestos-related diseases may obtain full compensation for their damage since the creation of a fund (Fonds d’indemnisation des victimes de l’amiante, FIVA) in 2000.
C.
Empirical evidence3
4 Benefits (daily allowances, benefits ‘in kind’ and permanent incapacity) granted under the AT-MP regime in millions of euros from 2004 to 2008:
3 .
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France
2004
6,534
2.4 %
2005
6,704
2.6 %
2006
6,793
1.3 %
2007
7,140
5.1 %
2008
7,273
1.9 %
Daily allowances granted under the AT-MP regime in millions of euros for 5 work-related accidents (on the left) and occupational diseases (on the right) 2004
1,954
0.4 %
5,455
–0.6 %
2005
1,944
–0.6 %
5,346
–2.0 %
2006
1,983
2.0 %
5,194
–2.8 %
2007
2,127
7.3 %
5,363
3.2 %
2008
2,245
5.5 %
5,664
5.6 %
Pensions awarded under the AT-MP regime in millions of euros in case of 6 permanent incapacity: for workers
for workers’ beneficiaries
Year Amount
% d’évol
Amount
% d’évol
Amount
% d’évol
2004
3,565
3.5 %
2,546
2.4 %
907
6,4 %
2005
3,709
4.1 %
2,650
4.1 %
940
3,7 %
2006
3,823
3.1 %
2,716
2.5 %
979
4.1 %
2007
3,892
1.8 %
2,740
0.9 %
998
1.9 %
2008
3,944
1.3 %
2,764
0.9 %
1,038
4.1 %
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Florence G’sell and Isabelle Veillard
II.
Workers’ Compensation
A.
Scope of cover
1.
Workers covered
7 The legislation on occupational risks applies to any person employed or working in any capacity or in any place whatsoever, for one or more employers or entrepreneurs. Coverage generally requires the existence of an employment contract between the victim and the employer. Under art L 411-1 of the Code of Social Security (Code de la sécurité sociale, CSS), a work-related accident is defined as any accident that occurred because of or in connection with work to any employee or agent working in any capacity or any place whatsoever for one or more employers. The characterisation as an occupational accident is excluded if the damage occurred while the employment contract was suspended, especially in case of strike or layoff.4 An undeclared contract, in violation of labour law, does not impede the application of the legislation on work accidents and occupational diseases.5 Accidents caused to the employer by his employee are not covered by this legislation.6 8 The legislation also applies to other categories of persons who, although not strictly working as employees, engage in activities that expose them to occupational risks: taxi drivers, journalists, professional home workers, artists and certain special categories such as voluntary members of social organisations, students, etc (arts L 412-2 and L 412-8 CSS7). Some specific provisions apply for certain types of workers: ■
civil servants and soldiers (art 413-12, 4°CSS);
■
workers under the special scheme of seafarers (art L 413-12, 2°CSS);
■
farm workers (art L 751-8 Code rural; L 431-1 CSS): their mandatory insurance for occupational accidents and diseases is managed by a particular agency (Central Fund for Agricultural Mutual Insurance) which provides benefits identical to those of the general system.
9 People who do not qualify for mandatory coverage may also join voluntarily.
4 Cour de cassation, Chambre sociale (Cass soc) 11 July 1996: Bulletin des arrêts de la la Chambre civile de la Cour de cassation (Bull civ) 1996, V, no 282. 5 Cour de cassation, Chambre criminelle (Cass crim) 11 February 2003, Recueil Dalloz (D) 2003, 2335, comments Y Saint-Jours. 6 Cass crim 13 March 1978, Bull crim 1978, no 94. 7 The article enumerates twelve categories of persons (for example, students learning technical fields, during their lessons and training placements, or volunteers).
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2.
Spatial, temporal and other limitations
The occupational nature of the accident presupposes a direct link between 10 it and work. Thus, a work-related accident is an accident that occurred during the execution of the employment contract, at a time and place where the employee is under the control and authority of her/his employer. The law states that a work-related accident is any accident that occurred because of or in connection with work to any employee or agent working in any capacity or any place whatsoever for one or more employers (art L 411-1 CSS). In 1911, the Court of cassation ruled that any accident that happened at the time and place of work must be considered as work-related.8 Today, French courts usually decide that any damage which occurs at the time and place of work is work-related9 unless evidence is reported that the cause of this accident was totally extraneous to work.10 Indeed, art L 411-1 CSS is considered as implicitly establishing a presumption of a causal link between the accident and work.11 This presumption is expressly recognised by art L 442-2 CSS which states that the refusal to have an autopsy by the beneficiaries of the deceased rebuts the presumption. In other cases, the presumption is not rebutted by the impossibility of determining the origin of the accident. Thus, the victim only has to prove that the accident took place at the time and place of work12 and he/she will, then, benefit from the presumption. Since a decision of 20 December 2001, the Cour de cassation no longer determines the characterisation of the accident as work-related or not: this classification is left to the discretion of the first instance and appeal judges.13
8 Cass civ 27 December 1911, Sirey 1911, 1, 383. 9 Cass soc 19 July 1962, Bull civ 1962, IV, no 670. 10 Cass soc 23 May 2002, Revue de jurisprudence sociale (RJS) 2002, 8/9 no 1027; Cass civ 2, 27 January 2004, RJS 2004, 4, no 455 (truck driver victim of a stroke in the cab of his vehicle after a night’s sleep; not after a physical effort). 11 Cass soc 2 April 2003, Bull civ 2003, V, no 132 (vaccination against hepatitis B imposed upon an employee by his employer because of the nature of his work; diagnosis of multiple sclerosis). 12 Cour de cassation, Chambres réunies (Cass Ch réun) 7 April 1921, S 1922, 1, 81; Cass soc 4 December 1997, RJS 1998, no 220. 13 Cass soc 20 December 2001, Bull civ 2001, V, no 397; Cass civ 2, 22 March 2005, D 2005, 2996; Cass civ 2, 21 June 2005, Juris Classeur Périodique, Edition Sociale (JCP S) 2005, 1244.
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Florence G’sell and Isabelle Veillard
a) Place of the accident 11 The ‘workplace’ includes the entire premises of the company and its outbuildings.14 However, even though accidents usually take place on the company premises or their outbuildings, a work-related accident may occur anywhere. The location of the accident does not affect its qualification, as long as it took place when the employee was under the supervision of the employer. Thus, the home worker is covered at the time of execution of the tasks entrusted by his employer. The injury of the employee who undertakes a task outside the company is also covered by the legislation on work accidents. Since a decision of 19 July 2001, the employee is entitled to compensation under the AT-MP regime when the accident occurred during the time of his task, irrespective of the type of activity (occupational or personal) in question.15 In particular, when an employee travels during a task, he/she remains under the authority of the employer and the accident that occurs in the course of travelling is classified as a work-related accident. However, this legislation is irrelevant when the employee interrupts her/his task for personal reasons. Nevertheless, the employee who initiates a fight at the time and place of her/his work will not be regarded as having withdrawn from his employer’s subordination, regardless of the reason for the altercation.16 The same approach is followed in respect of the employee who engages in horseplay or who fools around,17 or who is inebriated.
b) Time of the accident 12 The accident must occur during the normal time of work, defined as the period of time within which the employer can exercise control over the employee. Working time covers the time spent on actual work on a regular schedule and the time when the employee is in the workplace for work (including breaks, lunch, shower, etc.) As a result, an accident which occurs during a period of leave may not be characterised as a work accident. However, the Cour de cassation extended the benefit of the legal presumption of work-related accident to any accident occurring beyond the hours of work when the employee is in the workplace and his presence
14
15
16 17
208
Many places are considered as attached to the employee’s work: canteen, parking, and even restaurants where business meals are eaten. Cass soc 30 November 1995, no 9314208, RJS 1/96 no 70. Before this decision, injuries resulting from an act of everyday life were not covered by the legislation on work accidents. The case law resulting from the application of this principle was especially fluctuating and contradictory. Cass civ 2, 12 July 2007, RJS 2007, 11 no 1206. Cass soc 11 March 2003, RJS 2003, 6 no 800.
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is known and tolerated by the employer.18 The Court of cassation retains the same solution regarding the situation of the employee whose presence is required by the employer (for example, if the accident occurs when the employee has to stay near his working place in order to be able to respond promptly to any request for intervention, without being allowed to attend to his personal affairs). In principle, the date of onset of the injury is immaterial.19 However, 13 difficulties may arise for consequences remote in time from the initial accident. The approach is, in this respect, very pragmatic and does not mobilise theoretical considerations regarding causality. Judges will obviously treat the following as work-related consequences: the death of the victim of lung cancer six months after the occurrence of a trauma in the chest with fractured ribs,20 a death attributable to the drugs used to treat the consequences of the accident.21 On the other hand, injuries which occurred a long time after the victim’s condition has stabilised are not covered by the presumption. However, art L 443-1 al 3 CSS establishes an exception to this rule: a causal link between the initial accident and the death is presumed and compensation can be awarded to the beneficiary of the deceased when the deceased had been granted an increase in their pension for the assistance of a third person and when the beneficiary shows that he/she assumed this task. The fatal accident must result from a worsening of the health status of the victim, not from extraneous circumstances.
c) Exception In certain cases, an accident may be qualified as a work accident if the 14 employee establishes that the accident occurred because of the work, even if it occurred when the employee was no longer under the supervision of the employer. The main case where this exception would occur is the suicide attempt, at home, of the employee on sick leave who was suffering a depressive syndrome caused by a sharp deterioration of his working conditions. Suicide is an occupational injury when it is directly related to work, for example if it is a response to criticism of the employer, or
18 19
20 21
Cass civ 18 April 1923, Gazette du Palais (Gaz Pal) 1923, 2, 32. Cass soc 2 April 2003, Bull civ 2003, V, no 132 (vaccination against hepatitis B imposed upon an employee by his employer because of the nature of his work; diagnosis of multiple sclerosis). Cass soc 7 July 1986, Bull civ 1986, V, no 359. Cass soc 7 December 1983, Bull civ 1983, V, no 594; Cass soc 13 January 1977, Bull civ 1977, V, no 31.
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Florence G’sell and Isabelle Veillard
harassment. This is not the case, however, if suicide is the result of a preexisting depression, or is a voluntary non-work related act.22 15 To sum up, the following cannot be considered as work-related accidents: ■
accidents which occur outside of working hours or work premises (unless there is evidence of a relationship with work)
■
accidents which occur in the work place outside of working hours while the employee was there for personal reasons23
■
accidents which occur in the work place during working hours while the employee was engaged in an independent activity not related to her/his functions24
■
accidents which occur outside of the work place, during working time, regardless of the cause of this absence and whether or not it was authorised by the employer.
d) ‘Route accidents’ (accident de trajet) 16 The route accident is defined by the Cour de cassation as every accident suffered by the employee on the way to work or to home, when he is not yet, or no longer, under the control of the employer. 17 Thus, a route accident is an accident which occurred during the trip back and forth between the workplace and: ■
the employee’s home,
■
or a second home if the employee lives there on a regular basis or any other place where the employee usually goes for family reasons,
■
a restaurant or a canteen, or, generally speaking, the place where the worker usually takes his meal when it is located outside the company.
18 The work place is always the starting point or the final point of the journey. 19 The route accident is characterised as such only if the employee took the normal route, ie, the usual and shortest route. Moreover, the accident must have occurred in a normal time given the work schedules of the company
22 23 24
210
Cass civ 2, 22 February 2007, D 2007, 791; JCP S 2007, 1429, comments D AsquinaziBailleux; Droit Social (Droit Soc) 2007, 836, note L Milet. Cass soc 11 December 1985, no 84-13409. Cass soc 16 April1992, no 90-10320; Cass civ 2, 3 April 2003, no 01-20974, RJS 2003, 6, no 800; Cass soc 12 January 1977, no 76-10518.
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and given the length of the journey.25 In addition, the route should not be interrupted or diverted from for reasons dictated by personal interest and unrelated to the basic necessities of everyday life (art L 411-2 CSS). The interruption of the journey due to personal reasons leads to the suspension of the benefit of legal protection for its duration. The protection is maintained for the rest of the journey, as long as the employee took the normal route. By way of exception, the employee who has made a detour will remain covered by the rules on route accidents in two cases: ■
when the detour is motivated by the basic necessities of everyday life (to fetch a child,26 complete paperwork,27 go to the bank,28 etc);
■
when the detour is related to the employee’s work or to the enterprise’s activity (for example, the participation in a car-pooling scheme organised by several employees, art L 411-2, 1°CSS).
The classification as a work accident or route accident has consequences on 20 different levels. For the victim, social security benefits are the same regardless of the nature of the accident. However, compensation is fixed and any action in tort against the employer is forbidden when the employee is the victim of a work-related accident, while the victim of a route accident retains the possibility to file an action in tort against the employer. In addition, employers finance the compensation scheme of work-related accidents; the amount of their contributions varies according to the number of work-related accidents which occurred in one year. Route accidents are not taken into account to fix this amount. Moreover, the victim of an accident enjoys greater protection in terms of 21 employment. Indeed, the protective rules regarding the dismissal of an employee/victim of a work-related accident are not applicable to travelrelated accidents. Thus, whereas the dismissal of the victim of an occupational disease or a work accident is allowed under very restrictive conditions (proof of a serious fault, or proof of an impossibility to maintain the working contract for reasons unrelated to the accident29), victims of route accidents do not benefit from special protection.
25
26 27 28 29
A route accident cannot be characterised as such if the employee left home two and a half hours in advance whereas the route required only one hour (Cass soc 18 December 1972, Bull IV 1997, no 703). The same ruling was adopted regarding the accident of an employee who left his office fifty minutes after the end of his workday because of a lengthy conversation with a friend (Cass soc 17 May 1972, Bull IV, no 365). Cass soc 26 October 1972, D 1974, 46. Cass soc 18 November 1993, RJS 1994, 2, no 186. Cass soc 26 October 1972, D 1974, 46; JCP 1973, II, 17387. See art L 1226-9 Labour Code.
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Florence G’sell and Isabelle Veillard
22 Since several decisions were passed on 16 March 1995, the Cour de cassation no longer determines whether or not a route accident can be classified as such, this being left to the sovereign discretion of first instance and appeal judges.30
3.
Effects of the victim’s contributory conduct
23 The employee’s fault, such as intoxication31 or non-compliance with safety rules32 does not affect the characterisation of the accident as occupational. However, it may have an impact on compensation.
a) Intentional negligence 24 The intentional fault of a victim who inflicts an injury on him/herself or is involved in a fight deprives him/her of the benefit of the legislation on work accidents (art L 375-1 CSS). In such cases, the victim will only benefit from the health insurance guarantees, ie the guarantees that any victim of any accident or illness may recover, as long as they are affiliated to the French national health care scheme.33 However, a wilful fault is not necessarily an intentional fault, as illustrated by the litigation on workrelated suicide. When the suicide was committed against a background of mobbing by the employer,34 or by desperation resulting from a remonstrance from the employer,35 or by the painfulness related to working conditions,36 the death is considered as a work-related accident.
b) Inexcusable negligence 25 If the employee was inexcusably negligent, these particularly serious faults can have an impact on the compensation awarded to the victim. The social security scheme can choose to reduce the pension that the
30 31 32 33
34 35 36
212
Cass soc 16 March 1995, Bull civ 1995, V, nos 95, 96, 97. Cass soc 23 March 1995, no 92-21311, RJS 5/95 no 573; 11 March 2003, no 00-21385, RJS 6/03 no 800. Cass soc 5 April 1990, no 88-17010. The conditions to benefit from the guarantees of Social Security are quite flexible (workers, job seekers, students, the beneficiary borne by an insured, ie a spouse, a life partner, a child), so that the great majority of the population benefits from its coverage. For a presentation, see . Cass civ 2, 10 May 2007, JCP S 2007, 1547, note C Leborgne-Ingelare. Cass soc 20 April 1988, Bull civ 1988, V, no 241. Cour de cassation, Assemblée plénière (Cass Ass plén) 15 December 1972, D 1973, 237, note Y Saint-Jours.
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victim is entitled to receive for any permanent partial disability (incapacité permanente partielle). Inexcusable negligence on the part of the employee corresponds to wilful misconduct which is exceptionally serious and results in the exposure of its author to an unnecessary danger that he/she should have been aware of.37 This definition is stricter than the definition of the employer’s inexcusable negligence and is equivalent to the current definition of the inexcusable negligence of the victim of a traffic accident. Such a definition results in a quasi-immunity of the employee.
B.
Compensation trigger
The Social Security Code distinguishes between work-related accidents 26 (accidents du travail, AT) and occupational diseases (maladie professionnelle, MP).
1.
Accidents
Suddenness is the criteria used to distinguish an accident from a disease. A 27 disease is an evolutionary process whereas the sudden appearance of a physical injury, at the time and place of work, is an accident (for example, the deafness caused by a loud noise). According to case law, an accident involves the existence of a fact or set of facts which occurred suddenly, that is to say at a certain date and under certain circumstances. This requirement of suddenness excludes, in principle, the classification as accidents of lesions that appeared gradually38 and diseases contracted in the course of one’s employment.39 The two French superior courts (Cour de cassation and Conseil d’Etat) made a 28 controversial application of the legislation on work accidents in cases involving multiple sclerosis that appeared immediately after a mandatory vaccination against hepatitis B.40 As no other explanation could be found for the illness, the courts considered that the sudden appearance of the symptoms of the disease directly resulted from the vaccination and could
37
38 39 40
Definition given in two important decisions: Cass civ 2, 27 January 2004, Bull civ II, no 25; Cass Ass plén 24 June 2005, JCP S 2005, 1056; JCP édition Entreprise (E) 2005, comments P Morvan. Cass soc 21 October 1985, no 84-12653. Cass Ass plén 21 March 1969, no 66-11181. Cass soc 2 April 2003, D 2003, 1724, Droit Soc 2003, 673, obs L Milet; Cass civ 2, 25 May 2004, Bull civ 2004, II, no 237; CE 9 March 2007, Juris Classeur Périodique, Edition Générale (JCP G) 2007, II, 10142, note A Laude; Cass civ 1, 23 September 2003, JCP G 2003, II, 10179.
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Florence G’sell and Isabelle Veillard
be considered as a work-related accident insofar as the employer demanded the vaccination of his employees. 29 The decisive role of suddenness has been confirmed on several occasions: the sudden nervous breakdown of an employee after an assessment interview – on the occasion of which he was notified of his reassignment – was considered a work-related accident.41 On the contrary, the lesion caused by an extended exposure to the cold, at an uncertain date, is not a work accident but an occupational disease.42 30 An accident results in a bodily injury, which can either be physical or mental. When new lesions are the direct and exclusive consequence of the accident, they constitute a second work accident (for example, contamination with hepatitis C during a blood transfusion made necessary by a first work accident43).
2.
Diseases
31 It is difficult to date with certainty the origin of a disease, as opposed to an accident. A disease is an evolutionary process. Therefore, French courts have decided that occupational diseases could include the following: an infection caught by a doctor by contagion44 a disease developed after the repeated inhalation of toxic substances,45 a trauma caused by the repetition of the same movement, etc.
a) General scheme 32 The French system of compensation of occupational diseases is grounded on a series of tables (98 tables, art R 461-3 CSS), reviewable by a decree (décret), on recommendations issued by the Superior Council on the prevention of occupational risks. The tables describe the categories of work that are likely to generate each of the occupational diseases. Each table includes three columns. The first one indicates the illnesses covered (for example, table 6, leukaemia); the second one indicates the maximum delay between the last exposure to the risk and the manifestation of the disease (for example, 30 years) and the last one gives an exhaustive list of
41 42 43 44 45
214
Cass civ 2, 1 July 2003, Bull civ 2003, II, no 218. Cass civ 2, 18 October 2005, JCP Sirey 2005, 1423, note D Asquinazi-Bailleux. Cass soc 15 January 1998, no 96-16.536. Cass Ass plén 21 March 1969, Dr Gendre, D 1969, 531. Cass soc 18 April 1991, Bull civ 1991, V, no 210.
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activities likely to cause the diseases (for example, all work involving exposure to X-rays or radioactive substances, natural or artificial, or any other source of particle emissions, including the extraction and processing of radioactive ores, preparation of radioactive substances, etc). Each disease included in a table is presumed to result from work if the 33 victim’s work is classified among those capable of generating this disease. A disease which is not enumerated in the tables may however be classified as occupational if an individual expertise conducted by the Regional Committee for the recognition of occupational diseases decides so. It is required that the expertise establishes that the disease was primarily and directly caused by the victim’s usual work and resulted in his death or in a permanent partial disability at a minimum rate of 25 % (art L 461-1 al 4 CSS). Two thirds of occupational diseases belong to the category of muscle and 34 bone disorders. Nevertheless, almost half of the benefits paid are dedicated to the compensation of diseases caused by the inhalation of asbestos.
b) Special scheme: diseases caused by asbestos inhalation The Financing Law for Social Security of 23 December 200046 created a 35 compensation fund dedicated to the victims of asbestos (FIVA). This mechanism has a very wide scope. It concerns employees that the 36 Social Security acknowledges to be suffering from an occupational disease related to asbestos. It also covers those who cannot benefit from the ATMP regime and, if need be, the victims’ beneficiaries. In other words, the fund provides full compensation of the victims’ injuries in two cases: first, if Social Security recognises the occupational origin of their illness; second, if the victims are able to prove that their illness directly results from their exposure to asbestos (the causal link is evaluated by a committee specifically dedicated to this work: the Review Board of the circumstances of exposure to asbestos, la commission d’examen des circonstances de l’exposition à l’amiante).47 The compensation offered by the FIVA complements the sum already 37 awarded by Social Security in respect of the legislation relating to occupational diseases.
46 47
Law no 2000-1257, art 53. See P Morvan, Droit de la protection sociale (4th edn 2009) no 130.
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Florence G’sell and Isabelle Veillard
38 The FIVA makes an offer that indicates the assessment retained for every head of damage, pecuniary or non pecuniary. Contrary to Social Security, the FIVA compensates non-pecuniary damage (compensation for moral distress, physical pain and suffering, disfigurement, and loss of amenity) by the allocation of a lump sum to the victim. Unlike Social Security’s compensation, the FIVA’s compensation is not related to wages. It varies depending on the severity of the disease and the age of the victim. The scale of compensation of FIVA is indicative: the final compensation is determined on a case-by-case evaluation. However the amount of provisional allowance granted before the final determination of compensation is fixed: for example (as of 1 June 2005): ■
■
the victim of mesothelioma will get a provisional allowance of E 35,000; the victim of a pleural plaque will be awarded E 4,000. The spouse of a deceased victim of asbestos will be awarded E 13,000, her/his minor child E 8,000; her/his adult child E 5,000.
39 When the Social Security pension is higher than that awarded by FIVA, the FIVA does not pay a supplement. For example, if FIVA awards a rent of E 6,000, and the Social Security awards E 5,000, the victim will get E 5,000 from the Social Security and E 1,000 from FIVA. If the victim may receive E 5,000 in accordance with the scale of compensation awarded by FIVA, and E 6,000 in accordance with the scale of compensation awarded by the Social Security, FIVA will not supplement the sum awarded by Social Security. 40 The victim may refuse and contest the offer made by FIVA by alleging its inadequacy. In such a case, the victim must introduce an action before a Court of appeal. The statistics indicates that Courts of appeal generally increase by 77 % the amounts proposed by FIVA.48 If the victim accepts the offer made by FIVA, this acceptance impedes any new request before FIVA and any claim for compensation before the courts, except in the case where the victim tries to establish the inexcusable fault of the employer. From the moment FIVA has paid compensation to the victim, FIVA is subrogated to the victim’s rights and may recover the sum provided to the victim. If the employer has behaved in an inexcusably negligent manner, the fund has the obligation to file a complaint before the courts in the name of the victim. In such a case, additional compensation will be paid directly to the victim. 41 The creation of this compensation fund for asbestos victims caused the disappearance of claims against employers for inexcusable negligence
48
216
Ibid, no 130, p 85.
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filed by victims themselves. Indeed, when victims accept the offer of compensation from the fund, they cannot bring an action against the employer before the courts even if they are still allowed to start criminal proceedings against the employer. The creation of such a regime introduced a gap between the principles of compensation of the victims of asbestos and those used for other victims of occupational hazards: for the first time, full compensation is the principle for compensation of specific work-related accidents. Moreover, the 1999 Financing Law for Social Security created a grant for 42 the early retirement of employees affected by asbestos (ACAATA, or asbestos early retirement grant). The grant is allocated whether or not the employees declared an asbestos-related disease, as long as they had a listed occupational activity (manufacture of asbestos materials, flocking, etc). This pre-retirement grant can be allocated from the age of 50 and until the allowance of a full pension to the beneficiary.49
C.
Scope of protection
The legislation on work accidents and occupational diseases only provides 43 compensation for pecuniary losses, especially current and future health care costs and loss of earnings. All medical expenses resulting from any work-related accident are fully covered by social security funds, within the tariffs and rates accepted by Social Security. An important proportion of employees also have a complementary private insurance that compensates, in part or fully, the difference between the Social Security costs and the market price.50 The efficiency of the coverage of Social Security increases with the gravity of the illness.
1.
Personal injury
A work-related accident involves the appearance of a lesion. It may be a 44 physical injury that can be external (wound) or internal (cerebral hemorrhage, hernia, coronary, etc), superficial or deep. It may also be psychological (state of stress, depression, etc), as long as such a state appeared suddenly after an occupational incident, such as experiencing an inter-
49 50
See ibid, no 131. These private insurance policies usually also provide for reimbursement of types of treatment that are not covered by Social Security as, for example, osteopathic.
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view with a supervisor51 or being attacked in the workplace.52 The health of the employee must be medically established. 45 Under the AT-MP regime, the victim receives compensation for her/his injury (benefits in kind). Medical and surgical care, as well as pharmacy and medical analysis are fully covered within the tariffs and rates accepted by Social Security. They are directly paid to the providers (doctors, pharmacy, etc) by Social Security. The victim does not need to pay any sums in advance. 46 In principle, the non-pecuniary (extra-patrimonial) damage is not compensated as such. The lump sum compensation does not include compensation for moral distress, physical pain and suffering, disfigurement, and loss of amenity. A parallel may be drawn with the situation of civil servants. 47 Originally funded on the same principles as those applicable to the private sector, the administrative Supreme Court (le Conseil d’Etat) has progressively adapted the compensation rules applicable to civil servants in a more favourable sense. Since an important decision of 2003 (CE, 4 July 2003, Moya-Caville, no 211106), civil servants may be granted a complementary compensation, covering moral distress, physical pain and suffering and loss of amenity.
2.
Pure economic loss
48 Under the AT-MP regime, the victim is entitled to daily allowances in case of temporary interruptions of work that are more important than in the case of a non-occupational accident that results in sick leave. In both cases, if the employee needs to be on sick leave for a while, the employment contract is deemed to be suspended for the necessary amount of time. The employee’s dismissal is prohibited during the period of suspension.53 In case of a work accident, the day the accident occurs is completely paid by the employer. Daily allowances are paid from the day after the accident, with no waiting period. In case of sick leave due to occupational disease, the payment of daily allowances begins on the first day of the leave. In both cases, the victim is entitled to daily allowances throughout the period running up to the consolidation, that is, the moment when the healing or
51 52 53
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permanent damage to the victim is stabilised. During the first 28 days of the leave, the amount of the allowance is 60 % of the employee’s wage with a maximum of E 176.90 per day (since 1 January 2011). From the 29th day of the leave, the allowance amounts to 80 % of the employee’s wage with a maximum of E 235.86 per day. By comparison, daily allowances amount to 50 % of the employee’s wage in the case of a period of sick leave due to a non-occupational accident or disease and the first three days of the leave are not covered. Furthermore, if the employee has at least one year of seniority in its employment, he/she is entitled to additional allowances from the employer that supplement daily allowances granted by Social Security (art L 1226-1 Social Security Code). Such additional allowances allow the victim to receive 90 % of his/her salary for the first 30 days of leave, and then 66 % of his/her salary for the next 30 days. When the employee has more than five years of seniority, the payment periods of these additional allowances are longer.54 In addition, employees often purchase complementary pension plans (plan de prévoyance) through their employers from private institutions to maintain their level of remuneration. From the moment of ‘consolidation’, the victim is entitled to compensa- 49 tion for the permanent sequelae of the accident. Such compensation takes the form of a pension if the worker’s disability rate is over 10 %, or is paid in capital in other cases. If, after consolidation, it appears that the employee is unfit to resume her/his previous position, the employer must offer her/ him an alternative position which is appropriate to her/his abilities and as similar as possible to the previously occupied position. In such case, the employee’s dismissal is allowed only if the employer is unable to provide him/her a compatible alternative employment or if the employee has rejected the employer’s offer. The dismissed employee is then entitled to a specific compensation unless he/she committed an abuse in using her/ his right of refusal In case of relapse, the same regime applies. In the event of an accident that led to death, the heirs of the victim may 50 receive a pension (art L 434-7 to L 434-14 CSS). In particular, the surviving spouse, pacte civil de solidarité, PACS partner, or life partner is entitled to an annuity equal to 40 % of the former annual salary of the victim. In return, the victim and her/his assignees cannot act directly against the 51 employer on the ground of general civil liability, unless he/she, or any of her/his agents, has committed wilful misconduct (faute intentionnelle) or gross negligence (faute inexcusable).
54
40 days for at least six years of seniority, 50 days for at least eleven years of seniority, etc.
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3.
Property damage
52 Property damage is not compensated under the AT-MP scheme.
4.
Sexual harassment – dignitary injuries
53 Sexual harassment and dignitary injuries are not considered as such under the AT-MP scheme. However, if it is established that the victim suffered from psychological distress (for example, depression) as a result of an act of sexual harassment or mobbing, it may be considered as a case of psychological injury resulting from a work accident. Discrimination may also be considered as mobbing even though both concepts are distinct55. The case law reveals that discrimination is not usually considered as a cause of a work accident; on the contrary, mobbing is often characterised as a cause of a work accident.56 Surprisingly, case law has not yet clearly extended this solution to sexual harassment. The idea of characterising the injury resulting from sexual harassment as a work accident is said to be somewhat iconoclast.57 54 As we said previously, intentional acts causing a work accident open to the victim the opportunity to get full compensation of her/his damage under
55 56
57
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See P Adam, Harcèlement moral, Rép Droit du travail 2010, § 47. Ibid, § 341. The suicide following acts of mobbing is a work accident (Cour d’Appel (CA) Riom, 22 February 2000, D 2000, 634, comments Y Saint-Jours; CA Besançon, 19 December 2006, no 2006/325372). P Adam, Harcèlement sexuel, Rép Droit du travail 2008, § 210: ‘Posons ici, pour ne plus y revenir, une question (un brin) iconoclaste. Dès lors que les agissements de harcèlement sexuel portent atteinte à la santé de celui qui en est victime, ne peut-on soutenir que les règles d’indemnisation relatives aux accidents du travail et aux maladies professionnelles doivent trouver ici à s’appliquer (certes, l’art 18 de la directive no 2006/54 du 5 juill 2006 dispose que “la compensation ou réparation ne peut être à priori limitée par un plafond maximal“, mais la faute intentionnelle de l’employeur ou d’un de ses préposés permet à la victime de sortir du système d’indemnisation forfaitaire et d’obtenir la réparation intégrale de son dommage; CSS, art L 452-5)? Et si cette idée trouve quelque résonance devant les caisses de sécurité sociale et devant les tribunaux (Cass soc, 15 nov 2006, no 05-41.489, JCP, éd E, 2007. 1296, note G Vachet), en matière de harcèlement moral (V Harcèlement moral), elle n’a, à notre connaissance, jamais vraiment fait débat dans le champ du harcèlement sexuel’. However, in a recent ruling (Cass civ 2, 4 November 2010, no 09-16288), the Cour de cassation did not sanction the characterisation as work accident of injuries resulting from both facts of sexual assault and sexual harassment: ‘Attendu que, pour déclarer irrecevable la demande de Mme Y…, l’arrêt retient que les faits subis (harcèlement sexuel et agression sexuelle) sont constitutifs d’un accident du travail, puis énonce que les dispositions légales d’ordre public sur la réparation des accidents du travail excluent les dispositions propres à l’indemnisation des victimes d’infraction, même en cas de faute intentionnelle de l’employeur ou du préposé; Qu’en statuant ainsi, alors que les faits ayant entraîné le dommage subi par Mme Y... avaient justifié la condamnation de leur auteur pour infractions intentionnelles, la cour d’appel a violé le texte susvisé’.
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tort law. The victim may bring an action against the author of the accident to obtain compensation for the fraction of damage that was not covered by Social Security. Since most acts of harassment are intentional,58 their compensation 55 should require a derogation from the exclusive nature of the AT-MP scheme. Even if the case-law does not allow firm conclusions to be drawn, some decisions and commentators go in this direction regarding mobbing.59 At least, the acts of mobbing may be characterised as inexcusable negligence on the part of the employer, opening to the victim a right to complementary compensation60 (art L 452-1 CSS). For example, the Cour de cassation approved a court of appeal decision which held the inexcusable negligence of the employer after finding that the psychological balance of the employee had been seriously compromised as a result of the continued deterioration of the labour relations. The Court of appeal had indeed highlighted the fact that the employer knew or should have been aware of the danger to which his subordinate was exposed and had not taken the necessary steps to prevent it.61
D.
Heads and levels of benefit
1.
Medical care and rehabilitation assistance
Medical and surgical care, as well as pharmacy and medical analysis are 56 fully covered within the tariffs and rates accepted by Social Security. They are directly paid to providers (doctors, pharmacy, etc) by Social Security. The victim does not need to pay any sums in advance. Hospitalisation costs are covered at a rate of 100 %. The victim does not pay the daily rate (E 18 per night; under the general health insurance scheme, the daily rate is not refundable62). The supply, repair and renewal of prosthetic and orthopaedic equipment are supported at a rate of 150 %, based on the
58
59
60 61 62
Even if the definition of mobbing under French law (art L 1152-1 Labour Code) could include unintentional acts, the case-law adopts a restrictive position, requiring the author’s intention to cause the damage. See Adam, Rép Droit du travail 2010, § 353; Cass civ 2, 22 February 2007, JCP 2007, II, 10144, comment by J Colonna; Cass soc 15 November 2006, no 05-41.489, comment by J-E Tourreil; CA Riom, 25 October 2005, no 05/00148. See nos 84–85. Cass civ 2, 22 February 2007, no°05-13.771, RJS 5/2007, no 666. . The daily rate is a price paid as a contribution to the costs of the hospital.
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Social Security price list. Transportation costs between home and hospital are also covered by Social Security. Social Security also supports the costs of functional, as well as occupational rehabilitation when it appears that a specific treatment is likely to promote healing. 57 To sum up, Social Security supports, within the said limits (arts L 431-1, 1° L 442-8 CSS): ■
Medical costs, surgery, pharmaceutical costs and related costs;
■
Costs related to the accident regarding products and services that are officially listed: various devices, orthopedic implants, dental implants (art L 162-1-7 CSS);
■
Transport of the victim to her/his habitual residence or to the hospital: any transport caused by the treatment or rehabilitation of the victim is supported without prior approval;63
■
Any move to answer a call from Social Security or to be submitted to expertise;
■
And, generally, all costs involved in the treatment (organ transplant, spa etc).
58 The victim receives this support until recovery or consolidation, and, subsequently, for all costs directly resulting from the accident. 59 Under the general health insurance scheme, a certain percentage of costs is to be paid by the patient and not reimbursed by the Sécurité sociale. This fraction is called ticket modérateur and varies following rates and tariff references. The fraction which is not covered by Social Security may be paid by the patients or covered by private health insurance companies that are hired individually or in groups (assurance ou mutuelle complémentaire, complementary insurance or mutual fund). On the other hand, under the AT-MP regime, workers’ health costs are, in principle, fully covered. However, the principle of free care is generally not effective because of the extra fees charged by doctors and clinics. In practice, there is a mismatch between the tariff references imposed by Social Security and the actual costs of care. This is the reason why complementary insurance (mutuelle complémentaire) often complements Social Security coverage in case of work-related accidents and occupational diseases.
63
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2.
Lost earnings
If the victim is temporarily incapacitated and has to stop working for a 60 short period of time, then daily allowances (indemnités journalières) are granted by Social Security until the victim recovers. Such daily allowances correspond to a fraction of the salary of the victim and may be supplemented by the employer (see no 41 above). If the victim suffers from a permanent disability, the awarded compensa- 61 tion covers the loss of physical and occupational capacity. This compensation is calculated on the basis of the victim’s disability rate. The victim will either get a cash settlement if the disability rate is less than 10 % (about E 4,000), and or an annuity if the disability rate is greater than or equal to 10 %.
3.
Dependents’ benefits
If the accident or occupational disease caused the death of the insured, 62 her/his heirs may demand the payment of a pension calculated on the basis of the annual salary of the deceased. Spouses, PACS partners, or life partners receives a lifetime annuity of 40 % 63 of the annual salary of the victim (art L 434-8; R 434-10 CSS). The children of the deceased also benefit from a pension until the age of 20 (art R 43415 CSS); that age may be raised if the child is studying or is looking for her/his first job (art L 434-10 CSS). This pension is limited to a maximum of 25 % of the annual salary of the victim up to two orphans, and 20 % beyond two orphans (R 434-15 CSS).
4.
Comparison with damages in tort
Compensation for non-pecuniary loss (extra-patrimonial) is not granted 64 under the AT-MP legislation, contrary to compensation in tort where full compensation is awarded. Thus the victims cannot obtain compensation for moral distress, physical suffering, disfigurement, and loss of amenity. Moreover, medical and surgical care is only covered within the price list imposed by Social Security and based on its rate. The principle of full compensation applied in tort law is more favourable insofar as the wrongdoer has to cover all the expenses deemed necessary to repair the damage, as long as they are reasonable. In other words, the wrongdoer cannot limit the amount of damages by applying the price list and rates of Social 223
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Security. This difference has enormous implications regarding the supply of complex medical equipment (prosthesis, orthopedics, etc) which Social Security is very reluctant to support due to their price. On the contrary, private insurance companies often provide efficient solutions to the victims of their insured.
5.
Lump sum or periodical payments?
65 In general, Social Security health care benefits are paid as reimbursements of the out-of-pocket payments incurred by the patient. However, under the AT-MP regime, benefits are generally paid directly by Social Security to providers (doctors, pharmacists, etc) and medical institutions. Social Security also grants daily allowances that are paid every 14 days (see no 41 above). 66 The victim suffering from a permanent disability receives compensation calculated on the basis of the disability rate. The victim either gets a cash settlement if the disability rate is less than 10 %, or a pension if her/his rate is greater than or equal to 10 % (art L 434-15 ff CSS, R 434-25 ff CSS). If the victim’s disability rate is between 10 and 50 %, the pension is paid each quarter. If the victim’s disability rate is equal to or over 50 %, the pension is paid each month.
E.
Funding systems
67 Unlike other risks covered by Social Security, the coverage of occupational risks is funded by a system of differentiated – as opposed to uniform – contributions that must be paid by employers. 95 % of the sums awarded to the victims by Social Security are financed by the employers’ contributions.64 68 For employers that have less than 10 employees, contribution rates are uniform. They depend on the employer’s category of activity.65 For employers that have between 10 and 199 employees, contribution rates are
64 65
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. A particular rate is applied to each professional activity, calculated on the basis of its dangerousness. The different rates are enumerated in the following text: Arrêté du 28 décembre 2009 modifiant l’arrêté du 17 octobre 1995 relatif à la tarification des risques d’accidents du travail et de maladies professionnelles et fixant les tarifs des cotisations d’accidents du travail et de maladies professionnelles des activités professionnelles relevant du régime general de la sécurité sociale.
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calculated on a mixed base which is a compromise between uniform and individual pricing. First, an ex ante contribution rate is adopted which is based on the employer’s category of activity. This rate is corrected ex post by reference to the annual number of accidents and diseases declared by the employer. The final rate is called ‘mixed’. When the employer has over 200 employees, an ex post calculation is applied by referring, on a case by case basis, to the number of accidents of each company. This individualisation is intended to encourage employers to take care of internal safety. In such a case, the applied rate is called ‘real rate’. A reform of the system of employers’ contributions, voted on by Parlia- 69 ment at the end of 2009,66 will enter into force in 2012. It aims to strengthen the incentive to prevent occupational risks. Thus, it clarifies the calculation system to ensure that employers immediately notice the impact of the seriousness of their occupational risks on the amount of their contributions.67 The Law of December 24 2009 has been supplemented by a Decree of 5 July 2010.68 The fund dedicated to the compensation of the victims of asbestos is 70 regulated by special rules. The Financing Law for Social Security of 23 December 200069 created a 71 compensation fund dedicated to the victims of asbestos (Fonds d’indemnisation des victimes de l’amiante, FIVA). Contrary to other funds which are directly financed by the authors of the 72 damage covered (excluding. FIPOL, see oil pollution), the FIVA belongs to the category of funds for which the question of funding is independent of the question of liability. Such funds are usually set up to cope with an emergency situation. The FIVA is funded by a joint contribution from the State and from the AT-MP scheme (which is mainly funded by employers). The amount is fixed annually by social security financing law. The asbestos early retirement grant (Fonds de cessation anticipée d’activité des 73 travailleurs de l’amiante, FCAATA) is mainly financed by contributions from the workers’ compensation branch of Social Security (94 %). It is also funded by a fraction of the duties collected on tobacco consumption.70
66 67 68 69 70
Loi no 2009-1646 du 24 décembre 2009, Journal Officiel (JO) 27 December 2009. For a detailed presentation, ; see also no 167 below, Evaluation and Conclusions. Décret no 2010-753 du 5 juillet 2010 fixant les règles de tarification des risques d’accidents du travail et de maladies professionnelles (Journal officiel du 7 juillet 2010). Law no 2000-1257, art 53. See Morvan (fn 47) § 131.
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74 The employer cannot purchase a private insurance instead of, or in addition to, the legal scheme of work accident and occupational disease compensation. He/she can only take out insurance cover outside the scope of this legislation for the cases where he/she might be civilly liable in tort. There is one exception to this rule in the case of the employer’s inexcusable fault (see below). Indeed, when the accident/disease results from an inexcusable fault, the victim is entitled to damages that are excluded from the normal compensation of work accidents and occupational diseases (pain and suffering, loss of amenity, loss or diminution of career opportunity, see above). The amount fixed by the court of Social Security is paid directly by Social Security. However, Social Security has a personal right of action before the courts against the employer to claim reimbursement of sums paid to the victim. Since an Act of 27 January 1987, the employer is allowed to insure against that risk. It seems that this coverage is very useful in practice because it ensures a solvent debtor to Social Security.
F.
Administration and adjudication of claims
1.
Accident
75 The victim of an accident must inform or notify the employer or any of her/his employees on the day when the accident occurred or, at the latest, within 24 hours, except in cases of force majeure, of absolute impossibility or for legitimate reasons (arts L 441-1, L 441-6, R 441-2 CSS). This accident report may be made orally at the location where the accident occurred. Otherwise, it must be sent by registered mail. The victim must also have her/his injuries ascertained by a physician on the official accident sheet. The employer must report the accident within 48 hours to Social Security. Since 1 September 2008, Social Security offers an online service of declaration of work accidents. Once Social Security receives the accident report and the medical certificate, it has a maximum period of thirty days to examine the case and take a position on the occupational nature of the accident. If the complexity of the case so requires, it may take a further three months to make a decision, provided the victim and the employer are informed in writing. If Social Security deems it necessary, various investigations can be conducted: soliciting testimonials (victim, employer, witnesses, police), expert consultation, site visit, etc. In the absence of an express decision from Social Security at the end of this three months period, the occupational nature of the injury is considered as implicitly recognised.
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2.
Disease
Occupational diseases are compensated in the same way as work-related 76 accidents. The date on which the victim is informed by a medical certificate of a possible link between the illness and work is considered to be the date of the accident. The responsibility for reporting lies with the victim. He/she has to submit to Social Security a medical certificate from a doctor and the declaration of occupational disease. Social Security has a maximum of three months to examine the case and take a position on the occupational nature of the disease. If the complexity of the case so requires, it may take a decision within a further three months. In the absence of an express decision from Social Security at the end of this three months period, the occupational nature of the injury is considered as implicitly recognised.
3.
Litigation
If Social Security denies the occupational nature of the accident/disease, its 77 decision may be challenged in court. Special courts and procedures are dedicated to work accident litigation. A distinction can be drawn between litigation involving legal questions and technical litigation. Technical litigation includes two different fields: medical questions and calculation of the employer’s contribution. Regarding legal questions (ie the characterisation of a work accident, of 78 inexcusable negligence of the employer, financial dimensions of the benefits, designation of a beneficiary, etc), litigation starts with conciliation. Thus the claim begins with the submission of an application to the Conciliation Commission (Commission de recours amiable), which draws its membership from, and is organisationally linked to, the board of the administrative body of Social Security in charge of occupational diseases and work accidents (Caisse primaire d’assurance maladie). On failure of the conciliation process, the Tribunal of social security cases (Tribunal des affaires de sécurité sociale, TASS) has first-instance jurisdiction. No special courts and procedures are involved on appeal and cassation: on appeal, the case is submitted to the Social Chamber of the Court of Appeal, then, if necessary, to the Social Chamber of the Cour de cassation. For litigation involving medical questions (that is, the state and degree of 79 disability, the state and degree of permanent incapacity to work), a special court – the Tribunal of disability litigation (Tribunal du contentieux de l’incapacité) – has first instance jurisdiction. On appeal, a special court is 227
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dedicated to disability litigation and the pricing of insurance rates of occupational accidents (la Cour nationale de l’incapacité et de la tarification de l’assurance des accidents du travail – la Cour nationale). Its decisions may be reviewed by the Cour de cassation if a party voices criticism as to the legal reasoning of the court (as opposed to factual dimensions of the litigation, on which the Cour de cassation never takes a position). 80 For litigation regarding the calculation of the employer’s contribution, a special procedure also applies. Indeed, the employer’s contributions vary depending on the number of work accidents and occupational diseases related to his activity. Special entities of Social Security, operating at regional level, are in charge of the calculation of the employers’ contributions: the Caisses régionales de l’assurance maladie. When employers are not satisfied with the imposed amount of contribution, they may challenge this in court. In such a case, it is possible to try to reach a compromise by firstly introducing a request for reconsideration directly to the Caisse régionale. Then, the Cour nationale has jurisdiction. No appeal against its decisions is possible; its decisions can only be reviewed by the Cour de cassation.
4.
Speed of claims’ resolution and administrative costs
81 In general, Social Security has up to three months to make a decision regarding the employee’s accident or disease, except in complex cases where the delay is six months (see no 75 f above). If the employee decides to challenge the Social Security’s decision on legal grounds, he/she must file a claim within two months before the Conciliation Commission. If a medical question is at stake, the employee has to file a recourse before the Tribunal of disability litigation (Tribunal du contentieux de l’incapacité). It is generally said that the dedicated courts are unable to cope with the number of claims due to insufficient resources. As a consequence, the speed of claims’ resolution is considered as unsatisfactory, even though no official data are available. According to unofficial sources, the resolution of a case by the Cour nationale takes on average three years. In first instance, about 18 months are needed in Paris and its suburbs.
G.
Rights of recourse of workers’ compensation institutions
82 After a long period of uncertainty, the French legislator intervened in 1985 on the occasion of the passing of the Law on Traffic Accidents. The Law of 5 July 1985 took a position on the legal basis of actions introduced
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by third party payers to be reimbursed for incurred expenses. Thus it is now well established that the action introduced by third party payers to be reimbursed of sums paid to the victim is grounded on subrogation (art 30, Law no 85-677 on traffic accidents, 5 July 1985).71
1.
Recourse of workers’ compensation institutions against employers
Once an accident or a disease is classified as occupational, the employer 83 has immunity against any action introduced either by the victim, by Social Security or by any institution granting supplementary compensation to the victim. By exception, workers’ compensation institutions have a right of recourse against the employer when it is established that her/his fault was inexcusable or intentional.
a) Employer’s wilful misconduct When the accident results from the employer’s wilful misconduct, Social 84 Security is allowed to introduce an action against the employer for the reimbursement of incurred expenses.72 In such a case, Social Security may impose a supplementary premium on the employer.73 Intentional fault is strictly defined by art L 452-5 CSS: it requires a wilful act, done with the intent to cause a bodily injury (see below). It cannot result from mere carelessness, even if such carelessness is serious. The employer is civilly liable for the consequences of her/his wilful misconduct and cannot contract a private insurance to cover such a fault.74
b) Employer’s inexcusable negligence The Cour de cassation has determined the definition of inexcusable negli- 85 gence (faute inexcusable), especially by referring to the notion of ‘obligation of safety’ (obligation de sécurité de résultat) imposed on employers (see below). When such an inexcusable negligence is established, the victim receives an
71 72
73 74
See M Borghetto/R Lafore/R Ruellan, Droit de la sécurité sociale (15th edn 2005) § 1462 f. The action brought by Social Security against the employer will only be possible if the employer himself is the author of the damage. When the damage has been caused by an employee, Social Security has to introduce directly an action against the employee to be reimbursed (Cass soc 12 October 1989, Bull civ 1989, V, no 589; Cass civ 2, 3 July 2008, JCP S 2008, 1557). Under exceptional risks generated by the activity (art L 242-7 CSS). Art L 452-4 CSS only allows private insurance when the employer’s fault is inexcusable.
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additional lump sum or annuity directly paid by Social Security to compensate her/his disability (art L 452-2 CSS). Social Security cannot introduce an action against the employer to claim reimbursement of this additional compensation. However, a supplementary contribution will be imposed on the employer through which Social Security retrieves the amount of the additional compensation paid to the victim (see below).
2.
Recourse of workers’ compensation institutions against coemployees
86 In principle, once an accident or disease is classified as occupational, the victim’s co-employees have immunity against any action introduced by compensation institutions. By exception, when a co-employee, by her/his wilful misconduct, intentionally caused the damage to the victim under the conditions of art L 452-5 CSS, Social Security is allowed to introduce an action against him/her for the reimbursement of the incurred expenses.
3.
Recourse of workers’ compensation institutions against third parties
87 Compensation institutions are allowed to sue any person responsible for the accident in order to be reimbursed for the amounts paid to the victim. These actions are based on general rules of civil liability.
H.
Interaction with general social welfare provision and private insurance
1.
Fund of first resort
88 French Social Security initially bears the cost of the accident or disease. Social Security is divided between five autonomous branches. One of them is dedicated to work accidents and occupational diseases.75 When a work accident occurs, the employer delivers to the victim an administrative form (feuille d’accident), which allows the victim to get free medical care upon presentation. When the victim suffers from an occupational disease,
75
230
For more details, see .
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he/she has to get a medical certificate and to send an administrative form (déclaration de maladie professionnelle) to the relevant branch of Social Security in order to obtain free medical care. The daily allowances are paid by the AT-MP branch of Social Security once 89 the employer has sent an administrative form certifying the amount of wages of the victim (Attestation de salaire – accident du travail ou maladie professionnelle). The special scheme dedicated to asbestos-related diseases – the FIVA – 90 provides additional compensation to that paid by Social Security when it appears that, under the FIVA’s scale, the victim should be granted supplementary compensation.76 Private insurance generally complements Social Security benefits, both for 91 health costs and lost earnings. Regarding health costs, victims are often covered by private insurance or mutual insurance for costs that exceed Social Security coverage. Such complementary insurance (complémentaire santé) is sometimes subscribed to by employers for the benefit of their employees, but workers can also insure on their own initiative. Regarding lost earnings, private insurance (régime de prévoyance) comple- 92 ments Social Security benefits in case of temporary incapacity or permanent invalidity. In case of temporary incapacity, daily allowances are complemented by private insurance benefits which generally allow the victim to receive a full salary while on sick leave. In case of permanent invalidity, pensions are established by reference to Social Security benefits. Such private insurance (régime de prévoyance) can also be subscribed to by employers or purchased directly by workers.
2.
Deductibility of benefits
When the victim benefits from additional coverage by private insurance 93 (complementary health insurance or incapacity/invalidity insurance) this additional compensation complements the benefits paid by Social Security. There is no deductibility of benefits, only a complementary interaction between Social Security and private institutions.
76
See nos 35–42 above.
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3.
Recourse of social welfare agencies, social health insurance, private health insurers, etc, against workers’ compensation institutions?
94 All compensation payers have a right of recourse based on subrogation against the person responsible for the accident. But there is no right of recourse against workers’ compensation institutions.
I.
Interaction with employers’ liability
1.
Availability of damages in addition to workers’ compensation benefits?
a) Full compensation granted by tort law principles 95 Under the AT-MP regime, victims receive lump sum compensation from Social Security. 96 By way of exception, victims may be awarded full compensation: ■
when the accident is a route accident (art L 455-1 CSS) or a workrelated accident which falls under the scope of application of the law on traffic accidents (art L 455-1-1 CSS).77 In such circumstances, the victim can introduce an action based on the regime of traffic accidents liability mentioned above. In such a case, tort law principles apply and the victim is fully compensated. The use of this exception is particularly frequent since traffic accidents represent half of all fatal workrelated accidents.78
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in case of wilful misconduct of the employer or co-employee: the victim may introduce an action against the author of the wilful misconduct to be awarded full compensation of her/his damage (either the employer or the co-employee);79
77
78 79
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This solution results from an extensive interpretation of art L 455-1-1 CSS by the Cour de cassation, see Morvan (fn 47) § 147. See, for example, Cass civ 2, 29 March 2006, JCP S 2006, 1429, comment by G Vachet; JCP E 2006, 2129, no 19, comment by D A B. Morvan (fn 47) § 148. For a presentation of the rules regulating the articulation between the compensation paid by the Social Security and the money paid by the co-author as a result of her/his condemnation, see nos 88–91 above.
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when responsibility for the accident is shared between the employer and a third party, the victim may sue the third party under the law of tort to be fully compensated of her/his damage (art L 454-1 CSS).80
b) Specific compensation schemes Victims of asbestos-related diseases are entitled to complementary com- 97 pensation paid by a relevant fund (see below). Victims of criminal offences may also obtain full compensation from a 98 specific fund, the Commission for the compensation of the victims of criminal offences (Commission d’indemnisation des victimes d’infraction, CIVI) (see below).
2.
Deductibility of benefits provided by workers’ compensation institutions from claim against employer (collateral source rule)
Since the Financing Law of the Social Security of 2007 (L no 2006-1640, 99 21 December 2006, modifying art 31 of L no 85-677, 5 July 1985), the rules regulating the deductibility of benefits provided by Workers’ Compensation Institutions have changed to provide a better protection of employees. Indeed, the previous case law facilitated the recourse of the Workers’ Compensation Institutions. Therefore, the money allocated to victims for the compensation of damage that is not covered by the Workers’ Compensation Institutions (loss of amenity, pain and suffering, etc) was used to pay back Workers’ Compensation Institutions. Since the Act of 2007, new rules govern the reimbursement of the Workers’ Compensation Institutions:81 ■
the reimbursement is exercised head of compensation by head of compensation. This means that Workers’ Compensation Institutions can only recover for the heads of compensation that they actually covered.
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the victim benefits from a priority: until he/she has not obtained all the money he/she is entitled to regarding her/his damage, the Workers’ Compensation Institutions cannot be reimbursed. The reimbursement
80
81
For a presentation of the rules regulating the articulation between the compensation paid by the social security and the money paid by the co-author as a result of her/his condemnation, see nos 111–112 below. See Morvan (fn 47) no 157.
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of the Workers’ Compensation Institutions is considered only once the combination of the Workers’ Compensation Institutions allowances and the compensation directly paid by the employer are equal to her/ his entire due compensation. 3.
Subrogation of workers’ compensation institutions into the claim of workers against employer
100 Workers’ Compensation Institutions are subrogated into the rights of workers against employer (art 30, Law no 85-677 on traffic accidents, 5 July 1985).82 The scope of this provision is broad. It covers the benefits paid by Social Security, but also those paid by private health insurance for the reimbursement of the costs of medical care, as well as the granting of complementary daily allowances or grants (assurance, mutuelle complémentaire, régime de prévoyance).
III. Employers’ Liability A.
Classification
101 Under the AT-MP regime, victims receive lump sum compensation from Social Security and are not allowed to file a suit against their employer in order to obtain full compensation based on any general regime of civil liability (art L 451-1 CSS).83 However, the law provides several exceptions. The victim or her/his assignees can claim additional compensation if the employer acted in an inexcusably negligent manner (faute inexcusable). They can also file a complaint in tort in certain specific circumstances: when the employer committed an intentional fault (faute intentionnelle), when the victim’s damage was caused by a third party and when the accident is a traffic accident. The victim can also decide to prosecute the employer in a criminal court. In case of inexcusable or intentional fault, the employer’s liability is based on contract, whereas the liability of a third party is based on general tort law. Finally, liability rules for traffic accidents correspond to a bespoke regime implemented in 1985.
82 83
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See Borghetto/Lafore/Ruellan (fn 71) § 1462 f. Cass soc 17 February 2010, no 08.44463: ‘Attendu que sous réserve des dispositions prévues aux articles L 452-1 à L 452-5, L 454-1, L 455-1-1 et L 455-2, aucune action en réparation des accidents du travail et maladies ne peut être exercée conformément au droit commun, par la victime et ses ayants droit’.
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1.
Inexcusable negligence (art L 452-1 Social Security Code, CSS)
The victim or her/his heirs are entitled to additional compensation if the 102 accident or occupational disease is due to the inexcusable negligence of the employer (or of an employee who works under the employer’s supervision). Originally, when such an inexcusable fault was committed, the victim was only entitled to an increase in the pension paid under the ATMP regime. Then the Law no 76-1106 of 6 December 1976 provided that the victim could also sue the employer directly before Social Security courts in order to obtain compensation for the losses that are not compensated through Social Security benefits: disfigurement, loss of amenity, physical and psychological pain and suffering, and the loss or diminution of the victim’s possibilities of promotion (art L 452-3 CSS). Since this list was interpreted by the Cour de cassation as being exhaustive, no other harm can be compensated under this rule. However, the Conseil Constitutionnel has recently gone the other way and ruled that victims are entitled to full compensation (see below). Besides, if the victim of an inexcusable fault was dismissed from her/his 103 previous position due to any disability resulting from the accident or occupational disease, he/she is entitled to a specific and additional compensation amount for this loss. It must be highlighted that the victim of a route accident (accident de trajet) 104 cannot file a claim against the employer based on the existence of an inexcusable negligence. For the Cour de cassation, when the victim drives her/his own car, he/she is not at the place of work and such circumstance excludes the existence of an inexcusable misconduct on the part of the employer. In a recent decision, the Cour de cassation rejected the claim of an employee who attributed the accident to exhaustion due to the fact that the employer did not apply the rules regarding the minimum daily rest.84 This solution is counter-balanced by the fact that victims of route accidents can obtain compensation under civil liability rules on traffic accidents (see below). Until the Law no 87-39 of 27 January 1987, employers could not insure 105 against the consequences of an inexcusable fault. This prohibition was abolished by the Law of 1987. Today employers can be insured against the consequences of any inexcusable fault committed by the employer or the employees working under the employer’s supervision (art L 452-4 al 3 CSS).
84
Cass civ 2, 8 July 2010, no 09-16180.
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106 Finally, it should be emphasised that the action based on the employer’s inexcusable negligence is ruled by the Social Security Code and brought before Social Security courts. Therefore, presenting this action, which is part of the AT-MP regime, as an aspect of the employer’s liability could be questionable. However, considering this action among civil liability schemes is justified since the Conseil Constitutionnel has decided that Social Security courts must assess compensation by applying the general principles of tortious liability (see below).
2.
Wilful misconduct (art L 452-5 CSS)
107 By exception to the principle of the exclusive nature of the Social Security’s compensation scheme, the victim of the employer’s wilful misconduct (or her/his assignees) can obtain full compensation before civil courts. Wilful misconduct is defined as a voluntary act committed with the intent to cause bodily harm. In such a case, the victim can obtain compensation for the part of the damage that was not covered by Social Security benefits (eg reimbursement of certain expenses of care, lost wages that were not covered by daily allowances, compensation for moral distress, pain and suffering, etc). Such action is based on the general principles of civil liability. 108 Indeed, if the suit is brought against the employer, it is usually based on contract law. But the victim may also bring an action against another employee who may be personally liable in tort for her/his wilful misconduct. In general, the employer is vicariously liable and the employee cannot be personally liable if he/she acted within her/his mandate (art 1384 al 5 C civ).85 However, the employee is personally liable and the employer is exonerated from liability when the employee acted outside her/his duties, without permission, for purposes unrelated to her/his mission.86 Also, if the employee’s intentional misconduct amounts to a
85
86
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Cass Ass plén 25 February 2000, Costedoat, Bull no 2, 3, Bulletin d’information de la Cour de cassation (BICC) no 512, 1, concl M Kessous, rapp Mme Ponroy; Revue de jurisprudence de droit des affaires (RJDA) 2000, 395, obs J-P Dorly; D 2000, jur, 673, note P Brun; JCP G 2000, II, 10 295, note M Billiau; JCP G 2000, éd G, I, 241, no 5, obs G Viney; Responsabilité civile et assurances (Resp civ et assur) 2000, chron no 11, obs H Groutel; Bull Joly 2000, no 146, note J-F Barbièri; Droit et patrimoine 2000, no 82, 107, obs F Chabas; Revue trimestrielle de droit civil (RTDC) 2000, 582, obs P Jourdain: ‘Attendu que n’engage pas sa responsabilité à l’égard des tiers le préposé qui agit sans excéder les limites de la mission qui lui a été impartie par son commettant’. See also, Cour de cassation, Chambre commerciale (Cass com) 12 October 1993, Bull IV no 338, 245. Cass Ass plén 10 June 1977, Bull no 3, 5; Cass Ass plén 17 June 1983, Bull no 8, 11; Cass Ass plén 15 November 1985, Bull no 9, 12; Cass Ass plén 19 May 1988, Bull no 5, 7.
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criminal offence, he/she is personally liable for it.87 In any case, claims for intentional misconduct are brought before civil courts, not Social Security courts. However, an intentional fault often results in criminal proceedings. In such case, the employee may obtain damages from the criminal court, which awards full compensation to the victim. In case of intentional fault, Social Security agencies and third party payers 109 can claim reimbursement of the sums paid to the victim (art L 452-5 al 2 CSS). This claim shall only concern the author of the accident her/ himself. Therefore, Social Security agencies cannot claim reimbursement from the employer when the latter is vicariously liable for her/his employee. Besides, Regional Security Agencies can also demand an additional contribution from the employer (art L 452-5 al 4 CSS). In principle, liability insurers do not cover the harm resulting from the 110 intentional fault of the insured (art L 113-1 al 2 C assur). However, the employer can purchase insurance against the consequences of any intentional fault committed by employees (art L 121-2 C assur).
3.
Liability of a third party (art L 454-1 CSS)
When the accident was caused by someone outside the company, the 111 victim or her/his assignees may bring an action in tort in order to obtain compensation for the part of the damage which is not covered by Social Security benefits. They are entitled to claim compensation from the third party for the entire damage even if the employer or one of her/his employees contributed to the occurrence of the accident.88 For their part, Social Security agencies, which are bound to provide social security benefits, are allowed to claim reimbursement from the responsible third party. The employer her/himself may also pursue an action against this third party for her/his own losses, for example if the employee’s entire wages were maintained by the employer during sick leave. It must be emphasised that if the accident happened at the workplace, it will 112 generally be classified as a work-related accident even if it was caused by an unknown third person When an unknown individual kills an employee at the latter’s workplace, it is a work accident89 unless the victim failed to
87 88 89
Cass Ass plén 14 December 2001, Cousin, Bull no 487, D 2002, 1230, note J Julien. Cass Ass plén 12 December 1988, no 85-17.473, RJS 2/89 no 193. Cass soc 15 June 1995, no 93-20688, RJS 8-9/95 no 944.
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follow his employer’s instructions not to be alone with the murderer90 or if the murder is only due to the political activities of the victim.91
4.
Traffic accident
113 The AT-MP scheme overlaps with the traffic accident regime in case of route accidents or traffic accidents which involve a vehicle driven by the employer or by a co-employee. In such cases, the specific rules created by the Traffic Accidents Law of 5 July 1985, which laid down a no-fault regime of civil liability, can be applied. In other words, the victim can bring an action based on civil liability rules and be fully compensated. 114 Route accidents are usually traffic accidents that may lead to actions based on traffic accidents rules. Therefore, the victim of a route accident can obtain compensation from the driver of the vehicle involved in the accident for everything that was not taken care of by Social Security benefits. 115 Some traffic accidents that are not route accidents can nevertheless be work-related and compensated as such. But they can also justify an action under the regime of traffic accidents mentioned above. Art L 455-1-1 Social Security Code provides that any worker who is the victim of a traffic accident (or her/his assignees) can bring an action based on the traffic accidents legislation if the accident occurred on a road open to public traffic and involved a vehicle driven by the employer, an employee or another person belonging to the same company as the victim (art L 455-1 CSS). The victim is entitled to compensation of the accident for the part of the damage not covered by Social Security benefits. 116 Since liability insurance is mandatory for vehicles, the victim’s claim is brought directly to the insurer of any vehicle involved in the accident. Social Security agencies and third party payers can also claim reimbursement from the insurer.
5.
Criminal offence
117 Articles 706-3 to 706-15 of the Code of Criminal Procedure (Code de procédure pénale, C pr pén) provide that any person suffering an injury which resulted
90 91
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Cass soc 3 January 1985, no 83-15263. Cass soc 1 July 1999, no 97-18990, RJS 8-9/99 no 1144.
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from a criminal offence can receive full compensation of her/his damage, except in certain specific exceptions (like exposure to asbestos) where specific schemes were created. If the victim was injured at work as a consequence of the employer’s recklessness, he/she can obtain compensation by filing a claim before the criminal courts as a civil party (constitution de partie civile) against the employer for unintentional manslaughter or involuntary harm to the integrity of the person (arts 221-6 and 222-19 Code pénal (Penal Code, C pén)).92 Indeed, criminal courts can award compensation to the victim under the action civile: the victim can initiate proceedings against the employer in the criminal courts and obtain damages directly from these courts. Such a procedure is advantageous for victims because they benefit from the evidence gathered by the penal judge. It should also be noted that under French law, corporations (personnes morales) can be criminally responsible. For these reasons, bringing civil actions before criminal courts is a widespread strategy, especially as victims can get full compensation based on tortious liability principles. Most of the time, employers are insured for the civil consequences of criminal convictions, though insurance for their own intentional misconduct is prohibited (art L 113-1 al 2 C assur). It should be highlighted that, before the Law of 10 July 2000, the criminal 118 court’s decision to reject the classification of the employer’s misconduct as a criminal offence had the effect of closing the way for civil proceedings. This solution resulted from the principle of the unity of criminal and civil faults, which implied the authority of res judicata by criminal courts over civil judges. In other words, there was no civil wrong if there was no criminal offence. For this reason, criminal judges tended to characterise the slightest negligence as a criminal wrong in order to compensate the victim. This led to heavy sentences being handed down for persons whose mens rea was relatively minor. Moreover, in actions for compensation accompanying criminal proceedings, the French courts also designated as causes acts which had only a tenuous relationship with the result. This problem was solved in the Law (no 2000-647) of 10 July 2000 (creating art 4-1 C pr pén) which provided a dissociation of criminal and civil wrongs. Today, the absence of a criminal conviction is no longer a barrier to suing for compensation in the civil courts. It is possible for a court to rule that an employer did not commit a criminal offence but that he committed a civil wrong, such as an inexcusable fault,93 for which com-
92
93
Atteintes involontaires à l’intégrité de la personne (arts 222-19 et 222-20 C pén), les atteintes involontaires à la vie (art 221-6 C pén), l’omission de porter secours à personne en danger (art 223-6 al 2 C pén). Cass soc 12 June 2001, Manutrans, D 2001, 3390.
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pensation must be granted. In addition, art 470-1 of the Code of Criminal Procedure provides that, if a court hears a criminal case of unintentional homicide or injury and pronounces an acquittal, the court may, nevertheless, provide compensation for the damage suffered by the victim. 119 Furthermore, the Law of 10 July 200094 laid down that, where the causal link is indirect, criminal liability of individuals was premised upon evidence of wilful or serious misconduct. Cases of indirect causation are defined by that provision as those where the defendant ‘has created or helped to create the situation that has resulted in an injury’ or has ‘failed to take measures to avoid it.’95 In the first case, the perpetrator is an ‘indirect’ wrongdoer while in the second he is a ‘mediate’ wrongdoer. In such cases, the defendant can be convicted only if he/she committed an intentional or grossly negligent misconduct, ie behaviour exposing people to a risk whose seriousness cannot be ignored by the defendant. In other words, in such circumstances, employers are criminally liable only if they committed a gross misconduct, for example by deliberately violating a special obligation of precaution or safety. 120 Finally, the Court of Cassation decided on 18 June 1997 that a worker can claim compensation before the Commission which awards compensation to the victims of criminal offences (Commission d’indemnisation des victimes d’infraction, CIVI). If the victim seeks compensation for a personal injury, any kind of criminal offence can justify compensation from the CIVI whereas when the victim claims compensation for damage to property, only specific offences can justify compensation from the CIVI (such as robbery, fraud, breach of trust, extortion or destruction, degradation or deterioration of property). Damage resulting from acts of terrorism, from traffic accidents and from hunting accidents is excluded from the scope of compensation by CIVI. The CIVI awards full compensation only in cases of serious harm if the victim died or suffered a
94
95
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Loi no 2000-647 du 10 juillet 2000 tendant à préciser la définition des délits nonintentionnels (aimed at precisely defining non-intentional offenses). See F le Gunehec, Aperçu rapide, JCP G 2000, 1587; Y Mayaud, Retour sur la culpabilité non intentionnelle en droit pénal…, JCP G 2000 chron, 603; J Pradel, De la véritable portée de la loi du 10 juillet 2000 sur la définition des délits non intentionnels, D 2000, no 29 Point de vue, p 5. P Mistretta, La responsabilité pénale médicale à l’aune de la loi du 10 juillet 2000, évolution ou révolution? JCP G 2002, I chron 149. D Commaret, La responsabilité pénale des décideurs en matière de délits non intentionnels depuis la loi du 10 juillet 2000, Gazette du Palais 10-11 septembre 2004, p 3; JP Cotte/D Guihal, La loi Fauchon, cinq ans de mise en oeuvre jurisprudentielle, JCP A 2006, 1528. G Notté, Bilan jurisprudentiel en droit de l’entreprise de la loi no 2000-647 du 10 juillet 2000 sur la définition des délits non intentionnels, JCP E 2006, 1527. Art 121-3 al 4 C pén.
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permanent incapacity or a working incapacity for more than a month. If these requirements are not met, the victim will be fully compensated only for specific crimes, like rape, sexual assault, traffic of human beings, or sexual abuse of minors. In all other cases, compensation is limited to E 4,116.96
B.
Elements of liability
1.
Liability of employers for their own acts or omissions
a) Inexcusable negligence As regards inexcusable negligence, the Cour de cassation used to interpret the 121 notion of inexcusable negligence very narrowly. The law had been fixed by the decision Veuve Villa of 1941,97 according to which an inexcusable fault is a fault of exceptional gravity, resulting from a wilful act or omission, from the awareness of danger which its author should have had and from the absence of any justifying cause.98 A few years ago, the Cour de cassation modified this interpretation in order to ensure better compensation for victims. Initiated in 2002 in asbestos cases,99 this new interpretation was extended to work-related accidents,100 then reaffirmed by a decision of the Plenary Assembly of 2005.101 Now the Cour de cassation judges that any employer is under a contractual obligation of safety (obligation de sécurité de résultat) towards her/his employees and that the occurrence of the accident or illness reveals the breach of this obligation. According to the Cour de cassation, such breach has the character of an inexcusable negligence if the employer knew or should have been aware of the danger to which employees were exposed and has not taken the necessary steps to preserve them.
. 97 Cass soc 11 April 2002, Bull civ V, no 127; D 2002, 2215, note Y Saint-Jours. 98 ‘La faute inexcusable doit s’entendre d’une faute d’une gravité exceptionnelle, dérivant d’un acte ou d’une omission volontaires, de la conscience du danger que devait en avoir son auteur, de l’absence de toute cause justificative’. 99 Cass soc 28 February 2002, nos 00-10.051, 99-18.389, 00-11.793, 99-21.255, 99-17.201 and no 00-13.172, RJS 5/02 no 618, D 2002, 2696 note X Prétot. 100 Cass soc 11 April 2002, Bull civ V, no 127; D 2002, 2215, note Y Saint-Jours. Cass civ 2, 6 April 2004, no 02-30.688; RJS 6/04 no 755. 101 Cass Ass plén 24 June 2005, no 03-30.038, RJS 10/05 no 1037, JCP éd E 2005, 1201, note P Morvan. 96
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The burden of proving this awareness of danger or the failure to take appropriate measures rests with the victim.102 122 The new definition of the inexcusable fault has recently been applied in cases of suicide related to work. For example, an employer was condemned for inexcusable negligence in a case where the employee had committed suicide at home. Indeed, the judge considered that the suicide could be attributed to the employer’s attitude.103 The employer must be aware of the possible consequences of her/his behaviour on the employee’s psychological state.104 Recently, on 17 December 2009, the Tribunal des affaires de sécurité sociale (TASS) of Nanterre condemned Renault for inexcusable fault because of the suicide of an engineer. However, on 19 November 2010, the TASS of Versailles rejected Renault’s liability in a similar case. 123 When the employer is accused of having committed an inexcusably negligent act, this fault must be in relation to the injury. It is immaterial whether this fault was the decisive cause of the accident: it needs only to be a necessary cause, irrespective of whether other negligent acts have contributed to the damage105 and, in particular, that the victim was reckless106 or negligent.107 Awareness of danger is one of the key elements of inexcusable negligence. This awareness of danger may arise, for example, from the employer’s knowledge that the employee’s qualification was not suited to the task or that the victim’s disease had been added to the tables of occupational diseases108 or even from the deterioration in labour rela-
102 Cass civ 2, 8 July 2004, no 02-30984, RJS 10.04 no 1092, 22 March 2005, no 03 20044, RJS 6/05 no 671. 103 Cass civ 2, 22 February 2007, Bull II, no 54. D 2007. Actualités Juridiques 800, obs A Fabre. Le fait que ‘l’équilibre psychologique de M X... avait été gravement compromis à la suite de la dégradation continue des relations de travail et du comportement de M. Y...’ caractérise ‘le fait que l’employeur avait ou aurait dû avoir conscience du danger auquel était exposé son salarié et qu’il n’a pas pris les mesures nécessaires pour l’en préserver’. See also: Cass civ 2, 22 February 2007, no 05-20730, D 2007, AJ 791. Y SaintJours, De l’obligation contractuelle de sécurité de résultat de l’employeur, D 2007, 3024. 104 ‘Le directeur de l’établissement soumettait les salariés à une pression continuelle, des reproches incessants, des ordres et contre-ordres dans l’intention de diviser l’équipe se traduisant, en ce qui concerne M.X..., par sa mise à l’écart, un mépris affiché à son égard, une absence de dialogue caractérisée par une communication par l’intermédiaire d’un tableau, et ayant entraîné un état très dépressif’. Cass soc 10 November 2009, Bull V, no 247. 105 Cass soc 31 October 2002, no 00-18359, RJS 1/03 no 86; Cass Ass plén 24 June 2005 (fn 37). 106 Cass civ 2, 12 May 2003, no 01-21071, RJS 8-9/03 no 1071. 107 Cass civ 2, 11 June 2009, no 08-15944. 108 Cass civ 2, 8 March 2005, no 02-30998, RJS 6/05 no 670.
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tions.109 Moreover, the criminal conviction of the employer for homicide or unintentional injury or violation of safety regulations establishes the employer’s awareness of danger and thus represents inexcusable negligence.110 However, if a criminal court decides that the employer committed no criminal misconduct, this does not prevent other courts from recognising the existence of an inexcusable fault.111
b) Wilful misconduct With respect to wilful misconduct, the characterisation of intentional 124 wrong (faute intentionnelle) is admitted only in limited circumstances. It is not enough to prove that the perpetrator of the accident deliberately performed the act that caused the accident, it is also necessary to establish the intention of its author to cause bodily harm, either to her/himself or to others. Thus carelessness, even very serious, cannot be considered as such as an intentional fault. The most common example of wilful misconduct is a brawl between employees. If it is established that an act of violence was deliberately committed with the intent to injure the victim,112 as opposed to the hypothesis of a game,113 then the classification as wilful misconduct may be upheld. Also, when an act is characterised as battery, which is a criminal offence, it is necessarily wilful misconduct.
c) Criminal liability Both the Labour Code (Code du travail, C trav) and the French Penal Code 125 contain offences that are applicable in labour relationships. Discriminatory acts are punished in the criminal courts (art 225-1 Penal Code, C pén; art L 1132-1 C trav), as well as sexual harassment (art 222-33 C pén), moral harassment (harcèlement moral, art 222-33-2 C pén; art 1155-2 C trav) or the submission to working conditions that are incompatible with human dignity (art 225-14 C pén). Moreover, the Penal Code penalises the damage to physical integrity (atteinte à l’intégrité physique). Unintentional manslaughter can lead to three years imprisonment and a fine of E 45,000 (art 221-6 al 1 C pén). For unintentional injuries, injuries that resulted in a working incapacity of more than three months lead to two years imprison109 Cass civ 2, 22 February 2007, no 05-13771, RJS 5/07 no 666. 110 Cass soc 8 April 1999, no 97-20059, RJS 6/99 no 859; Cass civ 2, 15 June 2004, no 0231118, RJS 04.12 no 1333. 111 Art 4 - 1 Code of Penal Procedure; Cass soc 12 July 2001, no 99-18375, RJS 10.01 no 1198, Cass civ 2, 16 September 2003, no 01-16715, RJS 03.11 no 1314. 112 Cass crim 21 January 1958, Bull crim 1958, no 75. 113 Cass soc 24 July 1974, Bull civ 1974, V, no 451.
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ment and a fine of E 30,000 (art 222-19, para 1 C pén), those resulting in an inability to work less or equal to three months lead to a E 1,500 fine (art R 625-2 C pén). In addition, the ‘evidently deliberate violation’ (violation manifestement délibérée) of an obligation of safety or care imposed by the law is an aggravating factor in all cases of unintentional offences. Furthermore, the Law no 2003-495 of 12 June 2003 specifically punishes such offences in cases where the wrongdoer drives a vehicle (arts 221-61, 222-19-1, 222-20-1 C pén). Finally, art 223-1 of the Penal Code punishes the fact of exposing others to an immediate risk of death or injury that is likely to cause mutilation or permanent disability by the ‘evidently deliberate violation’ of a specific duty of care or precaution imposed by the law.114 This offence leads to a one year imprisonment sentence and a fine of E 15,000.
2.
Liability of employers for the acts or omissions of their employees and others (the scope of vicarious liability; the effect of any ‘common employment’ exclusionary rule)
a) Inexcusable negligence 126 Inexcusable negligence can be committed by the employer or by any person who has replaced him in his task (art L 452-1 CSS), that is, any person who directs the work and exercises supervisory powers (for example, a foreman). However, this person may be deemed to have replaced the employer only if the inexcusable negligence was committed in the exercise of the leadership role that was entrusted to her/him.115
b) Wilful misconduct 127 In cases of wilful misconduct of an employee, the employer is vicariously liable if the employee’s acts were accomplished within the framework of her/his functions.116 In most cases, the employer is vicariously liable and 114 ‘le fait d’exposer autrui à un risque immédiat de mort ou de blessures de nature à entraîner une mutilation ou une infirmité permanente par la violation manifestement délibérée d’une obligation particulière de prudence ou de sécurité imposée par la loi ou le règlement’. 115 Cass soc 2 March 1988, no 86-14749. 116 Cass Ass plén 25 February 2000, Costedoat, Bull no 2, p 3, BICC, no 512, 1, concl M Kessous, rapp Mme Ponroy; RJDA 2000, 395, obs J-P Dorly; D 2000, jur, p 673, note P Brun; JCP 2000, éd G II, 10 295, note M Billiau; JCP 2000, éd G, I, 241, no 5, obs G Viney; Resp civ et assur 2000, chron no 11, obs H Groutel; Bull Joly 2000, no 146, note J-F Barbièri; Droit et patrimoine 2000, no 82, 107, obs F Chabas; RTDC 2000, 582, obs P Jourdain: ‘Attendu que n’engage pas sa responsabilité à l’égard des tiers le
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the employee cannot be civilly liable (art 1384 al 5 C civ). However, the employee is personally liable and the employer is exonerated from liability when the employee acted outside her/his mandate, without permission, for purposes unrelated to her/his tasks.117 In addition, if the employee’s intentional misconduct corresponds to a criminal offence, he/she is personally liable for it: in such case, the victim can obtain compensation from both the employer and the employee.118 It should be emphasised that Social Security agencies can only sue the 128 author of the accident. Therefore, Social Security cannot obtain reimbursement from the employer when the latter is vicariously liable. In other words, the employer’s vicarious liability can only result from a claim brought by the victim or her/his beneficiaries. Employers can be insured against any wilful misconduct of their employees.
c) Criminal liability Employers can delegate to an executive the authority over the employees 129 and the burden of ensuring the implementation of safety rules, provided that this executive has been formally vested with the authority, the competence and the resources necessary to ensure the implementation of safety regulatory measures. In such case, it is the delegate who is responsible for criminal offences (art L 4741-1 C trav).
3.
Relevance of health and safety legislation in establishing liability
Health and safety legislation are taken into account when assessing the 130 possible inexcusable negligence of the employer. They also play a significant role in the case of criminal proceedings. Indeed, the French Code du travail provides specific rules of hygiene and safety (for example: workers at a construction site must wear helmets). Employers who do not comply with such rules are criminally responsible. First, even if no accident occurred, the employer pays a fine if the labour inspector (inspecteur du travail) finds that safety rules are not complied with. In such case, the employer may also be criminally sentenced for endangering the lives of
préposé qui agit sans excéder les limites de la mission qui lui a été impartie par son commettant’. See also, Cass com 12 October 1993, Bull IV no 338, 245. 117 Cass Ass plén 10 June 1977, Bull no 3, 5; Cass Ass plén 17 June 1983, Bull no 8, 11; Cass Ass plén 15 November 1985, Bull no 9, 12; Cass Ass plén 19 May 1988, Bull no 5, 7. 118 Cass Ass plén 14 December 2001, Cousin, Bull no 487, D 2002, 1230, note J Julien.
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workers (art 223-1 of the Penal Code, see nos 117–120119 above). This is the case, for example, if the employer did not comply with safety regulations and made his employees work in hazardous facilities, despite the warning of the company Safety Commission.120 Second, if an accident occurred, the employer will be criminally responsible for unintentional homicide or unintentional injury (art 221-6, para 1, art 222-19 para 1 C pén, see no 107 above). Here, the ‘evidently deliberate violation’ (violation manifestement délibérée) of safety legislation is an aggravating factor. Finally, it must be repeated that employers can delegate to an official the burden of ensuring the implementation of safety rules, provided that this official has been formally vested with the authority, the competence and the resources necessary to ensure the implementation of safety regulatory measures. In such a case, it is this delegate who is criminally responsible for any breach of safety legislation (art L 4741-1 C trav).
4.
Overall a fault-based or strict liability?
131 In most cases, the employer’s liability is based on her/his fault and such a fault must be serious: the employer is liable only in cases of inexcusable, intentional or criminal fault. The only hypothesis where the employer may be ‘liable’ without any fault is the case of traffic accidents. When the employer’s vehicle is involved (impliqué) in a traffic accident, the victims can obtain compensation from the employer’s insurer.
5.
Causation
132 Under the AT-MP regime, the victim benefits from the presumption that the accident is related to work (see above). This is not the case under civil or criminal liability rules. A causal link must be established between the employer’s intentional or criminal fault and the victim’s injury. However, the requirement of causation is relaxed when criminal proceedings are based on the offence of endangering the lives of workers (art 223-1 of the
119 Art 223-1 of the Penal Code punishes the fact of exposing others to an immediate risk of death or injury that is likely to cause mutilation or permanent disability by the ‘evidently deliberate violation’ of a specific duty of care or precaution imposed by the law ‘le fait d’exposer autrui à un risque immédiat de mort ou de blessures de nature à entraîner une mutilation ou une infirmité permanente par la violation manifestement délibérée d’une obligation particulière de prudence ou de sécurité imposée par la loi ou le règlement’. 120 Cass crim 9 December 2008, no 08-80.788, Droit soc 2009, 162, note F Duquesne.
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Penal Code, see above). In such case, it is necessary to establish that the employer exposed her/his employees to ‘an immediate risk of death or injury that is likely to cause mutilation or permanent disability by the “evidently deliberate violation” of a specific duty of care or precaution imposed by the law’.121 For example, the Cour d’appel of Douai, on 6 March 2008, found Alstom Power Boilers guilty of the offence of endangerment of others, for having deliberately violated the provision of Decree no 96-98 of 7 February 1996 on the protection of workers against risks related to the inhalation of asbestos dust. Indeed, the employer had failed to conduct an assessment of the risk due to inhalation by workers of asbestos dust. When the victim’s claim is based on a traffic accident, the requirement of 133 causation is also relaxed. The victim needs only to establish that her/his injury is due to the traffic accident. However, it is not required to prove any causal link between the defendant’s acts and the injury: it is sufficient to prove that the defendant’s vehicle was involved, one way or another, in the accident.
6.
Effect of the victim’s contributory conduct
To begin with, it must be highlighted that any intentional fault com- 134 mitted by the victim prevents her/him from obtaining compensation based on the AT-MP regime (see above). In addition, when the employer behaved in an inexcusably negligent 135 manner, the victim’s additional pension can be reduced only when the victim has also behaved in an inexcusably negligent manner.122 The employee’s inexcusable negligence is defined as wilful misconduct of exceptional gravity, exposing its author to a danger he/she should have been aware of.123 This definition is stricter than the definition of the employer’s inexcusable negligence and is equivalent to the current definition of the inexcusable negligence of the victim of a traffic accident. Such a definition results in a quasi-immunity of the employee. Under general civil liability rules, the victim’s negligence is taken into 136 account by the courts and may result in a reduction, or even suppression, 121 Art 223-1 of the Penal Code ‘le fait d’exposer autrui à un risque immédiat de mort ou de blessures de nature à entraîner une mutilation ou une infirmité permanente par la violation manifestement délibérée d’une obligation particulière de prudence ou de sécurité imposée par la loi ou le règlement’. 122 Cass Ass plén 24 June 2005, no 03-30.038. 123 Une faute volontaire ‘d’une exceptionnelle gravité, exposant sans raison valable son auteur à un danger dont il aurait dû avoir conscience’ Civ 2, 8 July 2004.
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of the victim’s compensation. Assessing the consequences of the victim’s negligence falls within the discretion of trial or appeal judges.
C.
Scope of protection
1.
Inexcusable negligence on the part of the employer
137 The employer’s inexcusable negligence leads to an increase in the rent paid to the victim or her/his heirs (art L 452-2 CSS) even if this supplement cannot exceed certain limits. In particular, if the victim is deceased or suffers from a permanent disability rate of 100 %, the rent cannot exceed the amount of the victim’s annual salary. The rent has the same function as in the general case (see above). 138 In addition to the increase of pension, the victim can obtain compensation for other kinds of harm which are not recoverable under the general scheme (art L 452-3 CSS).124 These are: disfigurement, loss of amenity, physical and psychological pain and suffering, and the loss or diminution of the victim’s possibilities of promotion. The Cour de cassation decided that the list of compensable injuries provided by the Social Security Code is exhaustive.125 Therefore, certain kinds of losses cannot be compensated under this rule: improvement of home and/or vehicle necessitated by disability, loss of occupational earnings after the consolidation, costs of daily assistance by a third person. However, very recently, the Constitutional Council has ruled that victims of inexcusable faults should obtain full compensation and that this list cannot be interpreted as being ex-
124 Art L 452-3 CSS: ‘Indépendamment de la majoration de rente qu’elle reçoit en vertu de l’article précédent, la victime a le droit de demander à l’employeur devant la juridiction de sécurité sociale la réparation du préjudice causé par les souffrances physiques et morales par elle endurées, de ses préjudices esthétiques et d’agrément ainsi que celle du préjudice résultant de la perte ou de la diminution de ses possibilités de promotion professionnelle. Si la victime est atteinte d’un taux d’incapacité permanente de 100 %, il lui est alloué, en outre, une indemnité forfaitaire égale au montant du salaire minimum légal en vigueur à la date de consolidation. De même, en cas d’accident suivi de mort, les ayants droit de la victime mentionnés aux articles L 434-7 et suivants ainsi que les ascendants et descendants qui n’ont pas droit à une rente en vertu desdits articles, peuvent demander à l’employeur réparation du préjudice moral devant la juridiction précitée. La réparation de ces préjudices est versée directement aux bénéficiaires par la caisse qui en récupère le montant auprès de l’employeur.’ 125 Cass civ 2, 9 July 2009, no 08-11804 and 08-12113.
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haustive.126 Indeed, in its decision, the Constitutional Council decided that the AT-MP compensation scheme is constitutional while stating reservations about the interpretation of art L 452-3 CSS. The Council considers that any worker who is a victim of her/his employer’s inexcusably negligent conduct should be fully compensated127 and should, therefore, recover for all kind of harms, even those that are not mentioned in the Social Security Code. As this decision is immediately applicable, Social Security courts should apply this new interpretation from now on. Furthermore, art L 452-3 CSS provides that if the victim has a permanent 139 disability rate of 100 %, a lump sum compensation amount is awarded that corresponds to the legal minimum wage in force at the date of consolidation. This means that the victim is entitled to receive an amount that corresponds to the monthly minimum salary: since this amount is not a rent, it is paid only once. Besides, the heirs of the victim, his ascendants and descendants, whether or not entitled to an annuity may, in case of a fatal accident, ask the employer for compensation for their moral harm. They may also claim compensation for the moral harm endured by the victim.
2.
General civil liability
Under general civil liability rules, the fundamental principle is the full 140 compensation of the victim’s harm. The objective of compensation is to place the victim in the position he/she would have enjoyed if the accident had not occurred. In this context, any kind of harm is compensable. Regarding personal injuries, the victims’ compensable damage was ori- 141 ginally composed of two categories: ■
‘Personal injury’ which included loss of amenity (préjudice d’agrément), disfigurement (préjudice esthétique), pain and suffering, and moral harm
126 Decision no 2010-8 QPC of 18 June 2010, D 2010. 1634, 2011. 35, obs P Brun et O Gout, et 459, chron S Porchy-Simon; Revue de droit sanitaire et social (RDSS) 2011, 76, note S Brimo; Constitutions 2010, 413, obs C Radé; Cah Cons const 2010, 29, p 1; M Badel, Accidents du travail, maladies professionnelles: l’indemnisation soumise à la ‘question’. A propos de la décision no 2010-8 QPC du 18 juin, Droit ouvrier 2010, 639; H Groutel, Lutte armée contre l’article L 452-3 du code de la sécurité sociale, Resp civ et assur 2010, Etude 8; M Ledoux (propos recueillis par F Champeaux), La question prioritaire de constitutionnalité fossoyeuse de la loi de 1898?, IV: La semaine sociale Lamy 2010, no 1454, 11; G Vachet, Qu’en est-il de la conformité de la loi du 9 avril 1898 à la Constitution?, JCP S 2010, 1361. 127 ‘La loi a écarté certains préjudices de toute indemnisation. Or, dans un tel cas de faute inexcusable, et en l’absence de tout régime légal d’indemnisation, tout préjudice doit ouvrir droit à la victime d’en demander réparation à l’employeur’.
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‘Objective harm’ which included various heads of damage corresponding to the direct consequences of the victim’s physical injury. The principal item was the Incapacité permanente partielle (permanent partial disability, IPP). This ‘permanent partial disability’ was defined as the reduction of physical, intellectual or psychological potential resulting from any impairment to the physical integrity of a person. It mixed two different types of harm which are now two separate items under the new nomenclature: ‘professional impact’ and ‘functional impairment’.
142 In 2006, a group was formed under the supervision of M Dintilhac, President of the Second civil chamber of the Cour de cassation and produced a report proposing the new nomenclature now used by French courts. Although this report is not legally binding, the ‘nomenclature Dintilhac’ is now widely used since a circulaire of the French Ministry of Justice of 22 February 2007 recommended that French courts work with it. French courts now use a new nomenclature which lists items corresponding to the different heads of damage that may result from a personal injury.128 The nomenclature lists the different items under which judges can award compensation. The new classification distinguishes between financial and non-financial harm. Therefore, financial losses may be temporary (health costs, temporary loss of earnings, various costs) or permanent (future health costs, adapted housing, adapted vehicle, assistance by third person, loss of future occupational earnings, professional impact). The list also includes non-financial losses that may also be temporary (temporary functional impairment, pain and suffering, temporary disfigurement) and permanent (permanent functional impairment, loss of amenity, disfigurement, sexual damage, permanent exceptional harm) and even evolutionary (disease). The French nomenclature also provides specific items for indirect victims. Indeed, relatives are considered as victims if they suffer any harm related to the direct victim’s injury. They are called victimes par ricochet or victimes indirectes (indirect victims) and are entitled to claim damages from the defendant before both civil and criminal courts if they suffered a harm resulting from the victim’s injury. They can be compensated for financial losses (loss of earnings, funeral costs, various costs) or non-financial losses (mental distress). 143 The ‘nomenclature Dintilhac’ only concerns harm resulting from bodily injuries. It does not address the problem of compensating moral or psychological suffering in itself, though such harm is taken into account
128 J-P Dintilhac, Rapport du groupe de travail chargé d’élaborer une nomenclature des préjudices corporels, July 2005.
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by the AT-MP regime, for example in case of depression (see above). In any case, if the employee suffered moral harm as a result of the employer’s behaviour, for example because of sexual or moral harassment, he/she is entitled to compensation. Assessing the victim’s damage is within the lower judges’ sovereign discretion.
D.
Heads and levels of damages
1.
Inexcusable negligence of the employer
The employer’s inexcusable negligence leads to an increase in the award 144 granted to the victim or her/his heirs (art L 452-2 CSS). However, the supplement cannot exceed certain limits. The increase cannot have the effect of making the award exceed either the annual salary of the victim in case of total disability or death, or the compensation paid in a lump sum if the permanent disability rate is lower than 10 %, or the fraction of wages corresponding to the rate of disability in the case of permanent partial disability (40 % of salary in case of a disability rate of 40 %). The victim’s assignees are also entitled to an increase in the award even if the victim already benefited from such an increase. Here again, the increase cannot have the effect of making the award exceed the annual salary of the victim. In practice, the increase of the award corresponds to the victim’s disability rate. In addition to the increase of pension, the victim may file a suit against the 145 employer before the Social Security courts in order to obtain full compensation. Today, courts grant compensation for disfigurement and loss of amenity as well as physical and psychological pain and suffering and the loss or diminution of the victim’s possibilities of promotion (art L 452-3 CSS). The heirs of the victim, her/his ascendants and descendants, whether or 146 not entitled to an annuity may, in case of a fatal accident, ask the employer for compensation for their moral harm. They may also claim compensation for the moral harm endured by the victim.
2.
General civil liability
Even when the AT-MP regime is not applicable, medical expenses and loss 147 of earnings due to temporary disabilities are partially supported by Social Security. If the victim suffers from a permanent disability which prevents 251
Florence G’sell and Isabelle Veillard
her/him from working, he/she will also be partially compensated for loss of earnings and receive a pension based on her/his salary and type of disability. This pension may be increased by 40 % if assistance by a third party is necessary. When the victim suffers from a handicap, he/she is entitled to receive a specific allowance which was created in 2005 (loi du 11 février 2005). This allowance seeks to compensate the victim’s loss of autonomy and takes into account the need for assistance by a third party. Recipients of such aid must suffer from a handicap, that is to say an important disability which prevents them from executing an essential activity in life. In addition to Social Security benefits, the victim is entitled to full compensation. 148 Under the full compensation principle, the assessment of damage is, in principle, made on a case-by-case basis. This is called the individualisation principle. The idea of a national scale has always been rejected. Awarded amounts are not controlled by the Cour de cassation (or by the Conseil d’Etat) because they fall within the sovereign discretion of trial (or appeal) judges. However, courts have become accustomed to publishing reference documents which summarise their methodology and give a range of amounts. For example, five courts of appeal (Toulouse, Bordeaux, Agen, Limoges and Pau) published a common document which was drawn up on the basis of previous decisions of these courts.129 149 For example, pain and suffering and disfigurement are assessed on a scale from 0 to 7: (very minor (1/7) very significant (7/7). For the Cours d’appel d’Agen, Bordeaux, Limoge, Pau and Toulouse, pain and suffering and disfigurement are compensated as such: ■
Very minor (1/7) up to E 1,500
■
Minor (2/7) E 1,500 to E 3,000
■
Moderate (3/7) E 3,000 to E 6,000
■
Average (4/7) E 6,000 to E 10,000
■
Fairly significant (5/7) E 10,000 to E 25,000
■
Significant (6/7) E 20,000 to E 30,000
■
Very significant (7/7) E 30,000 and more.
150 In order to assess the victim’s physical damage, judges use the disability rate established by medical experts, which expresses the degree of impair-
129 Cours d’appel d’Agen, Bordeaux, Limoge, Pau, Toulouse, Référentiel indicatif régional d’indemnisation du dommage corporel, 2010.
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ment of the victim in general, for any act of everyday life, personal or occupational. This disability rate is used to assess the loss of working capacity by listing the functions required by the victim’s occupational position. However, it must be emphasised that judges are not bound to assess the victim’s impairment in terms of a disability rate even if, in practice, most courts ask experts to determine a rate. The following is an example of the way judges assess the item called ‘functional impairment’ which compensates the consequences of the injury to the victim’s physical functions. If the victim is 20 years old and suffers from an incapacity rate of 8 %, the value of the victim’s functional impairment is E 1,290. Then the victim is entitled to E 10,320 (8 × E 1,290) for the item called ‘functional impairment’. Rates of Courts of appeal of AGEN, ANGERS, BORDEAUX, LIMOGES, PAU, POITIERS et TOULOUSE established in January 2010. TAUX d’IPP
0–10 ans
11–20 ans
21–30 ans
31–40 ans
41–50 ans
1à 5%
E 1,200
E 1,100
E 1,000
E 950
E 900
6 à 10 %
E 1,400
E 1,290
E 1,180
E 1,120
E 1,050
11 à 15 %
E 1,600
E 1,480
E 1,360
E 1,290
E 1,200
16 à 20 %
E 1,800
E 1,670
E 1,540
E 1,460
E 1,350
21 à 25 %
E 2,000
E 1,860
E 1,720
E 1,630
E 1,500
26 à 30 %
E 2,200
E 2,050
E 1,900
E 1,800
E 1,650
31 à 35 %
E 2,400
E 2,240
E 2,080
E 1,970
E 1,800
36 à 40 %
E 2,600
E 2,430
E 2,260
E 2,140
E 1,950
41 à 45 %
E 2,800
E 2,620
E 2,440
E 2,310
E 2,100
46 à 50 %
E 3,000
E 2,810
E 2,620
E 2,480
E 2,250
51 à 55 %
E 3,200
E 3,000
E 2,800
E 2,650
E 2,400
56 à 60 %
E 3,400
E 3,190
E 2,980
E 2,820
E 2,550
61 à 65 %
E 3,600
E 3,380
E 3,160
E 2,990
E 2,700
66 à 70 %
E 3,800
E 3,570
E 3,340
E 3,160
E 2,850
71 à 75 %
E 4,000
E 3,760
E 3,520
E 3,300
E 3,000
76 à 80 %
E 4,200
E 3,950
E 3,700
E 3,500
E 3,150
81 à 85 %
E 4,400
E 4,140
E 3,880
E 3,670
E 3,300
86 à 90 %
E 4,600
E 4,330
E 4,060
E 3,840
E 3,450
91 à 95 %
E 4,800
E 4,520
E 4,240
E 4,010
E 3,600
96 % et plus
E 5,000
E 4,710
E 4,420
E 4,180
E 3,750
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TAUX d’IPP
> 80 ans
51–60 ans
61–70 ans
71–80 ans
1à 5%
E 850
E 800
E 750
E 700
6 à 10 %
E 975
E 900
E 825
E 740
11 à 15 %
E 1,100
E 1,000
E 900
E 780
16 à 20 %
E 1,275
E 1,100
E 975
E 820
21 à 25 %
E 1,350
E 1,200
E 1,050
E 860
26 à 30 %
E 1,475
E 1,300
E 1,125
E 900
31 à 35 %
E 1,600
E 1,400
E 1,200
E 940
36 à 40 %
E 1,725
E 1,500
E 1,275
E 980
41 à 45 %
E 1,850
E 1,600
E 1,350
E 1,020
46 à 50 %
E 1,975
E 1,700
E 1,425
E 1,060
51 à 55 %
E 2,100
E 1,800
E 1,500
E 1,100
56 à 60 %
E 2,250
E 1,900
E 1,575
E 1,140
61 à 65 %
E 2,350
E 2,000
E 1,650
E 1,180
66 à 70 %
E 2,475
E 2,100
E 1,725
E 1,220
71 à 75 %
E 2,600
E 2,200
E 1,800
E 1,260
76 à 80 %
E 2,725
E 2,300
E 1,875
E 1,300
81 à 85 %
E 2,850
E 2,400
E 1,950
E 1,340
86 à 90 %
E 2,975
E 2,500
E 2,025
E 1,380
91 à 95 %
E 3,100
E 2,600
E 2,100
E 1,420
151 Damages for loss of earnings represent the financial loss resulting from the fact that the victim is no longer capable of performing her/his work anymore. The item called ‘professional impact’ (incidence professionnelle) concerns the future consequences of the injury over the victim’s career. These items are assessed independently from other items such as ‘assistance by a third party’. E.
Administration of claims
1.
Inexcusable negligence
152 The action in recognition of the employer’s inexcusable negligence must be directed against the employer (arts L 431-2, L 452-4 CSS). In practice, Social Security initiates a conciliation procedure, at the request of the victim (or her/his heirs) seeking to reach an agreement with the employer 254
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about the existence of the inexcusable negligence and the amount of additional compensation. Failing agreement, the victim (or her/his heirs) or Social Security can bring the case before Social Security courts. The limitation period is two years from either the accident or the knowledge of a possible link between the disease and employment, or the cessation of the payment of a daily allowance, or cessation of work, or even recognition of the occupational nature of the illness or accident. The additional compensation is paid to the victim or beneficiaries by 153 Social Security. Social Security then recovers the costs from the employer (arts L 452-2, L 452-3, L 452-4 CSS). The increase in the pension is recovered through a supplementary contribution the rate and duration of which is determined in negotiations between Social Security and the employer: otherwise the matter is brought before the Social Security courts. For the other heads of damage, there is no specific text but it is generally considered that Social Security has a right of recourse against the employer based on civil liability principles. Employers can insure against the financial consequences of their inexcusable negligence. In this case, they may be charged an additional fee.
2.
Civil liability
Claims for damages that are based on the general civil liability rules are 154 examined either by civil courts (employer’s wilful misconduct, claims against a third party, traffic accident) or by criminal courts (criminal proceedings). In case of criminal offence, the claim is brought before criminal courts and 155 sometimes before the Commission which compensates the victims of criminal offences (CIVI). CIVIs are installed with each court of first instance. Appeals against CIVI’s decisions are brought before the Cour d’appel.
F.
Rights of recourse
1.
In case of employers’ liability
a) Against other employees or their liability insurers? When the employer is vicariously liable for the fault committed by an 156 employee and has compensated the victim, recourse is possible against the responsible employee. Originally, the employer had a right of recourse 255
Florence G’sell and Isabelle Veillard
against the employee based on subrogation for the full amount granted to the victim. However this right of action has not been widely used. Indeed, most of the time it is the employer’s insurer who pays the compensation to the victim. However, the Code of insurance (art L 121-12 para 3 C assur) prohibits the employer’s insurer from taking direct action against the employee, unless the employee committed an intentional fault (malice, malveillance). However, if the employee is personally insured for her/his own civil liability (which is unusual), the employer’s insurer is free to act against the employee’s insurer for any kind of fault. 157 This state of the law was affected since the Cour de cassation decided that the employee shall not be personally liable when he/she acts within the limits of her/his tasks.130 In such case, the employer’s recourse cannot be based on subrogation, since the victim had no action against the employee who acted within the limits of her/his mandate.131 Subrogation is possible only in circumstances where the employee exceeded the limits of her/his tasks (see above). In all other cases, the employer’s recourse must be based on the labour contract and comply with labour law rules. Under labour law, the employer has a right of recourse against the employee only if the employee acted with gross negligence (faute lourde).132 The recourse must be brought before labour courts (the Conseil des Prud’hommes).
b) Against third parties or their liability insurers? 158 When the employer compensated the victim while a third party contributed to the occurrence of the accident, the employer should have a right of recourse against the third party based on subrogation. Thus it is possible for the employer to obtain compensation from the third party (or the third party’s liability insurer) if the requirements for civil liability are met. In such case, it is for the judge to assess the final contribution of each party by reference to everyone’s responsibility in the occurrence of the accident. Although the employer’s recourse is natural in case of traffic accidents, it is unlikely that such recourse is of interest when the employer committed an inexcusable or intentional fault. Indeed, in such cases, the third party’s contribution to the accident will generally be considered as negligible.
130 Cass Ass plén 25 February 2000, Costedoat, Bull no 2, 3 (see fn 85). 131 Cass civ 2, 20 December 2007, no 07-13.403, Bull civ II, no 274; Resp civ et assur 2008, no 50, note H Groutel; D 2008, 648, obs Sommer et Nicoletis. 132 Cass soc 16 January 2007, no 06-40.954, Resp civ et assur 2007, no 109; Cass soc 25 October 2005, Bull civ V, no 299.
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2.
In case of a third party’s liability
If a third party contributed to the occurrence of the accident, the victim 159 can obtain full compensation from this third party. Such compensation is based on general civil liability rules. Therefore, the requirements for civil liability must be met. When a third party is civilly liable for the accident, Social Security agencies are also allowed to sue this third party in order to be reimbursed for amounts paid to the victim. This recourse is based on subrogation. Of course, the third party’s civil liability insurer covers everything. When a third party has compensated the victim, the question arises whether 160 this third party has a right of recourse against the employer. Indeed, under subrogation rules, the third party cannot have more rights than the victim her/himself (art 1251 C civ). Therefore, the third party has a right of recourse in tort only in the case where the employer committed an intentional fault133 or if the employer’s vehicle was involved in a traffic accident.
G.
Interaction with social welfare systems and private insurance
a) Deductibility of benefits received by from social welfare agencies? When the victim decides to sue the employer or a third party in order to 161 obtain full compensation under tort law, this compensation is assessed by reference to the nomenclature Dintilhac. It is difficult to determine the extent to which such assessment integrates losses covered by Social Security benefits. This issue is nevertheless fundamental since Social Security agencies always bring an action against any liable person in order to obtain reimbursement for the benefits awarded to the victim. In principle, the amounts awarded to third-party payers cannot reduce the amount awarded to the victim insofar as such amount compensates the victim’s non-pecuniary harm, such as loss of amenity, pain and suffering, disfigurement, etc. Nevertheless, this principle has not been followed by recent case law. In practice, the damages awarded to the victim are often reduced in order to reimburse third-party payers. Some decisions have allowed third-party payers to recover amounts which compensated personal harm. Indeed, the Cour de cassation has recently decided that the annuities paid by Social Security for work-related accidents covered both occupational consequences of the accident and personal aspects of a permanent disability.
133 Cass Ass plén 31 Octobre 1991, nos 88-17449, 89-11514, 88-19689; Bull no 6; JCP 1992, G, no 21800, note Y Saint-Jours.
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Therefore, damages awarded to the victim for non-pecuniary harm may be reduced in order to reimburse Social Security agencies. 162 Since this case law generated much criticism, a recent reform introduced an obligation for third-party payers to sue only for harms that they actually compensated. The Law of Social Security Funding for 2007134 provided that the right of recourse of third-party payers is exercised item by item, only for harm actually compensated by third-party payers. In other words, third-party payers cannot be reimbursed for heads of damage that they did not actually compensate (for example, pain and suffering). Moreover, the victim has a preferential right over third-party payers as long as he/she has not been fully compensated: he/she benefits from a right of priority if the third party introduces an action against the perpetrator of the accident. This problem is still acute in French case law.
b) Recourse of social welfare agencies and private insurers against the employer 163 When the employer committed an inexcusable fault, the victim is awarded an additional pension paid directly by Social Security to compensate the injury (art L 452-2 CSS). Social Security agencies cannot introduce an action against the employer to claim reimbursement for this additional compensation. However, a supplementary contribution will be imposed on the employer through which the social security retrieves the amount of the additional compensation paid to the victim. 164 When the employer or an employee committed an intentional fault, Social Security agencies and compensation institutions have a right of recourse against the employer for reimbursement of the sums paid to the victim (art L 452-5 al 2 CSS). In principle, the consequences of an intentional fault cannot be covered by liability insurance (art L 113-1 al 2 C assur). However, the employer can purchase insurance against the consequences of any intentional fault committed by employees (art L 121-2 C assur). 165 When the employer’s vehicle is involved in a traffic accident, Social Welfare agencies can bring an action based on traffic accidents rules against the employer’s insurer.
134 Law no 2006-1640, 21 December 2006, modifying art 31 of the Law no 85-677 and art L 376-1 CSS.
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H.
Insurance
Insurance for work-related accidents and occupational diseases is provided 166 by Social Security. This welfare insurance provided by Social Security is mandatory. In addition, liability insurance is mandatory for traffic accidents: since 1985, any owner of a vehicle must be insured against the consequences in tort of a traffic accident. For the rest, liability insurance is not mandatory, but employers are usually insured. When the employer is criminally liable, the civil consequences of the employer’s conviction are covered by liability insurance while the criminal consequences (fine) cannot be supported by insurance. It should be highlighted that companies usually purchase specific liability insurance cover for executives (mandataires sociaux) in order to cover the possible consequences of their responsibility. Other cases correspond to the hypothesis of the employer’s intentional fault. Yet liability insurance is excluded for intentional faults committed by the employer (art L 113-1 al 2 C assur), though it is now possible to insure against the consequences of any intentional fault committed by employees (art L 121-2 C assur).
IV. Evaluation and Conclusions A.
Compensation
The inability of workers to seek redress in court to supplement the 167 compensation provided by the AT-MP regime, except in case of gross negligence, is being increasingly challenged. Indeed, general civil liability rules offer to victims the possibility to claim for full compensation of personal injuries. This compensation is called ‘full’ because it aims to cover not only the loss of earnings, but also the loss of chance in relation to career advancement, pain and suffering, disfigurement, loss of amenity, moral and legal costs. On the contrary, in the AT-MP regime, compensation is partial and fixed. It aims to compensate the loss of gain, not the non-pecuniary damage (‘extra-patrimonial’). Finally, while the workers’ compensation scheme was originally created to provide a better protection to workers, the law of torts is today often more favourable.135
135 See Borghetto/Lafore/Ruellan (fn 71) § 860 ff, § 866: ‘D’une certaine façon, le droit de la responsabilité civile a “rattrapé” et dépassé le droit des accidents du travail, de sorte que les victimes de ces accidents (ou leurs ayants droit) peuvent être pénalisées par rapport aux victimes d’accident de droit commun (ou leurs ayants droit)’.
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168 Nevertheless, workers enjoy various advantages in comparison to the situation of those who can only act on the basis of the general civil liability regime. Not only does the victim’s own negligence have no effect on the awarded compensation, but also the victim receives compensation automatically and quickly and is exempted from having to file a suit. Moreover, it is generally said that the scale used to assess permanent disability under the AT-MP regime is considerably more favourable than that used in the civil liability regime, even if the pension paid under civil liability may be supplemented by a more generous assessment of other items. 169 As a whole, the overall system is not satisfactory mostly because of its complexity. It is a two-tiered system in which certain victims can get full compensation whereas other victims have limited rights.
B.
Prevention
170 Prevention is, with compensation, the essential mission of Social Security. Since 1946, prevention has been part of the main objectives, not only for ethical reasons but also because of economic concerns, insofar as effective prevention leads to a decrease in costs. The law defines preventive actions which may be carried out by Social Security agencies: information, training, counselling, studies and research, inspections of employers. The Direction of occupational risks of the CNAMTS (Caisse nationale d’assurance maladie des travailleurs salariés) is in charge of implementing the prevention measures decided by the Commission of work-related accidents and occupational diseases (Commission des accidents du travail et des maladies professionnelles). Moreover, the INRS (Institut national de la recherche scientifique, National Institute for Research and Security), which is part of Social Security, also works for the prevention of occupational hazards. Finally, the ‘Eurogip’ works on the European aspects of occupational hazards. 171 In addition to safety rules provided by labour law, specific rules may be issued by Social Security agencies. Regional agencies may ask a specific employer to take justified prevention measures or can adopt general provisions applying to all employers who do a certain activity or use certain equipment. Such regional rules may be extended to the whole country at the request of the National Social Security Agency. Any breach of such provisions is punishable by a fine, which is applied as many times as offences identified or as there are employees of the firm involved in the offence (art R 471-1 CSS).
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172
Regional Social Security agencies may award: ■
Rewards to workers, supervisors and business leaders for prevention initiatives;
■
Loans at reduced rates to companies to facilitate the implementation of new work organisations aimed at ensuring better protection of employees;
■
Advances or grants to employers conducting exercises in prevention;
■
Advances to companies that subscribe to an agreement establishing a programme of prevention. Such advances can be acquired according to the results obtained.
This system of advances is limited to companies employing fewer than 300 employees and meeting their social obligations. Finally, the reform of the Social Security financing in 2010 was designed 173 to promote prevention. The Law no 2009-1646 of 24 December 2009 introduced a bonus-malus system. In January 2010, Cnamts posted a dossier outlining the future reform. The goal is to echo the financial impact of accidents and occupational diseases in the calculation of the contribution rate of firms. The reform concerns the three current tariffs (collective, mixed and individual). The reform was implemented by a decree of 5 July 2010.
C.
Overall costs
Income Statement (compte de résultat) of the AT-MP regime in millions of euros: CHARGES
2008
2009
I – Prestations sociales
7,473
7,693
Prestations d’incapacité temporaire
3,303
3,501
Prestations d’incapacité permanente
3,957
4,002
212
191
2,223
2,549
Compensations
552
548
Transferts
459
759
dont: Contribution du FNAT au FNAM
410
710
1,212
1,242
Autres prestations II – Transferts, subventions et contributions
Autres charges techniques
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CHARGES
2008
2009
dont: FCAATA, FIVA
1,165
1,195
III – Diverses charges techniques
189
154
IV – Dotations aux provisions
358
469
18
11
Charges de personnel
621
643
Autres charges de gestion courante
184
197
11,068
11,722
2008
2009
10,427
10,159
II – TRANSFERTS ET CONTRIBUTIONS
65
54
III – DIVERS PRODUITS TECHNIQUES
466
19
dont: Recours contre tiers
416
380
V – Charges financières
TOTAL CHARGES PRODUITS I – COTISATIONS, IMPOTS ET PRODUITS AFFECTES
IV – Reprises sur provisions TOTAL PRODUITS RESULTATS NET
D.
328
338
11,309
11,009
241
–713
Interaction between workers’ compensation and private law
174 Since private law is now often more favourable than the general workers’ compensation scheme, it becomes a significant pole of attraction.136 Thus, specific compensation pathways, ensuring a better protection than the workers’ compensation scheme, have been developed and are now competing with the general scheme of workers’ compensation. This is particularly true of the traffic accident scheme as well as of the special scheme for the compensation of the victims of criminal offences. The limits of the general workers’ compensation scheme have also recently resulted in the creation of funds dedicated to the compensation of new hazards leading to mass damage (asbestosis, blood contamination). 175 The inability of workers to seek redress in court to supplement the compensation of the AT-MP regime, except in case of gross negligence, is being increasingly challenged. Today, compensation for personal injuries has been greatly facilitated over the last century under the general civil
136 See Borghetto/Lafore/Ruellan (fn 71) § 864.
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liability regime. French courts have established presumptions of fault the effect of which is to reverse the burden of evidence that is shifted to the wrongdoer. This solution is very widely used by the courts, particularly in the field of contractual obligations of security (obligations de sécurité). Meanwhile, the courts have created no-fault liability based on art 1384 al 1 C civ, referred to as liability for the ‘actions of things.’137 Although this article was originally intended merely as a preface to the following provisions of the Code, French courts have reinterpreted it so as to impose liability for the actions of things within one’s custody which have played a role in the occurrence of the harm. In the last decades, the courts have significantly expanded the scope of this liability, especially in the case of personal injuries. Thus the special regime applying to work-related accidents – in particular the presumption that the accident is attributable to work – no longer appears as an exception made for the benefit of workers. In many cases, a victim who acts on the basis of the Civil Code will not have to prove the fault of the tortfeasor and will therefore benefit from evidence rules as favourable as those provided by the AT-MP regime. Moreover, private law offers to the victims the possibility to claim full 176 compensation of personal injuries. This principle is reiterated in the resolution of the Council of Europe concerning compensation for bodily injuries.138 This compensation is called ‘full’ because it aims to cover not only the loss of earnings, but also the loss of chance of career advancement, pain (pain and suffering), disfigurement, loss of amenity, moral and legal costs. However, very recently, the Constitutional Council has decided that the AT-MP compensation scheme is constitutional.139 In other words, the fact that workers do not receive full compensation is not considered to be a violation of the principle of equality.
E.
Plans for reform
Studies have been undertaken to review the conditions of compensation 177 under the AT-MP regime. They have resulted in the publication of two reports: Masse Report (2001) and Laroque Report (2004). The Masse Report concludes with an inevitable evolution towards a regime of full
137 ‘Responsabilité du fait des choses.’ Art 1384 al 1 C civ provides that ‘one is liable not only for the harm which one causes by one’s own action but also for that which is caused by the action of persons for whom one is responsible, or of things which one has in one’s keeping’. 138 Resolution of 1975 art 1. 139 Decision no 2010-8 QPC of 18 June 2010.
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compensation. The Laroque Report examines the conditions and consequences for Social Security of the transition to a system of full compensation. It proposes a system of social insurance that would grant full compensation to victims.
F.
Overall quality of each system independently and in combination
178 The AT-MP regime looks satisfactory from the prevention point of view (see above). However, the compensation objective is not met, since workers cannot obtain full compensation under the AT-MP regime. If workers want to obtain full compensation, they must sue their employer in court for inexcusable, intentional or criminal fault. Indeed, courts were led to expand significantly the concept of ‘inexcusable fault’ in order to award satisfying compensation to victims. This system is not only complicated but generates administrative and litigation costs.
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Employers’ Liability and Workers’ Compensation: Germany Raimund Waltermann
I.
Introduction
A.
Basic system of compensation and liability
1.
History and expansions
Introduced by Bismarck’s social insurance legislation in 1884, there is a 1 public occupational accident insurance system in Germany covering injuries caused by occupational accidents and certain occupational diseases.1 Since then the German statutory occupational accident insurance scheme aims to cover the risk that the material subsistence is endangered or destroyed in case of an employment-related occupational accident or disease. However, today this model of statutory accident insurance reaches beyond 2 the scope of employment; over the years, numerous additional cases not related to employment have been integrated into the model which was originally designed only for statutory occupational accident insurance. By act of law, for example, children attending day care centres, pupils attending schools and students during their studies at universities are insured (§ 2 subsec 1 no 8 a–c Sozialgesetzbuch (Social Code, SGB) VII) as are persons, who provide aid in situations of accidents (§ 2 subsec 1 no 13 a SGB VII). Although these cases are essentially ones of social reparation, they follow the model of traditional occupational accident insurance.
1 In principle W Gitter, Schadensausgleich im Arbeitsunfallrecht (1969).
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2.
Insurance and liability
3 Statutory accident insurance strives for two goals: to provide coverage by efficient and prevention-orientated insurance and, connected with this, to exempt an entrepreneur from liability to which he is subject by civil law. The exemption from liability does not only refer to entrepreneurs but also to further persons, especially to fellow workers. To the extent of the exemption, the civil law of damages is superseded.
B.
Interaction with other institutions
4 If an occupational accident occurs, the statutory accident insurance covers essentially the same risks as the statutory health insurance, which is also organised under public law. Thereby, the benefits provided by the statutory accident insurance are slightly more favourable for the insured persons. This is true both for the benefits relating to the restoration of accidentrelated damage (§§ 26–44 SGB VII) as well as for cash benefits which are paid following accident-related diseases, especially in the case of incapacity for work (§§ 45–52 SGB VII). Furthermore, the statutory accident insurance includes reparation benefits in the case of residual damages, especially pensions (§§ 56–62 SGB VII) and benefits for surviving dependants (§§ 63– 71 SGB VII). In principle, these pension benefits can be claimed in addition to pensions from the statutory pension insurance. If the total of both pensions exceeds a maximum amount of generally 70 % of the average monthly income (in the case of slightly injured persons 35 %),2 the pension from the statutory pension insurance is not paid out to that extent. § 93 SGB VI regulates the matters of detail, which are quite complicated concerning specific questions.
C.
Empirical evidence
5 In 2008 approx 38 million employees were insured with the statutory accident insurance, although a number of persons were multiply insured
2 The detailed calculation is carried out with the help of the so called Jahresarbeitsverdienst, the calculation basis for monetary benefits of statutory accident insurance. The Jahresarbeitsverdienst is calculated according to the insured person’s total annual earned wages and income pursuant to § 82 subsec 1 sent 1 SGB VII. In greater detail R Waltermann, Sozialrecht (9th edn 2011) no 303.
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(eg an employee who undertakes a secondary employment).3 The accident insurance institutions spent about E 8.7 billion on compensation and about E 0.9 billion on prevention.4 The German legal system does not know a specific institution of employ- 6 ers’ liability. Therefore there is no reliable data regarding employees’ claims against their employers. But it is obvious that – due to the exemption from liability for personal injuries – the amount of these claims can be assumed to be extremely small in proportion to the benefits of the statutory accident insurance.
II.
Workers’ Compensation5
A.
Scope of cover
The existence of a Beschäftigungsverhältnis pursuant to § 7 SGB IV is the 7 prerequisite for employees’ insurance protection under the statutory accident insurance. This notion essentially corresponds with the notion of an employment relationship. Therefore, those persons who are employed on the basis of an employment contract are covered. Under German law, the distinction between dependent occupation and self-employment is of decisive importance for the entire social security law and defining this distinction an important task for the respective courts. The employer’s right to give instructions is the crucial point both for the employment relationship and the Beschäftigungsverhältnis under social law.6 In case of an event leading to reparation benefits, the benefits are provided 8 without regard to the insured person’s fault (cf § 7 subsec 2 SGB VII).7 It
3 Geschäfts- und Rechnungsergebnisse der gewerblichen Berufsgenossenschaften und der Unfallversicherungsträger der öffentlichen Hand 2008 [Annual Report Deutsche Gesetzliche Unfallversicherung, DGUV] p 10; in subsequent footnotes: Geschäftsbericht DGUV 2008. 4 Geschäftsbericht DGUV 2008, 52 f. 5 Due to the differences between the British and American workers’ compensation system and the German system dealing with employment-related injuries and diseases, this report does not use the term ‘workers’ compensation’ and uses ‘statutory accident insurance’ instead in order to prevent misconceptions (except from fixed headings). 6 Cf representatively Bundessozialgericht (Federal Social Court, BSG) 27 October 2009 B 2 U 26/08 R, Die Sozialgerichtsbarkeit (SGb) 2010, 29; on comparative labour law: R Rebhahn, Der Arbeitnehmerbegriff in vergleichender Perspektive, Recht der Arbeit (RdA) 2009, 154. 7 BSG 4 June 2002, B 2 U 11/01 R, SozR (Sozialrecht, Loseblattausgabe der Rechtsprechung des Bundessozialgerichts) 3-2700 § 8 no 10; BSG 29 April 1982, 2 RU 10/81, SozR 2200 § 548 no 60.
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does not matter if contributions have actually been paid to the insurance,8 so that especially even ostensible self-employed persons (persons who are in fact dependent employees) and illicit workers are insured (with the opportunity for recourse for the statutory accident institutions pursuant to § 110 subsec 1a sent 1 SGB VII). Neither waiting periods nor the requirement of completed periods of insurance have to be considered.
B.
Compensation trigger
1.
Accidents
9 The most important event in practice that triggers compensation is the occupational accident. According to § 8 subsec 1 sent 1 SGB VII, occupational accidents are accidents which insured persons have as a result of an activity that establishes insurance cover. The term ‘occupational accident’ essentially corresponds with the criteria commonly used in other legal systems in order to regulate benefits from occupational accident insurance. 10 Since 1925 in Germany a commuting accident has been classified as an occupational accident as well (cf § 8 subsec 2 SGB VII). Insurance covers the journey – directly relevant to the insured activity – to and from the place of activity. It includes detours that are made if insured persons put their children in someone’s care because of their occupation, or take other employed persons, especially fellow workers, to the workplace with them by car.
2.
Diseases
11 Furthermore, since 1925 statutory accident insurance also covers occupational diseases (§ 9 subsec 1 sent 1 SGB VII). In Germany the problem of distinguishing diseases caused by an insured activity from diseases caused by other reasons is approached by compiling a list. According to § 9 subsec 1 sent 1 SGB VII, only those diseases classified as occupational diseases by legal decree are considered to be occupational diseases.
8 Cf R Holtstraeter in: R Kreikebohm/W Spellbrink/R Waltermann, Kommentar zum Sozialrecht (2nd edn 2011) § 2 SGB VII no 2.
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Germany
C.
Scope of protection
Entitlements to benefits require an occupational accident or an occupa- 12 tional disease.9
1.
Occupational accident
The requirements named in § 8 subsec 1 SGB VII are fulfilled if an 13 accident, ie a sudden event that constitutes an external impact on the human body, leads to health injury or death. Thereby, only accidents suffered by those persons named in § 2 SGB VII can be considered as occupational accidents in terms of German accident insurance law. Especially employees fall into the category of insured persons. The insured persons are only covered by insurance protection if the 14 accident occurs within the scope of an insured activity; the accident must not be related to a private activity. This is not meant in the sense of a causal connection, but as a matter of application of law; the question is whether insurance coverage exists or not. The insurance only covers those activities which happen in the course of an insured activity. In particular the jurisprudence of the Bundessozialgericht (BSG) demands an ‘inner’ or ‘factual’ connection between the employment and the activity which leads to the accident. This connection must be determined by evaluation.10 The purpose of the insured person’s activity plays a vital role for the determination.11 If this ‘inner connection’ between the accident and the insured activity is 15 given, the insured activity additionally must be causal to the accident (haftungsbegründende Kausalität). Furthermore, a causal connection is required between the accidental event and the personal injury upon which the claim for insurance benefits is based (haftungsausfüllende Kausalität).
9 Summarising description at S Muckel/M Ogorek, Sozialrecht (4th edn 2011) § 10 nos 35– 66; Waltermann (fn 2) nos 272–294. 10 BSG 20 January 1987, 2 RU 27/86, Entscheidungen des Bundessozialgerichts (BSGE) 61, 127 (128). Thus, the BSG recently considered the activity of taking a meal – usually a private and therefore non-insured activity – as an insured activity, for the meal was organised as a part of a convention the insured person practically had to participate in, cf BSG 30 January 2007, B 2 U 8/06 R, Neue Zeitschrift für Arbeitsrecht (NZA) 2007, 1150. 11 Summarising Kommentar zum Sozialrecht/Holtstraeter (fn 8) § 8 SGB VII nos 8–17; J Schmitt, SGB VII Gesetzliche Unfallversicherung (4th edn 2009) § 8 SGB VII nos 15–104.
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2.
Occupational disease
16 An occupational disease is not characterised by a temporary event but is rather due to a permanent impact. As in other legal systems there are practical difficulties in convincingly distinguishing between diseases caused by insured activities and those caused due to other reasons.12
3.
Insured ‘categories of damage’
17 Statutory accident insurance covers all personal injuries caused by an accidental event. As a general rule neither dignitary injuries nor damage arising as a result of sexual harassment are considered an accidental event. Insofar as there is no occupational accident and if treatment is necessary or if income is lost because of illness, these detriments may lead to benefits from statutory health insurance. Insofar as there is no insurance coverage in these cases, there can also be no exemption from liability. Compensation for damage then follows according to civil law rules. 18 Benefits from statutory accident insurance also do not cover damage to property or pure economic losses. Compensation for damage in these cases also follows according to civil law rules.
D.
Heads and levels of benefit
19 In case of personal injuries the insured person may claim the reimbursement of expenses which were incurred for medical care, rehabilitation, care service as well as benefits for lost earnings (Verletztengeld, which amounts, according to §§ 45–52 SGB VII, to 80 % of the employee’s wage). In these cases one is not entitled to benefits from the statutory health insurance (§ 11 subsec 5 SGB V). It has to be considered that, in cases of incapacity for work, the insured persons have a labour law-related entitlement to a continued payment of their wages (Entgeltfortzahlung) in the amount of 100 % (§ 4 Entgeltfortzahlungsgesetz (Continued Payment of Wages Act, EFZG)) for the first six weeks of sickness (§ 3 EFZG). This is followed by the Verletztengeld (injury benefits) of statutory accident insurance or the Krankengeld (sickness benefits, similar to the Verletztengeld, but
12
270
Cf A Kranig, Vergleichende Studien zu Berufskrankheiten in Europa, Die Berufsgenossenschaft (BG) 2005, 760; id, Japanisch-Deutscher Austausch zur Unfallversicherung, BG 2007, 143.
Germany
only amounting to 70 % of the employee’s wage, § 47 subsec 1 sent 1 SGB V) of statutory health insurance. The statutory accident insurance follows the principle of benefits in kind 20 for medical care just like statutory health insurance. Benefits in kind in German social insurance law means that insured persons obtain benefits, to which they are entitled, directly in kind. Thus, the bodies of the statutory accident insurance are obliged to provide benefits in kind. For this purpose they conclude contracts with the Leistungserbringer (care providers), for instance independent physicians or hospitals that provide the services. The invoicing is carried out between those Leistungserbringer and the accident insurance institutions. The principle of benefits in kind has been criticised in German debates as being outdated. However it has to be considered whether this system is not able to offer significantly better opportunities to control costs and quality than a system of reimbursement (ie the system in private health insurance) could do. It is notable that now private health insurance schemes are also anxious to introduce a direct invoicing system, eg with hospitals, and to offer this as an additional service.13 In Germany there are corresponding models in other sectors of the insurance industry as well. Direct invoicing in this manner provides the obvious opportunity for private insurances to control costs, which constitutes a pressing demand. By comparison, rehabilitation assistance is very important in Germany. 21 According to § 26 subsec 2 SGB VII, the goal of German statutory accident insurance is to restore health as comprehensively as possible and earning capacity as far as possible, but at least to avoid a deterioration in health and to ultimately reintegrate the insured person into a suitable occupation in the long run. Therefore, benefits in the form of medical care and rehabilitation assistance have priority over pension benefits pursuant to § 26 subsec 3 SGB VII. Rehabilitation assistance encompasses all appropriate measures, in particular counselling, placement, training measures and support concerning mobility, as well as further and re-training. The benefits are provided on a discretionary basis taking into account the individual’s suitability, his/her likings and previous occupation, (cf §§ 26 subsec 2, 35 SGB VII, 33 SGB IX). Thereby, the person’s reintegration into
13
Thus, the reform of the Versicherungsvertragsgesetz (Insurance Contract Act, VVG) in 2008 introduced the opportunity for private health insurance and others of direct invoicing with service providers. It was justified with the argument that insurances could control their costs more effectively in this new system; cf Regierungsentwurf (governmental draft) – Bundestagsdrucksache (BT-Drs) 16/3945, p 55.
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his/her previous occupation has priority. If this is not possible, the reintegration takes place at another appropriate workplace. 22 Only if all options to restore health (as far as possible) are exhausted, may reparation benefits be claimed. The goal of these benefits is to compensate the reduction of earning capacity caused by the insured event. The Verletztenrente (a periodical payment just like a pension) is the most important reparation benefit. Pursuant to § 56 subsec 1 sent 1 SGB VII, injury pensions are paid if, due to an occupational accident or an occupational disease (cf § 7 subsec 1 SGB VII), the insured person’s earning capacity is reduced by at least 20 % beyond the 26th week after the insured event. The decrease in the capacity for work is assessed by a medical expert. 23 Statutory accident insurance thereby applies an abstract calculation of losses. It is irrelevant whether the occupational accident led to a real loss of income. Verletztenrente is also granted if there is no real loss or even if the injured person’s income increases (eg due to occupational re-training). Thus, there is a difference to the basically concrete damage calculation in private law. According to § 249 subsec 1 Bürgerliches Gesetzbuch (German Civil Code, BGB), the injuring party must restore the position that would have existed if the circumstance obliging him to pay damages had not occurred. 24 According to § 56 subsec 3 SGB VII, the level of a full Verletztenrente totals up to two thirds of the Jahresarbeitsverdienst.14 In case of diminished earning capacity, a partial pension is provided, which correlates with the degree of diminished capacity. 25 Rights to benefits do not include, as is common under German social insurance law, immaterial losses, especially compensation for pain and suffering. The primary purpose of statutory accident insurance is to restore the injured person’s health and capacity for work (cf § 1 no 2 SGB VII). For this purpose compensation for immaterial damage is not necessary. Whether the injured person is nevertheless entitled to compensation for immaterial damage is a question concerning the scope of employers’ liability.15 26 In case of the insured person’s death, benefits for dependents are provided in the form of lump sums as death benefits and financial assistance as well as ‘dependents-pensions’ and the reimbursement for the costs incurring because of the transfer to the place of burial, cf § 63 subsec 1 SGB VII. Under § 65 f SGB VII widows or widowers can claim a pension for up to 24 months after the death, at first amounting to two thirds, later amounting
14 15
272
See fn 2. See below no 41 ff.
Germany
to between 30 % and 40 % of the Jahresarbeitsverdienst16 of the insured person; orphans can claim up to the age of 18, but this can be extended to the age of 27 in case of professional training, 20 % if they lost one parent and 30 % if they lost both parents (§ 67 f SGB VII). If an insured event causes serious injuries, the surviving dependents are provided with a one time lump sum payment in case of the insured person’s death which was caused by reasons other than the insured event, cf § 71 SGB VII. In view of the first of the two main aims of statutory accident insurance 27 (coverage by effective insurance), protection is not limited to mere risk coverage by means of benefits in case of an insured event. In fact pursuant to §§ 1, 14–25 SGB VII, accident insurance law emphasises the prevention of occupational accidents, occupational diseases and employment related health risks. § 1 SGB VII correspondingly reads: ‘It is the purpose of accident insurance … (1.) to prevent occupational accidents and diseases as well as employment related health risks by all appropriate means and (2.) after occurrence of an accident or a disease to restore the insured person’s health and capacity by all appropriate means and to compensate them and their surviving dependents with monetary benefits.’ The Unfallversicherungsgesetz von 1884 (Accident Insurance Act of 1884), introducing statutory accident insurance, had already regulated the responsibility of accident insurance institutions to prevent occupational accidents. There is consensus in Germany that the fact that the occupational accident rates (per 1,000 fulltime employees and per year) have continuously decreased over the past 40 years is due to the prevention work (also by self-governed statutory accident prevention regulations, § 15 SGB VII) of the accident insurance institutions. While the occupational accident rate was at 110 in the mid1960s and at 52 in the mid-1980s, it dropped to 28 in 2007. In 2009 this trend declined, in 2008 the rate increased to 28.3, although prevention work did not decline in this period.17 In German law prevention by accident insurance is additional to the occupational health and safety law; the traditional dualism of state and autonomous occupational safety has not been touched by the present reforms, rather the task of prevention has been extended for the accident insurance institutions due to the legislation of the SGB VII, enacted in 1996. Any criticism of this dualism is not directed at the prevention work undertaken by accident insurance institutions.18
16 17
18
See fn 2. Cf Bericht der Bundesregierung über den Stand von Sicherheit und Gesundheit bei der Arbeit und über das Unfall- und Berufskrankheitengeschehen in der Bundesrepublik Deutschland (Unfallverhütungsbericht [Report of the Federal Government about prevention]) 2008, 11, 19. Cf J Reusch, Reformieren, nicht demontieren, Arbeitsrecht im Betrieb (AiB) 2006, 566, 568 f.
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E.
Funding systems
28 Statutory accident insurance is, like German social insurance in general, organised under public law. It is a compulsory form of insurance. This is ensured due to the fact that persons named in § 2 SGB VII, (in particular Beschäftigte (ie employees), according to § 2 subsec 1 no 1 SGB VII), are insured statutorily. As a consequence, the entrepreneur (cf § 136 subsec 3 SGB VII) is obliged to participate in the statutory accident insurance. 29 Occupational accident insurance is funded completely from contributions made by the entrepreneurs who employ insured persons or who are insured themselves (§ 150 f SGB VII). The reason for funding only by entrepreneurs is the exemption from liability which is connected to accident insurance. The entrepreneur ‘buys’ coverage for his employees and, at the same time, liability insurance coverage for himself. Contributions cannot be imposed on the insured persons, not even by contract. The raising of the funds is organised as a PAYGO-system19, as is common for German social insurance. 30 The amount of contributions is basically determined by the risk of accidents in the company on the one hand and by the insured persons’ wages on the other hand (cf § 153 ff SGB VII). According to § 152 subsec 1 SGB VII, the required funds are allocated to the entrepreneurs at the end of a legal year. Every single accident insurance institution compiles by statute under § 157 SGB VII a risk pay scale establishing classes of risks. This scale applies to the whole sector of the accident insurance institution. In order to cope with difficulties arising in a PAYGO-system because of burdens belonging to the past (eg from the mining industry), a burden sharing between the gewerbliche Berufsgenossenschaften (ie institutions for statutory accident insurance and prevention for private companies) is regulated by law. 31 The most important instrument to provide incentives for prevention of occupational accidents and diseases is, according to § 162 subsec 1 SGB VII, the obligation of the gewerbliche Berufsgenossenschaften to regulate increases and reductions in the amount of contributions considering the number, the severity and the expenses incurred as a result of the insured events. In this respect, gewerbliche Berufsgenossenschaften have a wide leeway for their statutes. In any event, increases up to 25 % are legally permitted according to case law.20 Furthermore, there is the possibility to offer bonuses for effective prevention measures (cf § 162 subsec 2 SGB VII). Seals of quality and distinc-
19 20
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A PAYGO-system is a system in which the current contributors pay the expenses for the current recipients. BSG 18 October 1984, 2 RU 31/83, SozR 2200 § 725 no 10.
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tions for companies serve as non-financial incentives to the accident insurance institutions for special accomplishments in the field of prevention.
F.
Administration and adjudication of claims
Detailed rules regarding the organisation of statutory accident insurance 32 can be found in §§ 114–149a SGB VII. Bodies of statutory accident insurance are, in addition to the institutions for statutory accident insurance and prevention for private companies (gewerbliche Berufsgenossenschaften), the institutions for statutory accident insurance and prevention for agriculture (landwirtschaftliche Berufsgenossenschaften) and the institutions for statutory accident insurance and prevention for institutions governed by public law (Unfallversicherungsträger der öffentlichen Hand). Over the past years a concentration process has taken place following legislative directives; as a result, the number of institutions has significantly decreased. The bodies of statutory accident insurance are regulated by public law. 33 Therefore, there is an administrative procedure which takes place vis-à-vis citizens. Initially, the bodies of statutory accident insurance decide via administrative acts whether entitlements to benefits exist. The general rules for this procedure are part of a special procedure act concerning the administration of social benefits: the first chapter of the SGB X. The length of the administrative procedure varies from case to case. Due to the principle of benefits in kind, most procedures are conducted without participation of the insured person. In cases of dispute between the insured person and the statutory accident insurance body, the bodies of the latter decide the matter. If a decision on the application is not made within an appropriate amount of time without stating sufficient reasons, after six months at the earliest the statutory accident insurance can be forced by court order to make a decision (cf § 88 SGG). The judicial control is carried out by the social courts (Sozialgerichte), which 34 were created in Germany especially for disputes in social law. The social jurisdiction is a particular branch of the administrative jurisdiction. According to § 51 subsec 1 nos 1, 2, 3 and 5 Sozialgerichtsgesetz (Social Court Act, SGG), access to the social courts is especially available in all public-law disputes concerning social insurance, ie also in the statutory accident insurance. The legal procedure is designed to make the processing of social claims as easy as possible. A special characteristic lies in the fact that the insured person does not incur any court costs. The social jurisdiction provides two stages for appeal. As well as at the court of the first instance, the first court of appeal (second instance, Landessozialgerichte) 275
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decides the claim on questions of fact and law. The second court of appeal (third instance, Bundessozialgericht) addresses questions of law only. Each instance makes its own decision; the BSG has to remand the case back to the Landessozialgericht if factual matters have not been clarified sufficiently. 35 The administrative expenses of all gewerbliche Berufsgenossenschaften plus all Unfallversicherungsträger der öffentlichen Hand amounted to E 1.2 billion in 2008,21 which equals almost 10 % of the total expenses.22
G.
Rights of recourse of workers’ compensation institutions23
36 To coordinate the compensation of damage under private law with insurance benefits provided by insurers (under private law or public law), German law offers possibilities of recourse for private or public insurance companies. The recourse is basically arranged by a cessio legis: If the injured party is entitled to benefits from the insurer, the legal entitlements are assigned to the legally obligated insurer by operation of law. This constructive assignment is regulated in § 116 SGB X in favour of German social insurance, and in § 86 subsec 1 Versicherungsvertragsgesetz (Insurance Contract Act, VVG) in favour of private insurance. This means that liability under private law de facto turns into a ‘law of recourse prerequisites’.24 37 Due to the principal of exemption from liability within the system of statutory accident insurance, the legal situation of statutory accident insurance differs from that described above: Because of the fact that all insurance benefits paid out by statutory accident insurance are funded from payments made by participating entrepreneurs’, the law regulates a most wide exclusion of legal entitlements for personal injuries under private law in order to coordinate the claims for compensation under private law with the claims according to social accident insurance law. In particular, according to §§ 104 ff SGB VII entrepreneurs are exempted from liability under private law. The explicit regulation in § 104 subsec 1 sent 2 SGB VII clarifies that legal entitlements are not assigned to the bodies of statutory accident insurance by operation of law. § 104 SGB VII excludes the application of § 116 SGB X.25
21 22 23 24 25
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Geschäftsbericht DGUV 2008, 56. Ibid, 61. See fn 5. Cf H Kötz/G Wagner, Deliktsrecht (11th edn 2010) no 47. For reasons and content of the regulation see: R Waltermann in: G Wannagat, Kommentar zum Sozialgesetzbuch, SGB VII (updated: April 2007) § 104 no 23.
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The possibility for statutory accident insurance institutions to initiate 38 recourse actions is narrowly restricted. In accordance with § 110 SGB VII, statutory accident insurance bodies are only entitled to be reimbursed for the expenditure they incurred (up to the amount of the compensation which would have been awarded under private law provisions) if the person who is exempt from liability in accordance with §§ 104–107 SGB VII, caused the insured event with intent or gross negligence. This also applies to damage caused by entrepreneurs or fellow workers. Due to the fact that third parties, especially suppliers and manufacturers of work equipment, are regularly not exempted from liability according to the principals named above, they are subject to the general recourse rule within the social insurance system: § 116 SGB X.
H.
Interaction with general social welfare provision and private insurance
Because of the priority of statutory accident insurance in relation to 39 statutory health insurance, statutory accident insurance has to bear the costs of the insured event a priori. If the statutory health insurance institute has paid benefits because of an initial lack of knowledge of the fact that the insured event was an occupational accident, the statutory health insurance institute is entitled to a claim to recourse against the responsible statutory accident insurance institute pursuant to § 105 SGB X. In case of dispute, the social courts have to decide on the recourse issue.
I.
Interaction with employers’ liability
The entrepreneur’s exemption from liability applies in principal to all 40 claims for personal injuries. Material damages can be claimed without any restrictions in accordance with the rules of private law. The entrepreneur’s exemption from liability according to § 104 SGB VII 41 (as well as the exemption from liability especially for fellow workers according to § 105 SGB VII) covers all claims for personal injuries. Even compensation for pain and suffering is included. The Bundesverfassungsgericht (Federal Constitutional Court, BVerfG) has approved this.26 The ques26
Cf BVerfG 7 November 1972, 1 BvL 4/71 and 17/71 et al, Entscheidungen des Bundesverfassungsgerichts (BVerfGE) 34, 118 (129 ff) = Neue Juristische Wochenschrift (NJW) 1973, 502 ff; BVerfG 8 February 1995, 1 BvR 753/94, NJW 1995, 1607 f.
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tion whether denying compensation for personal suffering is the correct approach has always been controversial. If the occupational accident was caused by gross negligence and resulted in severe and permanent damage to the injured person, the exclusion of compensation for pain and suffering seems to be questionable in view of the function of compensation (compensation for the loss of the sufferer’s well-being and satisfaction). Nevertheless, even with respect to amendments introduced by the second amending law regarding compensation law (Schadensrechtsänderungsgesetz, SchadRÄndG) of 19 July 200227 the rule is still justifiable, although the compensation for pain and suffering now also applies to contractual liability and strict liability. 42 Indeed exceptional cases exist in all cases of exemption from liability: the exemption from liability does not apply in cases of intentional causation28 and in cases of commuting accidents. In these two exceptional cases the injured party shall retain entitlements under private law which reach beyond the compensatory benefits of statutory accident insurance. In accordance with § 104 subsec 3 SGB VII, the remaining claims for compensation are reduced by the benefits which the entitled party obtains because of the insured event. The described exclusion of the subrogation by operation of law (cessio legis) pursuant to § 104 subsec 1 sent 2 SGB VII is important in this context as well. 43 In 1997 the rule of exemption from liability was extended considerably in the context of the recodification of the statutory accident insurance in the course of incorporating its rules into the Sozialgesetzbuch (SGB). Originally, only the entrepreneur was covered by the exemption from liability (as an offset to his insurance contributions). In 1963 the exemption from liability especially for fellow workers was added (formerly: § 637 Reichsversicherungsordnung (Reich Insurance Code, RVO), now: § 105 SGB VII). These extensions were necessary in order to complete the legal framework: with the entrepreneur obtaining cover of a liability insurance by the statutory accident insurance (§ 104 SGB VII), one must, in consequence, make sure that the entrepreneur is exempted from claims for compensation or for release from liability by his employees if the latter have negligently caused an insured event to happen to one of their fellow workers. However, without an exemption clause, in particular for fellow workers, compensa27 28
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Bundesgesetzblatt Teil I (Federal Law Gazette I, BGBl I), 2674. Conditional intent is sufficient; the person must act with intent not only with regard to the action but also the result, cf Bundesgerichtshof (Federal High Court of Justice, BGH) 11 February 2003 – VI ZR 34/02 – Entscheidungen des Bundesgerichtshofes in Zivilsachen (BGHZ) 154, 11 ff = Zeitschrift für Versicherungsrecht, Haftungs- und Schadensrecht (VersR) 2003, 595 ff.
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tion claims against the entrepreneur could be asserted by those employees who have injured a fellow worker. This is due to the fact that under German labour law the employee is not liable for damage which he causes in the context of his work acting with only slight negligence; in contrast the employee is liable if he acts with intent or (as a rule) in a grossly negligent manner. In cases of ‘mid-level’ negligence the damage is distributed between entrepreneur and employee.29 This liability rule in labour law, which is based in Germany – for lack of codification – on the (unchallenged) judicial development of law, could as a consequence nullify the entrepreneur’s exemption from liability: If an employee’s injury is caused by a fellow worker, the entrepreneur would have to pay compensation in accordance with the principles of employees’ limited liability in German labour law, although the entrepreneur is exempt from liability due to his contributions to statutory accident insurance. He would thus be in a worse situation than if he had caused the occupational accident himself. The extension of this exemption from liability to fellow workers was 44 therefore necessary to complete the concept of liability. However, from the outset it went further than what was strictly necessary and was extended again in 1997 for reasons of legal policy. § 637 RVO, enacted in 1963, went further than the necessary coordination between the exemption from liability rule and the principle of employees’ limited liability in German labour law, because the regulation stated a full exemption from liability with an exclusion for the intentional causation of damage. In order to avoid inconsistencies with the principles of labour law, an exemption for slight negligence and (cost) splitting in cases of ‘mid-level’ negligence and (in exceptional cases) of gross negligence would have been sufficient. The idea behind the extension beyond what was necessary was not based on the fact hat the insurance coverage is funded by the entrepreneur. The idea was rather to preserve the peaceful work climate within the company and to take into account the fact that fellow workers form a risk-bearing community. Every employee may equally be the injuring or the injured party.
29
Prevailing case-law, cf Bundesarbeitsgericht (Federal Labour Court, BAG) 25 September 1957, GS 4/56, Entscheidungen des Bundesarbeitsgerichts (BAGE) 5, 1 (7); BAG 23 November 1962, 1 AZR 304/61, BAGE 13, 326 (331 f); BAG 29 June 1964, 1 AZR 434/63, Arbeitsrechtliche Praxis (AP) no 33 to § 611 BGB; BAG 24 November 1987, 8 AZR 524/ 82, BAGE 57, 55 (59 f); BAG 27 September 1994, GS 1/89, BAGE 78, 56; BAG 25 September 1997, 8 AZR 288/96, AP no 111 to § 611 BGB; BAG 18 April 2002, 8 AZR 348/01, BAGE 101, 107 (113); BAG 18 January 2007, 8 AZR 250/06, NZA 2007, 1230.
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45 In 1997 this direction was continued in the course of incorporating the rules of statutory accident insurance into the Sozialgesetzbuch (as ‘SGB VII’). This concerns the exemption from liability of persons working in the company (§ 105 SGB VII) as well as the exemption from liability beyond the scope of one single company in cases in which the insured persons work – so to speak ‘hand in glove’ – at a gemeinsame Betriebsstätte (common business premises of two or more companies). In a nutshell, today § 105 SGB VII also regulates the exemption from liability in relation to (insured and even non-insured) entrepreneurs and in relation to civil servants (who, under § 4 subsec 1 no 1 SGB VII, are exempted from insurance in the statutory accident insurance). According to § 106 subsec 3 SGB VII, the exemption from liability also applies to cases in which insured persons of several companies work temporarily at a gemeinsame Betriebsstätte. The rule is very relevant in practice. The courts take it into account if the operational work of the companies is consciously and intentionally linked. § 106 subsec 3 variant 2 SGB VII carries weight in particular on building sites if several companies (masons, electricians, heating installers) are working on the same site.30 Ultimately, with the mentioned extensions in §§ 105, 106 SGB VII, liability law for occupational accidents has developed into a ‘social liability insurance’. Leading arguments for this development are retaining a peaceful work climate within a company and in particular the aspect of a risk-bearing community.31
III. Employers’ Liability 46 As shown above, under German law, due to the exemption from liability pursuant to § 104 SGB VII, the employer is basically not liable for personal injuries sustained by his employees if the personal damage is caused by an occupational accident pursuant to § 8 SGB VII. An exception is made according to § 104 subsec 1 sent 1 SGB VII for personal damage that is caused intentionally or is sustained as a result of commuting accidents. The exemption from liability also covers compensation for pain and
30
31
280
Cf fundamentally BGH 17 October 2000, VI ZR 67/00, BGHZ 145, 331; further eg BGH 3 July 2001, VI ZR 198/00, BGHZ 148, 214; BAG 12 December 2002, 8 AZR 94/02, BAGE 104, 229 (234 ff); from literature cf representatively O Krasney in: P Becker et al, Gesetzliche Unfallversicherung (SGB VII) § 106 SGB VII no 15 ff (updated: September 2010); Kommentar zum Sozialgesetzbuch/Waltermann (fn 25) § 106 SGB VII no 5 ff with further references. Detailed to the whole issue R Waltermann, Auswirkungen des Sozialrechts, insbesondere des Unfallversicherungsrechts, auf die privatrechtliche Schadensersatzpflicht, in: Festschrift 50 Jahre Bundessozialgericht (2004) 571–589.
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suffering.32 Therefore, the employer is liable only for latent bodily injuries (which do not qualify as an occupational disease), eg if the employer allows – in violation of occupational safety regulations – contact with toxic substances that gradually lead to a disease. The exemption from liability also does not cover the violation of personal rights, in particular resulting from harassment, and damage due to discrimination. Employers’ liability includes, finally, compensation for material damage.
A.
Classification
Employers’ liability, if it is not excluded by the exemption from liability 47 rule pursuant to § 104 SGB VII, follows the general rules of contract law and tort law which are both applicable (in parallel). If the employer is a legal person, § 31 BGB provides liability for damage that is inflicted on employees by the chairman, the board of directors or the managing director while carrying out their work. According to § 278 BGB, the employer is liable for faults of his vicarious agents. The employers’ tortious liability complies with the general rules of §§ 823 ff BGB. Under German law there are no specific legal provisions regarding the liability in an employment relationship.
B.
Elements of liability
Following the general rules, employers’ liability on the above-mentioned 48 legal basis is in principle fault-based. As for areas of strict liability codified in German law, the general rules apply.33 According to the general rules, employers are liable for their own acts and 49 omissions. This liability is in principle fault-based (intent and negligence, § 276 BGB). Under the conditions set out in § 278 BGB, contract liability also includes employers’ liability for fault of vicarious agents, in particular for other employees. Pursuant to § 278 sent 1 BGB, contractual law liability encompasses liability for those persons at fault, whom the employer used to fulfil an obligation; the employer is liable for their faults to the same extent as for his own faults. According to the general rule of § 254 BGB (contributory negligence), the injured party’s conduct can reduce the obligation to pay damages. 32 33
See no 41 above. In principle G Wagner in: Münchener Kommentar zum BGB (5th edn 2009) Vor § 823 nos 16–26; in subsequent footnotes: MünchKomm/Wagner.
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50 According to jurisprudence of the highest court through the judicial development of law, besides the general provisions, the employer is strictly liable for damage to the employee’s goods. This form of strict liability, created by the judicial development of law, is predominantly called ‘risk-based liability’ although it is not actually risk-based liability in the true sense of the word as this requires a legal basis under German law.34 51 The employers’ strict liability for damage to the employee’s goods applies to damage sustained by the employee while working (therefore arising from occupational activities). The precondition for this is that the item of property (eg the employee’s car) is used with the employer’s approval in his operating area. This is, for example, the case if an editorial journalist uses – with her employer’s prior consent – her private car to keep an appointment. In such a situation the damage is the result of a typically dangerous situation that arises out of employment. According to high court decisions and the prevailing opinion in literature, in such a case the employee is (regardless of fault and illegality) entitled to reimbursement of expenditure (analogous to § 670 BGB).35 52 This employers’ strict liability is dogmatically connected with the already indicated employees’ limited liability that results from the judicial development of law: basically these principles are about risk distribution for certain risk situations that must occur regardless of which person suffers the damage first. It is irrelevant if the employer suffers the loss first (in this case the principles of employees’ limited liability apply), if a third party suffers first (in this case the employee can internally claim release from liability or compensation against the employer) or if the employee suffers first (loss of his property items that are used in the interest of his occupation). In all these cases the risk distribution follows the same reasoning and the same pattern.36 53 Occupational health and safety law is part of public law. The implementation of the safeguarding provisions is ensured by state supervision, obligations to comply as well as criminal penalties and administrative fines. Public occupational health and safety law encompasses provisions con-
34 35 36
282
Cf MünchKomm/Wagner (fn 33) Vor § 823 no 23 f. Fundamentally BAG 10 November 1961, GS 1/60, NJW 1962, 411 ff; BAG 25 May 2000, 8 AZR 518/99, NZA 2000, 1052 (1053). Cf R Waltermann, Risikozuweisung nach den Grundsätzen der beschränkten Arbeitnehmerhaftung, RdA 2005, 98 (99); summarised in A Söllner/R Waltermann, Arbeitsrecht (15th edn 2009) no 254 f.
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cerning technical workplace protection (hazard protection) and protection of working time.37 At the same time public occupational health and safety law has an impact on 54 the employment relationship. It not only limits the possible contents of the employment contract since it contains prohibitions (in terms of § 134 BGB) but it also enables the individual employee to demand compliance with regard to the health and safety regulations. The provisions on occupational health and safety are simultaneously contractual obligations as far as they can be agreed upon in a contract and are more than mere regulatory and organisational provisions. As the case may be, the employee therefore has a right to withhold performance (pursuant to § 273 subsec 1 BGB) if the employer violates provisions on occupational health and safety. With the provisions on occupational health and safety being protective duties according to civil law, employees are entitled to compensation for breach of contract. This has the advantage that the employer is liable for the faults of his vicarious agents as well (pursuant to § 278 BGB). In addition the employee is entitled to compensation. § 823 subsec 1 BGB serves as a basis of a claim for the violation of legal rights or of legally protected objects as well as § 823 subsec 2 BGB in connection with provisions on occupational health and safety as far as these provisions are imperative rules of health and safety in the sense of § 823 subsec 2 BGB. According to case-law, the accident prevention regulations of the respective occupational accident insurance institutions are not to be regarded as imperative rules in this sense.38 Pursuant to § 831 BGB, the employer is liable in tort for his vicarious agents; this liability is regarded as a liability for an assumed own fault of the employer which allows an exculpation. It has to be noted that, as already mentioned above,39 compensation for personal injuries resulting from occupational accidents is excluded by social law pursuant to §§ 104, 105, 106 SGB VII with the exception of intentionally caused injuries or those sustained as a result of commuting accidents.
C.
Scope of protection
The employer is liable for the employee’s personal injuries according to the 55 general rules of contract law and tort law. As a matter of fact, this type of liability applies only if the personal injury did not occur as a result of and 37 38 39
Summarising eg U Preis, Arbeitsrecht – Individualarbeitsrecht (3rd edn 2009) 497–500; Söllner/Waltermann (fn 36) no 439 ff. Representatively BGH 2 June 1969, VII ZR 76/67, VersR 1969, 827 f. See nos 37 f, 41 above.
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in the course of employment (occupational accident pursuant to § 8 SGB VII). In case of an insured event of the statutory occupational accident insurance (occupational accident or occupational disease, § 7 SGB VII), the employer is, as set out above, exempted from liability pursuant to § 104 ff SGB VII.40 56 The employer may be liable for infringement of property rights and pecuniary losses according to the general rules of contract law and tort law. Furthermore, employers’ liability plays an important part when individual rights are violated, in particular by discrimination and (sexual) harassment. 57 Harassment can lead to liability claims for compensation in particular for lost wages (eg instead of full remuneration the employee receives statutory sick pay amounting to 70 % of remuneration, § 44 ff SGB V), compensation for pain and suffering (if the harassment led to actual bodily harm) or compensation for non-pecuniary losses due to violation of individual rights. It is only in recent years that the Bundesarbeitsgericht (Federal Labour Court, BAG) had to deal with claims based on harassment for the first time.41 In such cases the employer himself can be liable on the one hand (liability in contract or in tort, §§ 823 subsecs 1 and 2, 826 BGB), namely in person, but also for the conduct of directors and officers (§§ 31, 89 BGB) and vicarious agents (§§ 278, 831 BGB). On the other hand fellow workers can also be found liable (in tort). It is recognised that it is also the employer’s contractual duty to protect the employee’s individual rights. The allgemeines Persönlichkeitsrecht (‘general right of personality’, guaranteed by the German Constitution) includes the protection of personal honour; the latter aims to protect individuals against false assertions and humiliating statements and actions and ensures social reputation. According to case-law, criteria can be found in § 3 subsec 3 Allgemeines Gleichbehandlungsgesetz (General Equal Treatment Act, AGG), which was recently passed for discrimination cases. Accordingly, conduct is relevant if it takes place with the purpose or effect of violating the concerned person’s dignity and of creating an intimidating, hostile, degrading, humiliating or offensive environment. The employer is only liable for his vicarious agents if there is an internal factual connection with the tasks that the employer assigned to the vicarious agents with regard to contractual performance. As a rule, this connection exists only if the vicarious agent has duties in respect of care and supervision of the affected employee or rather the right to give instructions to his workforce. 40 41
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See no 37 above. Cf BAG 16 May 2007 – 8 AZR 709/06 – NZA 2007, 1154 ff; BAG 25 October 2007 – 8 AZR 593/06 – NZA 2008, 223 ff.
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Since the AGG entered into force (18 August 2006) employers’ liability for 58 discrimination refers to the discrimination prohibitions as listed in § 1 AGG. These discrimination prohibitions follow Directive 2000/78/EC. The legal basis for claiming compensation for discrimination is found in § 15 AGG.42 In accordance with the objective of the Community, § 15 AGG aims to prevent and compensate for disadvantages caused by discrimination. Liability requires discrimination according to § 7 subsec 1 and § 1 AGG that is not justified by §§ 8–10 AGG. Furthermore, the discrimination must, in accordance with the requirements set out in § 15 subsec 1 sent 2, subsec 3 AGG, be connected with the employer’s responsibility. Claims must be enforced in accordance with § 15 subsec 4 AGG. The person liable is the employer (§ 6 subsec 2 sent 1 AGG). The employer is liable for his vicarious agents’ conduct under the legal provisions (§§ 31, 278, 831 BGB). In terms of fault, German legislation has created a regulation that is questionable with a view to Community Law and hardly convincing.43 As expected the Commission has criticised the implementation. As a legal consequence, § 15 AGG does not provide restitution in kind but compensation for material damage (§ 15 subsec 1 AGG) and compensation for non-material damage (§ 15 subsec 2 sent 1 AGG).
D.
Heads and levels of damages
1.
Personal injuries
Under German law compensation for personal injuries is mostly determined 59 by the exemption from liability clause regulated by social law: In the scope of the outlined44 exemption from liability by social law, the employer is not liable. Medical and rehabilitation costs as well as compensation for lost wages, including compensation for limited earning capacity, are governed by the social law regulations as set by statutory accident insurance (SGB VII). Losses arising from occupational accidents or diseases are regulated 60 according to the specified provisions of statutory accident insurance. Benefits, in particular medical and hospital treatment are provided, as already mentioned, by the principle of benefits in kind.45 Cash benefits
42
43 44 45
See in detail G Thüsing, Arbeitsrechtlicher Diskriminierungsschutz (2007) no 89 ff; G Wagner/N Potsch, Haftung für Diskriminierungsschäden nach dem Allgemeinen Gleichbehandlungsgesetz, Juristenzeitung (JZ) 2006, 1085. Cf representatively Wagner/Potsch, JZ 2006, 1085, 1091. See no 40 f above. See no 20 above.
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(§§ 45–52 SGB VII) of statutory accident insurance include, in particular, injury benefits (Verletztengeld, comparable to sickness benefits, Krankengeld) – amounting to 80 % – and transitional allowances (§§ 49–52 SGB VII) serving as income compensation benefits. Pensions, allowances and indemnity payments for permanent harm are compensation payments. The law distinguishes between pensions for insured persons (§§ 56–62 SGB VII) and pensions and other cash benefits for surviving dependents (§§ 63–71 SGB VII). For the purpose of compensation, injury pensions are at the centre of attention among the mentioned cash benefits. Pursuant to § 56 subsec 1 sent 1 SGB VII, injury pensions are paid if, due to an occupational accident or occupational disease, the insured person’s earning capacity is reduced by at least 20 % beyond the 26th week after the insured event. Statutory accident insurance thereby applies an abstract statement of losses. It is irrelevant whether the occupational accident led to a real loss of income. An injury pension is also paid if there is no real loss of income and even if the injured person’s income (due to occupational re-training) is higher than before. Pursuant to § 56 subsec 3 SGB VII, the injury pension in the form of a complete pension amounts to two-thirds of the Jahresarbeitsverdienst.46 61 As a result, compensation under social law differs from general principles of civil law. On an individual basis, compensation therefore might be more or less profitable compared to compensation in private law. From a general point of view, the solution provided by German social law for personal injuries gives no cause for complaint neither for the injured party nor for the employer nor for society as a whole: the social law solution ensures a quick and efficient provision of benefits on a remarkable level. Benefits are granted regardless of how the damage arose and who is liable. In contrast, to receive compensation in private law can be a lengthy process. Moreover, as a rule, social benefits are granted in the amount provided by the law regardless of whether the injured party contributed negligently to the accident whereas in private law contributory negligence or maximum amounts can lead to gaps in coverage. On the other hand, private liability law aims for total reparation whereas social law satisfies standard needs that include, according to case-law, compensation for pain and suffering. Total reparation means that the injuring party is – regardless of the degree of fault – liable for the entire damage of the injured party (who might be a relative of the employee as well). The injuring party must restore the position that would have existed if the circumstance obliging him to pay damages had not occurred (§ 249 subsec 1 BGB). This includes, 46
286
Cf fn 2.
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in addition to costs for medical and hospital treatment, also loss of income and loss of earning capacity, for which the law provides obligatory pension payments (cf § 843 subsec 1 BGB). Compensation by contractual liability regularly covers all pure pecuniary losses. If an injured person does not make use of domestic services provided by the statutory accident insurance but receives that care and assistance from relatives or friends at no cost (gratuitous care), he/she is nevertheless entitled to claim this as damage according to § 843 BGB. In any case possible exemptions from liability must be taken into consideration47
2.
Material damages
As for material damages, employers’ liability is subject to the general 62 rules. However, with regard to an employee’s contributory negligence, the principles of employees’ limited liability as developed by case-law must be taken into account when applying the law (§ 254 BGB) in cases in which the damage arises out of, and in the course of, occupational activity.
3.
Liability agreements
Up to now the BAG has explicitly left open whether the principles of strict 63 liability as set out by judicial development of law are not mandatory, whether, therefore, liability agreements may be stipulated.48 It appears correct to assume that the principles of case-law as well as the principles of employees’ limited liability cannot be altered.49
E.
Administration of claims
In case of dispute, the employee must enforce his claims against an 64 employer in a labour court as the legally competent court. Labour law has particular rules of procedure that mainly fall back on the general procedural law of the ordinary courts. A peculiarity is the fact that each party must bear his/her lawyer’s expenses regardless of the outcome of the trial, 47 48 49
Cf BGH 8 June 1999, VI ZR 244/98, NJW 1999, 2819 f; 22 November 1988, VI ZR 126/88, BGHZ 106, 28. BAG 27 January 2000, 8 AZR 87/98, BAGE 93, 295 (304). In greater detail R Waltermann, Besonderheiten der Haftung im Arbeitsverhältnis, Juristische Schulung (JuS) 2009, 193, 198.
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cf § 12 a Arbeitsgerichtsgesetz (Labour Court Act, ArbGG). Moreover, many court proceedings are (following the principle of conducting proceedings expeditiously and without undue delay, § 9 subsec 1 ArbGG) concluded by settlement following a mandatory conciliatory hearing. Thus the settlement may occur only a few weeks after the filing of the complaint. If one initiates a litigation procedure, the duration of the proceedings may exceed that of the ordinary courts and sometimes take up to one year. As well as the social jurisdiction the labour jurisdiction provides a court of first instance and two higher judicial authorities.
F.
Rights of recourse
1.
Against other employees who caused the harm
65 As has been pointed out before,50 the employer is not liable for an employee’s occupational accident (or disease) caused by other employees. Therefore, against the background of the German statutory accident insurance solution as far as personal injuries are concerned, rights of recourse are ruled out. In case of material damage, recourse is possible to the extent that the employer is liable, in particular pursuant to § 278 BGB by contract or to § 831 BGB in tort. The principles of employees’ limited liability apply.51
2.
Against third parties (eg equipment/component manufacturers, suppliers of raw materials, etc)
66 In the case of insured events (occupational accidents, occupational diseases) caused by third parties, the cover of the statutory accident insurance also applies in the employee’s favour according to the rules of SGB VII. The occupational insurance institutions have a right of recourse provided by the general rules of social law: Because these cases are not covered by the exemption from liability pursuant to § 104 ff SGB VII, subrogation is not excluded according to §§ 104 subsec 1 sent 2, 105 subsec 1 sent 3, 106 subsec 1 SGB VII. This leads to subrogation by operation of law according to § 116 subsec 1 SGB X onto the accident insurance institutions. Claims can be brought against non-privileged tortfeasors, ie outside third parties, on the basis of the statutorily transferred rights.52 As far as claims have been
50 51 52
288
See no 43 f above. See ibid. In greater detail Kommentar zum Sozialrecht/Waltermann (fn 8) § 116 SGB X no 6 f.
Germany
made against employers by employees to compensate for damage caused to them by a third party, there are recourse possibilities in the employee’s favour against the tortfeasor.
G.
Interaction with social welfare systems and private insurance
1.
Problems concerning the extended exemption from liability
The social security related rules of statutory accident insurance, which 67 overlap with general tort law, do not only affect the employer’s liability but also the obligation of coverage of private insurance companies. Beyond the already emphasised points, this can be shown with the extended exemption from liability, established in 1997 by § 106 subsec 3 variant 3 SGB VII. According to § 106 subsec 3 variant 3 SGB VII, the exemption from liability applies between insured persons of different companies on common business premises as well.53 This further development of liability law in the sector of statutory accident insurance by means of § 106 subsec 3 variant 3 SGB VII towards a ‘social liability insurance’ not only leads to tortfeasors’ exoneration but also to the exoneration of their private liability insurance, at the expense of the accident insurance institutions. The control over claims concerning vertexes of damage not covered by social security law and compensation for pain and suffering is taken from the injured person. The obliged accident insurance institution and the employer, who is committed to the continuation of wage payments, lose their right of recourse in the favour of private indemnity insurance for claims of compensation cannot be statutorily transferred to them under § 116 SGB X or § 6 EFZG.
2.
Are benefits received from social welfare agencies deducted from claims against the employer?
German law answers this question expressly: according to § 104 subsec 3 68 SGB VII, employees’ claims for compensation, which still arise despite the exemption from liability, are reduced by the rate of benefits the employees have gained from statutory accident insurance.
53
See no 45 above.
289
Raimund Waltermann
3.
Recourse of social welfare agencies and private insurers against the employer
69 Recourse is of practical significance in the case of personal injuries that the employer is responsible for. This aspect is embedded in the context of the statutory accident insurance-based solution as well. Pursuant to § 110 SGB VII, the accident insurance institution possesses a recourse right in the case that employers have caused the insured event intentionally or as a result of gross negligence. According to § 110 SGB VII, tortfeasors are liable to social welfare agencies only for compensation up to the amount of damages as conceded by civil law. 70 Recourses of private insurance can only exist when there is no exemption from liability. Pursuant to § 86 VVG, the damaged person’s rights are transferred by operation of law to the paying insurance company. According to the concept of statutory accident insurance, this case will hardly be of practical relevance in relation to employers. A fitting case must concern an employee’s material damage which is already covered by insurance by the employee himself, for example, a vehicle under fully comprehensive insurance is damaged by the employer during an occupational activity.
H.
Insurance
71 The employer does not need to take out special insurance for damage caused by occupational accidents or diseases. As shown,54 this insurance is included by the statutory accident insurance-based solution of German social law. 72 The employer’s possibility to cover material damage by insurance follows the general rules. Accordingly, the employee is not entitled to demand compensation directly from the insurance company. It is common to take out liability insurance. For the holder of a vehicle, liability insurance is mandatory regardless of whether he is an employer or not. Although this kind of insurance has found a special arrangement in legislation, it basically follows the rules established for general liability insurance.
54
290
See no 43 above.
Germany
IV. Evaluation and Conclusions A.
Compensation
In the overall picture of compensation, the essentially undisputed and 73 long established solution of German social law should be lamented neither in respect of the interests of injured persons nor in respect of employers and society as a whole. It is true that statutory accident insurance only covers standard needs whereas civil law can provide total reparation (if contributory negligence is absent). But compensation provided by statutory accident insurance amounts to a respectable level and it offers the advantage that insurance benefits are provided fast, effectively and generally without consideration of the injured person’s possibly given contributory negligence. The pursuit of compensation claims under civil law may be lengthy and unprofitable. Therefore gaps in coverage might appear. It must also be considered that accident insurance institutions maintain their own accident hospitals which are specialised in accident medicine, especially in the treatment of injuries that typically occur with occupational accidents. The benefits provided by statutory accident insurance are slightly more 74 favourable for the insured persons than the benefits available from statutory health insurance and pension insurance. The statutory accident insurance has to provide all appropriate measures to restore health and capacity. The idea of social reparation is at the focus of attention. The risk connected with each occupation shall be taken into account by ensuring a better protection. While the statutory pension insurance calculates pensions for reduced earning capacity on the basis of the paid contributions, statutory accident insurance calculates abstractly, it is irrelevant if there is an actual loss of income. Thereby – following the idea of social reparation – equal treatment of the ensured persons is guaranteed. In the statutory accident insurance system cash benefits are generally calculated on the basis of the Jahresarbeitsverdienst.55 Above all, because of the determination of a minimum Jahresarbeitsverdienst and a maximum amount, cash benefits may be higher or lower in the given case compared to the benefits provided by other social insurance schemes as well as compared to claims of reparation under civil law. In practice that is the place where discrepancies which appear unfavourable in isolated cases and are only acceptable from a general point of view are most likely to arise.
55
Cf fn 2.
291
Raimund Waltermann
B.
Prevention
75 The question whether the system provides adequate incentives to ensure health, safety and compliance with the rules is of practical significance in particular for personal injuries. Because of the exemption from liability clause, particularly for occupational accidents, the preventive function of private tort law has no significance in this regard; tort law is applicable only if the insured event has been caused intentionally or if the damage is the result of a commuting accident. One might argue that for this reason the persons involved are not encouraged to act carefully; the prevention effect of private tort law exists in spite of insurance coverage by liability insurance because the insured persons have to take into account higher premiums or termination following the damage occurrence.56 However, in practice the importance of this incentive for prevention is questionable. Also it has to be considered whether the prevention measures that are – besides the exemption from liability – already part of the conception under public law (under private law a similar conception could hardly be implemented) can be seen as a considerable counterbalance to the current prevention incentives. In accordance with § 19 SGB VII, statutory accident insurance institutions have target-oriented measures at their disposal in order to enforce and supervise compliance with the accident prevention regulations. For instance, they are authorised to take appropriate individual measures, which may also include the closure of a company, in order to ensure enterprises comply with the accident prevention regulations or to avert specific health or accident risks. Entrepreneurs have to accept and participate in inspections in order to enable supervision. Moreover, violations of the accident prevention rules can constitute an administrative offence for both entrepreneurs and insured persons, if and insofar as the respective accident prevention rule so stipulates (cf § 209 subsec 1 sent 1 no 1 SGB VII). Furthermore there are, as demonstrated,57 possibilities in the law regulating contributions to provide prevention incentives by means of additions and reductions of contributions as well as bonuses. To alert the public to the significance of accident prevention the Federal Government is obliged to present an annual report on the state of health and safety at work and on the course of occupational accidents and diseases (§ 25 subsec 1 SGB VII). Every four years this report contains a comprehensive survey of the development of occupational accidents and diseases, their costs and health and safety measures at work (§ 25 subsec 1 sent 2 SGB VII).
56 57
292
MünchKomm/Wagner (fn 33) Vor § 823 no 40 f. See above no 31.
Germany
C.
Overall costs
The question whether the costs of the system are justified in comparison 76 with the provided benefits can hardly be answered independently. In 2008 the calculated average contribution of the gewerbliche Berufsgenossenschaften per employee was 1.26 % of the remuneration liable to contribution and has mostly decreased over the past years,58 taking into account that the amount of contribution may vary substantially from this value depending on the line of business due to different occupational risk. Altogether, in 2008 E 8.7 billion were spent on reparation benefits and almost E 900 million on prevention benefits. It is often pointed out that insurance systems governed by public law tend 77 to cause high bureaucratic costs due to lack of market competition.59 Even if private insurance institutions worked more economically, extra costs for marketing and advertising, which do not arise in statutory accident insurance, would have to be considered after all. The PAYGO-system of German social insurance does not know administrative costs for reserve assets management. The administration costs of statutory accident insurance amount to 10 % of the total costs.60 It is questionable whether these costs would be more favourable if the insurance was offered by a private insurance company, taking costs of advertising into account.
D.
Interaction between workers’ compensation61 and private law
The well-established system of an efficient statutory accident insurance, 78 which at the same time serves as ‘social liability insurance’, ensures prompt and comprehensive compensation for insured persons. In practice, the aim of the statutory accident insurance – to restore the insured person’s health and capacity for work, therefore preferably enabling him/her to pursue his/her profession again – is met by appropriate measures. The advantages of the exemption from liability clause have been pointed out. The latter is especially inspired by the idea of a riskbearing community: often it is just a coincidence whether an employee injures a fellow worker or his employer at work, or vice versa. At the same time, this solution can enhance a peaceful company climate, whereby it must be taken into account that liability for material damage 58 59 60 61
Geschäftsbericht DGUV 2008, 62. Cf eg Kötz/Wagner (fn 24) no 51. See no 35 above. See fn 5.
293
Raimund Waltermann
can still arise. To counter-balance this, the insured person obtains (financially) efficient insurance. In Germany there is no debate about changing the system. Concerning material damage, there is no juridical interaction between statutory accident insurance and employers’ liability. The prevention – as demanded by statutory accident insurance law – might also have effects on the material assets of the employees.
E.
Plans for reform
79 The current Federal Government’s coalition agreement of 26 September 2009 includes just a short statement about possible reforms of statutory accident insurance.62 Reform plans will most likely concentrate on the scope of benefits of statutory accident insurance, an area that has appeared on the political agenda for a few years. In addition, the economic efficiency of the gewerbliche Berufsgenossenschaften should be enhanced and the system should be made less bureaucratic. 80 As to employers’ liability, there is no need for action. Without substantial alterations to statutory accident insurance there is also no need for this, since the systems are well coordinated. In view of liability for damages as a result of discrimination it remains to be seen how the legislator will react to possible complaints of the European Commission.
F.
Overall quality of each system independently and in combination
1.
Statutory accident insurance
81 Concerning the socio-political evaluation from the point of view of German jurisprudence, there is no indication that the interaction of prevention, rehabilitation and reparation shaping German accident insurance law is not successful and economical.63 From the employee’s viewpoint, the statutory measures of prevention, rehabilitation and reparation should offer a satisfying solution. On the entrepreneurs’ side it is also assumed that the applica-
62 63
294
Wachstum. Bildung. Zusammenhalt. – Koalitionsvertrag zwischen CDU, CSU und FDP, 17. Legislaturperiode [coalition agreement], p 83. On the need to reform statutory accident insurance see P Becker, Gesetzliche Unfallversicherung – Reformbedarf trotz oder wegen über 100-jähriger Tradition? in: Sozialrecht – eine terra incognita, Festschrift 50 Jahre saarländische Sozialgerichtsbarkeit (2009) 105, 125 ff.
Germany
tion of the law by the gewerbliche Berufsgenossenschaften, the landwirtschaftliche Berufsgenossenschaften and the accident insurance institutions of the public sector successfully gives effect to the provisions which are generally considered as a fair balance of interests. There is no discussion about the quality of the benefits granted by statutory accident insurance. As usual, employers complain about the costs connected with social provi- 82 sion. In particular, the inclusion of the risk of commuting accidents into statutory accident insurance and the extent of the granted benefits has been considered negatively for many years. The Bundesvereinigung der deutschen Arbeitgeberverbände (Federal Association of German Employer Unions, BDA) demands an exclusion of the risk of commuting accidents from accident insurance and the assignment of it to health insurance. This would be a (legally possible) political decision to change the assignment of the risk of commuting accidents in contrast to the long-term legal situation. There are no compelling reasons for either solution.64 One cannot argue that the journey to work is a mere private matter of the employee. Anyway, the risk of commuting accidents also depends on the chosen business location and on decisions concerning company organisation (in particular working hours), and even the journey to the place of the activity is covered to enable the performance of the working activity; therefore it is not only a private matter.65 Under the current legal situation of German law, specialised rehabilitation and the benefits of injury pensions and pensions for surviving dependents are connected with the insurance of the risk of commuting accidents; this constitutes a benefit for society. One might examine how much benefit for society could be obtained by letting employees contribute towards the expenses of the commuting accident insurance, since they can exert influence on the risk by their behaviour. It might be more targetoriented to combine risk-increasing behaviour with regulations of benefit exclusion or reduction, following the system of private insurance. According to the employers’ wishes, the recognition of occupational dis- 83 eases should be made more difficult by a more precise wording of the lists. Furthermore, accident pension law should be revised; in particular, employers demand the abolition of the surviving dependents’ pension and the amendment of the abstract statement of losses.66 In the opinion of
64 65 66
Cf comparing with French and US law G Thüsing, Die Versicherung des Wegeunfalls gemäß § 8 Abs 2 SGB VII, SGb 2000, 595 ff. In principle already Gitter (fn 1) 85 ff. In detail cf Bundesvereinigung der deutschen Arbeitgeberverbände e V (ed), Leistungen zielgenauer gewähren! – BDA-Konzept für die Reform der gesetzlichen Unfallversicherung (2009) 3–6.
295
Raimund Waltermann
employers’ associations, the main argument for this is the lack of the companies’ risk responsibility. The cases mentioned demonstrate common risks of everyday life and must therefore not be borne only by companies. 84 In general the BDA expressly argues in support of the preservation of statutory accident insurance and against privatisation.67 The prevention benefits of statutory accident insurance meet the companies’ expectations. In an aging and shrinking society the aspect of prevention will gain greater importance in the future. According to the estimation of the main association of the accident insurance institutions – the Deutsche Gesetzliche Unfallversicherung (DGUV, domiciled in Berlin) – and companies, the self-administration that is formative for statutory accident insurance is a good instrument to increase its acceptance substantially. Self-administration, as provided throughout German social insurance, has a substantial practical effect on statutory accident insurance. Following §§ 29–66 SGB IV, companies and employees as well as their associations contribute to the more detailed configuration of the legal framework of accident insurance in many ways.
2.
Employers’ liability
85 From the employers’ point of view, there are no demands on legislation concerning the legal framework of employers’ liability. Employers are relieved from risk to a great extent by their exemption from liability concerning personal injury. The High Court jurisprudence regarding compensation for pain and suffering maintains a good company climate and, additionally, eases the financial burden. Liability for material damages is not a subject of discussion. The German legal situation regarding compensation for discrimination is open to criticism, as shown above.68
67 68
296
Ibid, 6. See no 58 above.
Employers’ Liability and Workers’ Compensation: Italy* Alessandro P Scarso and Massimo Foglia
I.
Introduction
A.
Basic system of compensation and liability
The first Italian social insurance was introduced by Legge (Statute) 17 1 March 1898, no 80 – curiously at the time when also both France and the UK introduced a specific regulation on workplace injuries.1 At that time, industrial development led to a significant increase in workplace injuries, thus raising the question of the allocation of the corresponding costs. Legal scholars have developed the ‘principle of occupational risk,’2 according to which damages flowing from the carrying out of occupational activities should be borne by the employer as they gain an advantage from such activities: periculum eius esse debet cuius commodum est.3 With the entering into force of the Italian Constitution (Const) in 1948, 2 the protection of victims of workplace injuries or occupational diseases has been embraced in art 38 Const.4
* 1 2
3
4
Prof Alessandro Scarso is the contributor of no 12–22 and no 81–150, whilst Dr Massimo Foglia is the contributor of no 1–11, no 23–80. See the English and the French reports in this book by R Lewis and F G’sell/I Veillard, respectively. G Fusinato, Gli infortuni sul lavoro e il diritto civile, [1887] Rivista italiana scienze giuridiche (Riv it scienze giur) III, 209. On the concept of ‘occupational risk’, see also F Carnelutti, Infortuni sul lavoro, vol I (1913) 1 ff. See C Castronovo, La nuova responsabilità civile (2006) 361 ff; A De Matteis/S Giubboni, Infortuni sul lavoro e malattie professionali (2005) 33 ff; L Principato, I diritti sociali nel quadro dei diritti fondamentali, [2001] Giurisprudenza costituzionale (Giur cost) 873; C Aldo/I Agostino/C Armando, Analisi storico-critica della nascita e dello sviluppo della assicurazione infortuni e malattie professionali, [2000] Rivista italiana di medicina legale (Riv it med leg) I, 973. According to art 38 Italian Constitution, ‘Every citizen unable to work and without the necessary means of subsistence is entitled to welfare support. Workers have the right to be assured adequate means for their needs and necessities in the case of accidents, illness,
297
Alessandro P Scarso and Massimo Foglia
3 The current system of Workers’ Compensation is ruled by Decreto del Presidente della Repubblica (Presidential Decree, DPR) 30 June 1965, no 1124 – amended by Decreto Legislativo (Legislative Decree, Dlgs) 28 February 2000, no 38,5 which provides for a public insurance scheme covering work-related accidents and occupational diseases. 4 The crucial role has been attributed to INAIL (Istituto Nazionale Assicurazione contro gli Infortuni sul Lavoro,6 the Workers’ Compensation Agency) which – amongst others – pursues the objectives of reducing work accidents, insuring workers involved in ‘risky’ work activities7 and reintegrating victims of work accidents into the working environment and into social life. 5 INAIL insurance is compulsory for all employers8 hiring workers in activities which statutory provisions consider as being ‘risky.’9 6 Workers enjoy a comprehensive protection,10 ranging from prevention at the workplace to health and economic benefits, medical treatment, rehabilitation and reintegration into social and working life. With a view to contributing to the reduction of accidents, INAIL has implemented a number of tools to continually monitor work accident trends, providing small and medium size businesses with training and advice in the field of
5 6 7
8 9
10
disability, old age and involuntary unemployment. Disabled and handicapped persons are entitled to receive education and vocational training. Responsibilities under this article are entrusted to entities and institutions established by or supported by the State. Private-sector assistance may be freely provided.’ See also Dlgs 9 April 2008, no 81, which provides for a comprehensive regulation of health and safety at work. INAIL was established by Statute 29 June 1933, no 860. Due to the imposition of new mandatory provisions almost all categories of workers whose working activity constitutes a ‘dangerous activity’ enjoy insurance coverage: any activity involving the use of machinery or any type of equipment is considered as being ‘dangerous.’ The insurance coverage extends to any worker within the working premises, regardless of whether they directly operate the machinery and/or the equipment. Employers are divided into four categories, with specific tariffs and premium rates. The categories are as follows: industry, craftsmanship, services and miscellaneous activities. According to art 1, DPR 30 June 1965, no 1124, the following activities are considered as being ‘risky’: activities involving the use of machinery and other types of equipment; activities carried out in work and services’ premises where machinery and various types of equipment are used; activities complementary or auxiliary to ‘risky activities’. Furthermore, statutory provisions explicitly list a set of activities with an irrefutable presumption of risk. These include – among others – building and road works, handling of goods in warehouses, street cleaning and waste collection, private surveillance services, transport, setting up of shows, public events, etc. With reference to social security in the case of workplace accidents and occupational diseases, see DPR 30 June 1965, no 1124, amended by Dlgs 28 February 2000, no 38. See also Dlgs 9 April 2008, no 81, which provides for a comprehensive regulation of health and safety at work.
298
Italy
prevention and funding businesses which decide to invest in the improvement of workplace safety.11
B.
Interaction with other institutions
The duty to supervise the enforcement of provisions related to health, 7 hygiene and safety at work is placed on Regions, through the ASL (Azienda Sanitaria Locale, Local Health Units),12 and to the State, through Labour Offices, the fire brigade and ISPESL13 (Istituto Superiore per la Previdenza e la Sicurezza sul Lavoro, National Institute for Occupational Safety and Prevention).14
C.
Empirical evidence
The ‘Observatory on occupation’ issued by INAIL shows a marked decrease 8 in industrial accidents in 2009:15 790,000 accidents and 1,050 casualties, with a drop of – respectively – 9.7 % and 6.3 % as compared to 2008 (when the lowest figures since 1993 were registered).
11
12
13
14
15
For detailed information, see: . The so-called ‘Local Health Units’ are legal entities with organisational autonomy, administrative, investment, accounting, managerial and technical expertise, which provide health care in their respective territories. The purpose of the single ASL is ‘to provide the services related to prevention, care, rehabilitation and forensic medicine, ensuring health care service levels for the entire population in conformity with art 3, para 2, Statute 23 December 1978, no 833.’ ISPESL is the technical-scientific body of the National Health Service which reports to the Ministry of Health with reference to all aspects of workplace safety, health and prevention. For detailed information, see: . Maritime sector and flight crew members are insured by IPSEMA (Istituto di Previdenza per il Settore Marittimo, Institute of Social Security for the Maritime Sector), which provides compulsory insurance against work accidents and occupational diseases and pays maternity allowance. The 2009 figures were most likely affected by the economic crisis in 2009.
299
300
100
Index (2001 = 100)
100
95.6
1,478
133.8
396
86.6
1,082
2002
93.5
1,445
120.9
358
87
1,087
2003
85.9
1,328
103
305
81.8
1,023
2004
82.8
1,280
94.3
279
80.1
1,001
2005
86.7
1,341
89.9
266
86
1,075
2006
81.5
1,260
87.8
260
80
1,000
2007
72.4
1,120
98.3
291
66.3
829
2008
67.9
1,050
95.6
283
61.3
767
2009
(*) See the statistical monthly bulletin ‘DATI INAIL,’ which is available at: . The 2008 and 2009 data are retrieved from ‘DATI INAIL – June 2010,’ whilst the data of the remaining years have been retrieved from ‘DATI INAIL – April 2008.’ All data are estimates – on an annual basis – of consolidated data.
Index (2001 = 100)
1,546
296
On the way to the workplace (in itinere)
TOTAL
100
1,250
Within the workplace’s premises
Index (2001 = 100)
2001
TYPOLOGY
WORKPLACE CASUALTIES – YEARS 2001–2009 (*)
Alessandro P Scarso and Massimo Foglia
9 The following table shows the trends in workplace injuries and casualties from 2001 to 2009:
Italy
With reference to workplace accidents in the field of industry, commerce and 10 services, the number of claims submitted to INAIL in 2009 amounted to 705,181 (as compared to 790,279 in 2008 and 825,974 in 2007). The number of injuries indemnified by INAIL in 2009 was 468,568 (including casualties and temporary or permanent disabilities). With reference to occupational diseases in the field of industry, commerce 11 and services, the number of claims in 2009 amounted to 30,362 (as compared to 27,756 in 2008 and 26,817 in 2007). The number of occupational diseases indemnified by INAIL in 2009 was 7,233 (including casualties and indemnities for both permanent and temporary disabilities).
II.
Workers’ Compensation
A.
Scope of cover
In the event of a work accident or occupational disease, workers subject to 12 compulsory insurance are covered by INAIL. All workers who carry out ‘risky’ activities, including – amongst others – 13 superintendents,16 parasubordinate workers,17 associates of partnership companies and/or co-operative societies,18 medical staff exposed to X-rays, apprentices, employees working with computers and cash registers,19 executives, professional sportsmen, etc are insured by INAIL. Coverage is also granted to craftsmen and self-employed workers in the agriculture sector.20 In addition, the Domestic Accidents Insurance Act of 1999 protects per- 14 sons – aged between 18 and 65 – who carry out, on an exclusive basis, nonpaid domestic activities in the household (ie who are not involved in any type of work requiring compulsory social security insurance and who are not parties in a subordinate work relationship).
16 17 18 19 20
Art 4 Dlgs 23 February 2000, no 38. Art 5 Dlgs 23 February 2000, no 38. See Corte di Cassazione (Italian Supreme Court, Cass) (Labour Section) 15 April 2002, no 5382, [2002] Pratica e lavoro (Prat lav) 1148. See Corte Costituzionale (Constitutional Court, Corte Cost) 9 June 1977, no 114 – see . See DPR 30 June 1965, no 1124, which has been deeply amended by Dlgs 23 February 2000, no 38.
301
Alessandro P Scarso and Massimo Foglia
15 Insurance coverage includes accidents occurring on the way to the workplace (in itinere).21 Pursuant to art 12, Dlgs 28 February 2000, no 38, injuries suffered: ■
whilst travelling to and from the workplace (accidents occurring at home are excluded);
■
whilst travelling from one workplace to another (in the case of multiple employments);
■
whilst leaving the business premises in order to consume food, provided that no canteen is present,
are considered as being accidents occurring on the way to the workplace. 16 Insurance coverage extends to deviations from the ‘usual’ journey to the workplace due to the carrying out of an assignment given by the employer; force majeure (for instance, a mechanical failure); due to essential ‘needs’ (for instance, fulfilment of physiological ‘needs’); due to the fulfilment of obligations under criminal law (for instance, administer first aid to victims of road accidents) or as a consequence of short stops22 which do not result in an increase in risk conditions.23 17 The insurance also covers usage of private transportation, provided that its use is indispensable (for instance, in the case of a lack of public transportation to the workplace).24 18 The worker is entitled to indemnification also in cases where the risk is not intrinsically connected to their working tasks (the so-called rischio
21
22
23
24
302
G Corsalini, Infortunio in itinere, in: F Facello (ed), Il sistema di tutela degli infortuni e delle malattie professionali (2005) 215 ff; De Matteis/Giubboni (fn 3) 261 ff; G Ferrari/ G Ferrari, Infortuni sul lavoro e malattie professionali (2004) 174 ff. See Cass (Labour Section) 18 July 2007, no 15973, [2007] Guida al lavoro (Guida lav), no 40, 38, which states that an unnecessary stop at a bar located along the way to the house of the worker interrupts the causal nexus with the accident. Clearly, in the cases listed above, insurance coverage is excluded if the worker using their private means of transportation abused alcohol and/or drugs, made a non-therapeutic use of narcotics and hallucinogens and/or drove without a driving license. See Cass (Labour Section) 14 February 2008, no 3776, [2008] Guida lav, no 14, 35. According to Cass (Labour Section) 17 January 2007, no 995, [2007] Guida lav, no 6, 33, the mere time-saving permitted by them does not render the usage of a private transportation means indispensable. Insurance coverage is not necessarily excluded if the injury flows from a traffic violation committed by the worker on the way to their workplace, unless in the presence of ‘elective risk’ (see fn 29, nos 98 and 99 below) by the worker: see Cass (Labour Section) 29 July 2009, no 17655, [2009] Repertorio del Foro italiano (Rep Foro it), keyword Infortuni sul lavoro, no 57; Consiglio di Stato (Conseil d’Etat) 17 January 2008, no 104, [2008] Rep Foro it, same keyword, no 64; Cass (Labour Section) 6 August 2003, no 11885, [2003] Rep Foro it, same keyword, no 56. On workers’ contributory negligence, see below no 97 and no 98.
Italy
improprio – ‘inappropriate risk’), as long as it is related to an activity which is a pre-condition to their performance.25 Insurance coverage applies also in the case of negligent conduct (both 19 slight as well as gross negligence) by the injured worker,26 including contributory negligence. The seriousness of the worker’s negligence does not bear on the quantum of the indemnity.27 On the contrary, workplace injuries caused intentionally (fraud) by the 20 worker28 or when they undertake a so-called ‘elective risk’ (rischio elettivo)29 are not covered by INAIL. Insurance coverage is granted by INAIL also in cases where the employer 21 has not regularly paid the insurance premiums (referred to as the so-called principle of automatism.30 Self-employed workers who are not up-to-date with the payment of 22 insurance premiums at the time the accident or occupational disease occurred will suffer a suspension of their economic benefits until social security claims have been fully paid.31
25
26 27
28 29
30 31
See Cass (Labour Section) 18 July 2005, no 15107, [2005] Guida lav, no 41, 37; Cass (Labour Section) 8 March 2001, no 3363, [2001] Il Foro Italiano (Foro it) I, 1531; Cass (Labour Section) 11 February 2001, no 1944, [2001] Vita notarile (Vita not) 399; Cass (Labour Section) 24 September 1999, no 10542, [1999] Guida al diritto (Guida dir) no 49, 30, with a commentary by F De Ritis. See Cass (Labour Section) 4 December 2001, no 15312, [2001] Diritto e giustizia (D&G) 45, 36. See Cass (Labour Section) 18 February 2004, no 3213, [2004] Foro it I, 3129, with a commentary by S Di Paola. A different rule (ie liquidation of damages according to the seriousness of the negligence of the employer and the extent of the consequences arising from it) applies where INAIL brings a recourse action against the employer for their liability: see below ch II sec G (no 69 ff) and ch III sec F (no 122 f). Whereas intentional wrongdoing of the worker is ascertained by a criminal sentence: see arts 11 and 64 DPR 30 June 1965, no 1124. The ‘elective risk’ indicates any purely arbitrary deviation, in the absence of any workrelated reason, from the ‘normal’ ways of working, which result in risks different from those inherent in the ‘usual’ carrying out of the work. See De Matteis/Giubboni (fn 3) 248 ff; see also Cass (Labour Section) 10 September 2009, no 19496, [2009] Foro it, keyword Infortuni sul lavoro, no 56. On the ‘elective risk,’ see below nos 98 and 99. See Ferrari/Ferrari (fn 21) 288 ff; D Piergrossi, Le prestazioni economiche, in: Facello (fn 21) 375 ff. This automatic procedure is not applicable to housewives. Victims of domestic accidents leading to permanent disability equal to or exceeding 33 %, who have failed to pay their premiums, are not protected by INAIL.
303
Alessandro P Scarso and Massimo Foglia
B.
Compensation trigger
23 According to jurisprudence,32 a work accident is characterised by a physical or psychological injury due to a ‘violent cause’ (causa violenta), provided the accident is related to the work activity. 24 In contrast to work accidents, occupational diseases do not stem from ‘violent causes.’33 Therefore, the drawing of a boundary between work accidents and occupational diseases depends on the meaning attributed by jurisprudence to the notion of ‘violent cause.’34 Even though the notion of ‘violent cause’ so far has not been univocally interpreted, its most recent notion encompasses any ‘sudden, and instantaneous’35 action which may be ascribed to a ‘factor’ existing on the business premises.36 25 With reference to occupational diseases, a ‘mixed’ system applies37, depending on whether the disease at issue is on the so-called ‘prescribed lists’ (the Tabella [‘Tables’]). For diseases listed in the relevant Tables38 (DPR 13 April 1994, no 336 and DPR 30 June 1965, no 1124), the occupational origin of the disease – for compensation purposes – is considered as being proved (rectius, a presumption as regards causation applies),39 whilst for any other disease the burden of proof related to its work-related origin has to be discharged by the worker.40 In any case, 32
33 34 35
36
37 38 39 40
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See, ex multis, Cass (Labour Section) 30 December 2009, no 27831, [2009] Rep Foro it, keyword Infortuni sul lavoro, no 43; Cass (Labour Section) 14 August 2007, no 17676, [2007] Rivista degli infortuni e delle malattie professionali (Riv infortuni) II, 38; Cass (Labour Section) 20 June 2006, no 14119, [2006] Rep Foro it, keyword Infortuni sul lavoro, no 59. See Cass (Labour Section) 26 May 2006, no 12559, [2006] Foro it I, 2732 with a commentary by V Ferrari. See also, Cass (Labour Section) 20 June 2006, no 14119 (fn 32). L Galantino, Diritto del lavoro (2009) 411 ff; S Cui, Il diritto penale del lavoro (2007) 111 ff. See Cass (Labour Section) 20 June 2006, no 14119 (fn 32); Cass (Labour Section) 26 May 2006, no 12559 (fn 33); Cass (Labour Section) 12 May 2005, [2005] Rep Foro it, keyword Infortuni sul lavoro, no 65. Work accidents may also be caused by so-called ‘external agents:’ see Cass (Labour Section) 16 October 2000, no 13741, [2000] Massimario giustizia civile (Mass giust civ) 2145; [2000] D&G 38, 72. Following Corte cost 18 February 1988, no 179, [1988] Giur cost I, 639; [1988] Notiziario giurisprudenza del lavoro (Notiziario giur lav) 549. Tables might be updated by a scientific committee pursuant to art 10, Dlgs 23 February 2000, no 38 and they are subjected to periodical revision. See INAIL Memorandum of 24 July 2008, no 47. See Cass (Labour Section) 1 July 2008, no 17965, [2008] Guida lav, no 38, 60; Cass (Labour Section) 27 November 2007, no 24637, [2008] Guida lav, no 5, 32; Cass (Labour Section) 25 January 2007, no 1669, [2007] Guida lav, no 14, 24; Cass (Labour Section) 1° March 2006, no 4519, [2006] Guida lav, no 20, 35; Cass (Labour Section) 17 March 2006, no 5932, [2006] Guida lav, no 24, 30; Cass (Labour Section), 16 December 2005, no 27838, [2006] Guida lav, no 7, 45; Cass (Labour Section) 24 January 2005, no 1370,
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indemnification is subordinated to causation (between the work activity and the harmful event),41 a mere chronological or topographical connection being insufficient.42
C.
Scope of protection
Pursuant to art 2, DPR 30 June 1965, no 1124, social insurance covers both 26 personal injuries (inasmuch as it affects the employee’s ability to work)43 and the death of the worker deriving from the work activity inasmuch as it is due to a ‘violent cause’. Unless they evolve into occupational diseases, sexual harassment or dig- 27 nitary injuries (ie those resulting from discrimination44) are not covered by INAIL. Similarly, the indemnity granted by INAIL does not cover danno biologico 28 for temporary partial disability (lower than 100 %) and permanent danno biologico not exceeding 6 %. Compensation – by INAIL – for ‘pain and suffering,’ as well as indemnification for dignitary injuries, property damage and pure economic loss is also excluded. In addition, INAIL coverage encounters a cap as regards the amounts 29 liquidated as compared to those payable under the employers’ liability regime. Indeed, the indemnity granted by INAIL as danno biologico is lower than compensation awarded for tortious liability. In order to recover the ‘gap,’ the injured worker may sue either the employer or the third person who caused the injury, provided their civil liability has been affirmed.
41
42
43 44
[2005] Guida lav, no 15, 21; Cass (Labour Section) 20 December 2002, no 18204, [2003] Guida lav, no 8, 23. More generally, on ‘causation,’ see R Pucella, La causalità ‘incerta’ (2006). For an interesting and – potentially – far-reaching application, see Court of Appeal (second-instance court) of Brescia 22 December 2009, [2010] Responsabilità civile e previdenza (RCP) 1369, where the court stated the liability of INAIL for the development of a tumor affecting the auditory nerve by an employee, who for work-related reasons had been using a cordless phone for an average of six hours every day for almost a decade. See Cass (Labour Section) 14 February 2008, no 3776, [2008] Guida lav, no 14, 35; Cass (Labour Section) 20 April 2002, no 5764, [2002] Diritto e pratica del lavoro (Dir prat lav) 2983; Cass (Labour Section) 26 October 2000, no 14085, [2000] Giustizia civile (Giust civ), 2813; Cass (Labour Section) 23 January 1998, no 645, [1998] Mass giust civ143. The concept of ‘ability to work’ is defined by both jurisprudence and legal scholars as the ability to perform any remunerated work activity. See De Matteis/Giubboni (fn 3) 110. For an outline of the ‘discrimination theme’, see A Gentili, Il principio di non discriminazione nei rapporti civili, [2009] Rivista critica del diritto privato (Riv crit dir priv) 207.
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Alessandro P Scarso and Massimo Foglia
30 The right to receive compensation from INAIL arises after three days from the date of the injury or onset of the occupational illness.45 The indemnity amounts to 60 % of the average daily wage for the first 90 days of absence, and is increased to 75 % of the average daily wage starting from the 91st day onwards. The average daily wage is calculated with reference to the last 15 days before the work accident occurred or the onset of the occupational disease.46
D.
Heads and levels of benefit
1.
Medical care and rehabilitation assistance
31 INAIL supplies medical treatment and rehabilitation as follows:47 First aid medical treatment (art 86 ff, DPR 30 June 1965, no 1124);48 forensic-medical treatment; costs related to the supply of prosthesis and their replacement 49 are
45
46 47 48
49
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In order to be entitled to compensation from INAIL, the temporary disability has to last at least for three days (including holidays). Indeed, the employer is obliged to pay the injured worker the full pay for the day on which the accident occurred and 60 % of the daily pay for the following three days, unless collective agreements or individual contracts of employment have provided for more favourable conditions. In the case of domestic accidents, no indemnity for temporary disability will be awarded. Workers suffering from silicosis or asbestosis are an exception as they receive a daily allowance equal to the full amount of the temporary disability when they are absent from work in order to undergo diagnostic tests or medical treatments: see art(s) 140 ff, DPR 30 June 1965, no 1124: For an outline on this topic, see AP Scarso, Compensation for Personal Injury related to Asbestos Exposure [2008] Lex Medicinae – Revista Portuguesa de Direito da Saúde 27 ff. Specific categories such as, for instance, agricultural workers employed on a fixed-term basis, enjoy preferential treatment. See D Piergrossi, Le prestazioni sanitarie, in: Facello (fn 21) 405 ff; A Carnevale/G Scarano, Il danno alla persona (2010) 348. Thanks to specific agreements reached with the Regional administrations, INAIL provides a first aid and relief service both to injured workers and to out-patients in its surgeries throughout Italy. Assistance and medical treatment are provided to insured workers for the whole period of their disability. See INAIL – Memorandum 18 July 2000, no 54, and Memorandum 5 December 2000, no 76. As from January 2007, new regulations on prosthesis came into force. Perhaps the principal change lies in the development of the catalogue of supplies which is made available to victims of accidents for their better reintegration into social and working life (such as dental implants; digital acoustic prosthesis; interventions for hair transplants; prosthesis in silicone and cosmetic surgery). In addition, the concept of ‘aid’ has been enlarged to include so-called ‘domotic aid’ (ausilio domotico), ie all technological instruments allowing for the management and control of the victim’s home through the improvement of its comfort, functionality and safety. Disabled persons to whom such services are provided may receive a specific training in domotics, in order for them to choose the most adequate solution. Finally, the new regulation on prosthesis provide for the total reimbursement of the expenses sustained for the removal of architectural barriers in the victim’s home. For more detailed information, see ‘INAIL in brief’ (2008)
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absorbed by INAIL to the extent that they aim to reduce the worker’s disability50 (art 90, DPR 30 June 1965, no 1124) whilst expenses for spa and thermal treatment are covered inasmuch as they aim to reduce the worker’s disability.51 The aim which the rehabilitation aims to achieve is the ‘maximum 32 recovery’ of the injured worker in order for them to resume, if possible, the same work which they previously performed. INAIL grants to disabled workers an allowance for continuous personal 33 assistance should the injury result in a high degree of disability requiring continuous personal assistance.52 For instance, insured workers with a degree of permanent disability of 100 % deriving from one of the impairments listed in DPR 30 June 1965, no 1124 (see therein Annex, Table 3) may apply to INAIL for a monthly allowance to be used for 24-hour personal assistance.53
2.
Non-pecuniary losses
The ‘Work Accident and Occupational Diseases Act’ of 23 February 2000, 34 no 38 (hereinafter: the ‘WA-Act’) has explicitly introduced the notion of danno biologico, thereby providing for its compensation as part of compulsory insurance against work-related accidents and occupational diseases.54
50 51
52 53 54
at . Depending on technological progress, INAIL periodically provides up-to-date medical devices to the workplace victims enjoying insurance coverage. Travel expenses and the cost of staying in hotels subscribing to a special agreement are payable by INAIL, both for the disabled worker and the accompanying person, if the need for the latter to assist the injured worker has been ascertained by the physician in charge. For the events included in the new compensation system relative to danno biologico, spa treatments and climatic stays are recognised starting from the minimum degree of impairment granting the right to lump sum compensation (at present 6 %). See ‘INAIL in brief’ (fn 49). See art 76, DPR 30 June 1965, no 1124. See art 218, DPR 30 June 1965, no 1124. Dlgs 23 February 2000, no 38 was stimulated by the constitutional jurisprudence: see Corte cost 15 February 1991, no 87, [1992] Rivista italiana diritto del lavoro (Riv it dir lav) II, 3. On danno biologico see, G Alpa, Il ‘danno biologico’: parabola o evoluzione di un progetto di politica del diritto, in: M Persiani/F Carinci (eds), ADL. Argomenti di diritto del lavoro (2000) 168; P Sandulli, La ridefinizione dell’assetto normativo in tema di assicurazione contro gli infortuni sul lavoro e le malattie professionali, [1999] Riv infortuni I, 643; A Martone, Danno biologico tra diritto alla salute e tutela previdenziale, [2000] Riv infortuni I, 617; M Cinelli, La tutela del danno biologico nel Dlgs 38/2000: luci ed ombre, [2000] Riv infortuni I, 351; De Matteis/Giubboni (fn 3) 123 ff; E Gambacciani, Danno biologico, danno esistenziale e tutela INAIL, [2000] Riv infortuni I, 451; L La
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The WA-Act defines danno biologico as an ‘injury to an individual’s psychophysical integrity capable of medical evaluation.’ 35 Danno biologico is indemnified with reference to standardised economic reference values,55 based on a point system (the so-called calcolo a punti).56 36 Danno biologico may be permanent (where the health prejudice may not be recovered) or temporary (where a recovery is possible). 37 Injuries for permanent danno biologico not exceeding 5 % are excluded from insurance coverage.57 38 Personal injuries corresponding to a danno biologico ranging between 6 % and 15 % of disability are compensated in the form of a lump sum indemnity. 39 In the case of injuries exceeding 16 %, the indemnity is awarded as a fixed income by granting an annuity (in this case, both non-pecuniary as well as pecuniary losses resulting from the injury are compensated).58
55
56
57
58
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Peccerella, La tutela della persona nel nuovo sistema indennitario del danno di origine lavorativa, [2000] Riv infortuni I, 367; id, Principi generali del nuovo sistema di indennizzo, [2001] Riv infortuni I, 1047; M Rossetti, Il danno da lesione della salute tra sistema indennitario e sistema risarcitorio: punti di contatto e questioni irrisolte, [2001] Riv infortuni I, 1035; A Andreoni, L’azione del lavoratore per il risarcimento del danno biologico, [2001] Riv infortuni I, 1067; G Corsalini, La tutela del danno biologico da parte dell’INAIL tra novità e continuità, [2002] Riv infortuni I, 11. For this reason, ie due to its objectively determinable amount, some legal scholars hold that danno biologico should rather be considered as being a pecuniary loss (rather than a non-pecuniary loss): See FD Busnelli, Il danno biologico – Dal ‘diritto vivente’ al ‘diritto vigente’ (2001) passim; E Bargelli, Danno non patrimoniale e interpretazione costituzionalmente orientata dell’art 2059 CC, [2003] RCP 702 ff. The question has been explicitly addressed by the Corte di Cassazione, which stated in plain language that danno biologico constitutes a non-pecuniary loss: see Cass 4 November 2005, no 16525, [2004] Foro it I, 779, with a commentary by M Bona. Pursuant to Decreto Ministeriale (Ministerial Decree, DM) 12 July 2000, the value of each point increases with the seriousness of the disability and decreases according to the age of the injured person. In addition, the amount of each point varies according to gender, in order to take into account the longer life expectancy of women. See Dlgs 23 February 2000, no 38, with reference to which a complaint of unconstitutionality has been raised: see D Iarussi, Responsabilità civile e nuovi danni risarcibili per gli infortuni sul lavoro (2010) 44 f. However, the Corte Costituzionale has recently declared the constitutionality of the Amendment (see Corte cost 19 December 2006, no 426, [2007] Orientamenti della giurisprudenza del lavoro (OGL) 398. For workplace injuries occurring after 25 July 2000. For accidents which occurred prior to the entering into force of the WA-Act, INAIL provides a general annuity for permanent disabilities, which does not include danno biologico. Pursuant to art 74, DPR 30 June 1965, no 1124, INAIL grants to victims an annuity for the permanent disability exceeding 10 % (with reference to workplace accidents) or exceeding 20 % (in the case of occupational diseases). Victims are entitled to receive the annuity starting from the first day after the occurrence of the damage.
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In addition, INAIL awards compensation for the reduction of the (specific) 40 ability to work59 in the case of injuries exceeding 16 % of danno biologico.60 No financial benefits are granted by INAIL for temporary partial disability 41 (ie any temporary disability lower than 100 %). On the contrary, INAIL grants to victims a daily allowance for a complete (100 %) temporary disability to work.61 INAIL grants no compensation of non-pecuniary losses other than danno 42 biologico,62 for instance for ‘pain and suffering’ (danno morale)63. In order to otain compensation for damage not covered by INAIL – which are therefore defined as complementary damages (danno complementare)64 – the worker will have to sue the wrongdoer (be it the employer or a third person) according to the ordinary contractual and/or tortious liability regimes.
59
60
61
62
63
64
The notion of ‘ability to work’ designates the specific ‘aptitude’ or ‘ability’ to work with reference to the injury the worker suffered in the case at issue: for instance, a workplace accident occurring to a musician which causes their deafness will entitle the musician to seek a higher indemnity as compared to that which would be granted, for the same injury, to a farmer. A different rule applies with reference to the indemnity aimed at compensating the generic ‘ability’ to work (see Dlgs 23 February 2000, no 38). The indemnity awarded – in the form of an annuity – may be added to the damages for danno biologico: see art 13, para 2, let b), Dlgs 23 February 2000, no 38. The new compensation regime applies to work accidents and occupational diseases which occurred after 25 July 2000. The direct annuity for permanent disability continues to be provided to victims of work accidents which occurred before 25 July 2000 (with the exception of domestic accidents, to which the repealed compensation regime does not apply). The allowance aims to provide compensation for the loss of earnings. The indemnity is paid starting from the fourth day after the workplace accident occurred and will be awarded until the injury has healed (see art 68, DPR 30 June 1965, no 1124). Art 13, para 2, let a), Dlgs 23 February 2000, no 38 provides for an indemnity for the ‘dynamic-relational aspects,’ thus raising the question of whether it also encompasses damages different from danno biologico: see A Carnevale/G Scarano, Il danno alla persona. Aspetti giuridici e medico-legali (2010) 356 ff. Recent decisions attest to the difficulties in the assessment of non-pecuniary losses in general, and of ‘pain and suffering’ in particular. See, for instance, with reference to socalled ‘terminal damages,’ ie personal injuries leading to the death of the injured person within a short time. Jurisprudence holds that, as far as the assessment of so-called terminal damages are concerned, it becomes essential in order to calculate damages ‘to evaluate the pain and suffering actually suffered by the victim, the seriousness of the offence and all other elements of the case submitted, in order to quantify precisely the compensation awarded in the concrete case’. See the recent contribution of B Facci, La Cassazione ed il risarcimento del c.d. danno terminale, [2003] RCP 1060. With reference to unitary nature of non-pecuniary loss recently affirmed by the Corte di Cassazione, see no 111 below. See no 49 ff below.
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Alessandro P Scarso and Massimo Foglia
43 Due to a limitation laid down in statutory provisions,65 the indemnity granted by INAIL as danno biologico is lower than compensation for damage awarded under general tortious liability.66
3.
Dependent’s benefits and benefits to their relatives
44 In the case of the worker’s death, INAIL pays an annuity to the surviving relatives of the victim (pursuant to art 85, DPR 30 June 1965, no 1124).
4.
Comparison with damages in tort
45 Under tort law the worker may recover any unfair damage they have suffered (pursuant to art 2043 CC).67 46 As a general rule, compensation is awarded whenever a significant interest protected by the legal system has been infringed, ie in the case of the employers’ liability: in contrast to compensation awarded by INAIL, any unfair damage suffered may be recovered; in addition, damages awarded are not subject to any cap or threshold. 47 Indeed, the indemnity granted by INAIL covers neither permanent danno biologico not exceeding 6 % nor danno biologico for temporary partial disability (lower than 100 %). Compensation for ‘pain and suffering,’ dignitary injuries, property damage and pure economic loss is also excluded. 48 In addition, INAIL coverage encounters a cap with reference to the amounts awarded as compared to those granted under the employers’ liability regime. Indeed, the indemnity granted by INAIL as danno biologico is lower than compensation awarded under general tortious liability. 49 Legal scholars designate the type of losses not indemnified by INAIL as socalled complementary damage (danno complementare), ie ‘types of injuries’ excluded from the public insurance coverage.
65 66
67
310
See art 66 ff, DPR 30 June 1965, no 1124. For instance, a 6 % disability of a male worker aged thirty-one will result in an indemnity granted by INAIL amounting to approx E 8,160 whereas compensation for danno biologico under the tortious liability regime would amount to approx E 9,368. Art 2043 Codice civile (Italian Civil Code, CC) lays down that ‘Any fraudulent, malicious, or negligent act that causes an unjustified injury to another obliges the person who has committed the act to pay damages’.
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Legal scholars refer to the difference between the indemnity awarded by 50 INAIL and the compensation due to the injured worker under the (applicable) civil liability regime as so-called differential damage (danno differenziale).68 To obtain compensation for ‘complementary damage,’ the injured worker 51 will have to sue the wrongdoer (be it the employer or a third person), who will be liable, if at all, according to the (ordinary) contractual and/or tortious liability regimes. Similarly, the injured worker may sue either the employer or the third person who caused the injury in order to recover the ‘gap’ between the indemnity paid by INAIL and the amount to which they are entitled under the ordinary civil law regime (so-called ‘differential damage’).69 The granting of the indemnity by INAIL is independent from the award- 52 ing of any compensation under tortious liability principles.
5.
Lump sums or periodical payments?
Personal injuries corresponding to a danno biologico ranging between 6 % 53 and 15 % of disability are compensated in the form of a lump sum indemnity. The indemnity will be paid directly by INAIL in two distinct tranches: an advance payment within 20 days from the receipt of the application and the remaining sum within 30 days from the receipt of the medical certificate confirming the ‘final’ recovery. INAIL may reduce the amount payable for hospitalisation periods to workers without family 68
69
See art 10, DPR 30 June 1965, no 1124. ‘Differential damage’ (danno differenziale) – designates the difference between the indemnity awarded by INAIL – mainly with reference to danno biologico – and compensation granted to the injured worker under the relevant civil liability regime. On the criteria for the assessment of danno differenziale, see Tribunal of Monza 12 May 2009, no 241, [2009] Giustizia a Milano 5, 35; Tribunal of Milan 9 June 2009, no 7515, [2009] Giustizia a Milano 7–8, 52; Tribunal of Parma 18 June 2009 (without a no), [2009] ADL 1398, with a commentary by D Iarussi; Tribunal of Vicenza 4 January 2007, no 321, [2007]; Riv infortuni 19; Tribunal of Bassano del Grappa 24 January 2006, no 59, [2006] Riv infortuni, I, 80; Tribunal of Treviso 31 March 2006, [2006] OGL, 921; Tribunal of Camerino 19 July 2006, [2006] Corti marchigiane 2006, 426; Tribunal of Monza 21 February 2005, [2005] Giurisprudenza di merito (Giur merito) 2305; Tribunal of Treviso 12 July 2004, [2005] Riv infortuni II, 34; Court of Appeal of Turin 29 November 2004, [2004] Orientamenti della giurisprudenza del lavoro (OGL) I, 1001 and [2005] Rivista critica di diritto del lavoro (Riv crit dir lav) 251, with a commentary by E Barraco. Contra: Tribunal of Vicenza 3 June 2004, no 82, [2005] Lavoro e giurisprudenza (Lav giur) 569, with a commentary by E Barraco. Obviously, the injured worker seeking compensation for the ‘differential damage’ will have to disclose the amount of the indemnity granted by INAIL: see Tribunal of Parma 18 June 2009 (fn 68). See also Iarussi (fn 57) 100 ff.
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dependents by one-third. However, the insured worker may apply to INAIL in order for it not to apply the reduction, provided ‘special’ reasons exist. 54 In the case of injuries exceeding the 16 % threshold with reference to the point-system, compensation is awarded as a fixed income by granting an annuity (in this case, both non-pecuniary as well as pecuniary losses resulting from the injury are compensated).
E.
Funding systems
55 The Italian insurance coverage for work accidents is based on mandatory statutory provisions.70 56 The cost of the insurance coverage is payable by the employer and is determined by applying, to the remuneration paid to workers, pre-determined coefficients which substantially take into account the different degrees of ‘risk’ involved in the working activities at issue.71 57 INAIL promotes – both by directly financing as well as by granting reductions in the insurance premium to be paid by employers – the adoption of prevention measures pursuant to art 23, Dlgs 23 February 2000. Prevention measures include: programmes to adjust labour structures and organisation with reference to health, hygiene and safety at work in small and medium-sized businesses, in the agriculture and in the crafts sectors, in compliance with health and safety at work regulations;72 training and information projects on dangers and risks at work and the related prevention measures, including multimedia products and data70 71
72
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For an outline of the funding system, see P Rossi, Il finanziamento dell’assicurazione e la gestione del rapporto assicurativo, in: Facello (fn 21) 425 ff. Insurance charges, known as the premium, will have to be paid exclusively by the employer, the craftsman or the self-employed worker in the agriculture sector. In the case of workers with an continuous and co-ordinated collaboration contract (in general, contratto di collaborazione), the payment of the premium is subdivided as follows: one third is payable by the worker and the remaining two-thirds by the employer. In the case of employees, the premium is calculated according to their salary and in relation to the risk factor of the activity carried out. In the case of craftsmen, calculations are made according to a fixed income. In the case of self-employed workers in the agriculture sector, the premium consists in a per-capita fixed contribution paid to the National Social Security Institute (Istituto Nazionale della Previdenza Sociale, INPS) together with other social security contributions. The employer, when starting up his activity, assumes – amongst others – the following obligations in respect of INPS and of the insured workers, which include the declaration of works, the nominative declaration of the insured persons (DNA), the keeping of the prescribed books, the payment of premiums and the report on any accidents. See Dlgs 9 April 2008, no 81.
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banks made available to anyone either for free or at production price; projects for the gathering of relevant information.73 Such ‘premium policy’ by INAIL substantially amounts to a ‘direct sup- 58 port’ to employers investing in workplace safety.74 Injuries not covered by INAIL75 may be insured by the employer by having recourse to private insurance.
F.
Administration and adjudication of claims
INAIL has been conferred the authority to monitor employers’ compliance 59 with statutory workplace safety provisions. In such capacity, INAIL inspectors are public officials and are conferred powers of inspection, verification, warning and notification. In the case of an accident at work, the worker must immediately inform 60 the employer who must draft a report indicating any relevant circumstance related to the workplace accident which will have to be sent to INAIL (see art 52, para 1, DPR 30 June 1965, no 1124).76 Should INAIL receive a complaint related to workplace safety, it will 61 inform the Investigative Section of the competent Provincial Labour Office (Sezione Ispettiva della Direzione Provinciale del Lavoro, ISPL) which will initiate an investigation as soon as possible and in any event within four days from the receipt of the complaint (pursuant to art 56, para 2, DPR 30 June 1965, no 1124).77 The ISPL will gather data related to: the identity of the injured worker; the nature and extent of injuries; the status of the injured worker 73 74
75 76
77
See above ‘INAIL in brief’ (fn 49). Indeed, businesses which have carried out interventions for the improvement of safety and health conditions of the workplace may apply for a reduction of the average tariff rate (art 24, DM 13 December 2000), by submitting an application through the simplified single model (OT24, published on the INAIL internet site). See above ‘INAIL in brief’ (fn 49). Danno biologico not exceeding 5 % and temporary disability lower than 100 % are excluded from insurance coverage. See no 37 ff above. The report must be drafted by the employer within two days from the date on which they have knowledge of the workplace accident (see art 13, DPR 30 June 1965, no 1124). In cases of fatal accidents, the report must be sent within 24 hours to INAIL. In the case of the occurrence of an occupational disease, the worker must inform their employer and hand over to them the medical certificate within 15 days (art 52, para 2, DPR 30 June 1965, no 1124). The employer is under a duty to submit the relative report to INAIL within 5 days from the date of receipt of the medical certificate. INAIL may request the injured worker who has submitted a request to be granted compensation to undergo a forensic medical examination to ascertain and quantify the permanent damage deriving from the accident or from the occupational disease. The Investigative Section of the Provincial Labour Head Office may also decide to carry out
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and their pay; the nature of the work carried out by the injured worker; the circumstances in which the accident occurred and its cause and nature, also with reference to any deficiencies in hygiene and prevention measures; in the case of the death of the worker, whether any surviving relative is entitled to indemnity and their residence. 62 Should, at the end of the investigation, INAIL consider the injured worker to be entitled to indemnity, it is under a duty to settle any lump sum payment within 20 days from the date of the work accident (art 100, DPR 30 June 1965, no 1124).78 63 Should – on the contrary – INAIL not be held to be obliged to pay any indemnity, it must notify the injured worker or their surviving relatives of this decision, specifying the reasons for its refusal. 64 Before suing INAIL, the injured worker opposing INAIL’s findings will have to submit to INAIL – within 60 days from the notification of the denial made to them – a written complaint, outlining the arguments for which they challenge INAIL’s refusal to pay any indemnity/the indemnity amount determined by INAIL, and will have to enclose a medical certificate.79 65 Should the complainant not receive any reply from INAIL within 60 days from the date of the submission of their complaint, or should they deem INAIL’s reply unsatisfactory, they may sue INAIL. 66 Litigation is brought under the jurisdiction of the Labour Sections of firstinstance ordinary courts (which do not constitute a special jurisdiction).80 67 The first-instance decision may be appealed before the Corte d’Appello (ie the ordinary second-instance court), which may substitute the first-instance decision with its own decision. Should, on the contrary, the case be submitted to the Corte di Cassazione, it may – as a general rule – either validate or quash the decision by the Corte d’Appello: in the latter case it will remit the case for re-hearing to a different Section of the competent Corte d’Appello. 68 No relevant empirical data is available with reference to administration costs.
78
79 80
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investigations at the workplace. The investigations should be carried out in the shortest time possible and in any case within ten days of the receipt of the claim. A different and more lengthy procedure is applicable in the event of permanent disability or casualties (see, respectively, arts 103 and 105 DPR, 30 June 1965, no 1124). For an outline of the payment procedure, see, Ferrari/Ferrari (fn 21) 364. See Ferrari/Ferrari (fn 21) 377 ff. Litigation related to pension rights is regulated by arts 409–441 Codice di procedura civile (Code of Civil Procedure, CPC). See S Di Giacobbe, Il contenzioso giudiziario previdenziale, in: Facello (fn 21) 551 ff.
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G.
Rights of recourse of workers’ compensation institutions
INAIL has a right of recourse: against the employer, whenever the employer 69 has been adjudicated guilty in criminal proceedings (pursuant to art 11, DPR 30 June 1965, no 1124 – in such cases INAIL may recover the indemnity granted to the worker by bringing a so-called azione di regresso, recourse action);81 against third persons according to the general rule laid down in art 1916 CC (Civil Code),82 which provides for the so-called azione di surroga (action of subrogation). According to jurisprudence,83 INAIL is (also) entitled to bring a recourse 70 action against co-workers who have caused – or have contributed to causing – the injury (pursuant to art 11, DPR 30 June 1965, no 1124). The employer will be jointly and severally liable together with the co-workers who caused the damage pursuant to art 2055 CC:84 a contractual liability regime will apply to the employer (pursuant to art 1218 CC)85 whilst the co-workers’ liability will be ruled by tort law principles (pursuant to art 2043 CC). In the presence of ‘triangular labour relationships,’86 ie the worker is 71 detached from their employer (‘the supplier’) to another employer (‘the user’), the duty to protect the worker – as a matter of principle – bears upon both the ‘supplier’ and the ‘user,’ regardless of who formally is the ‘employer.’ As a consequence, INAIL has the right of recourse against both of them according to their respective responsibilities (for instance, depending on information or training duties bearing upon the ‘supplier’
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The time limitation for bringing the so-called ‘recourse action’ runs from the day of the court’s decision (pursuant to art 112, DPR 30 June 1965, no 1124). Crimes committed by the employer are regulated both by the Criminal Code (Codice penale, CrC) as well as Dlgs 9 April 2008, no 81. See, for instance, arts 437, 451, 589, 590 CrC; and arts 55, 58, 59 Dlgs 9 April 2008, no 81. Art 1916, para 1 CC, states that ‘An insurer who has paid the indemnity is subrogated up to the extent of the amount of said indemnity, to the rights of the insured against third persons who are liable for the damage.’ See Cass (Labour Section) 18 August 2004, no 16141, [2004] Rep Foro it, keyword Infortuni sul lavoro, no 158. According to art 2055 CC, ‘If the act causing damage can be attributed to more than one person, all are jointly liable for the damages. The person who has compensated for the damage has recourse against each of the others in proportion to the degree of fault of each and to the consequences arising therefrom. In the case of doubt, the degree of fault attributable to each is presumed to be equal.’ According to art 1218 CC, ‘The debtor who does not exactly render due performance is liable for damages, unless they prove that the non-fulfilment or the delay was caused by the impossibility of performance deriving from a cause not imputable to them.’ See art 20 ff, Dlgs 10 September 2003, no 276.
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rather than upon the ‘user’ [or upon both of them], the ‘users’’ duties to prevent occupational hazard within their premises, etc).87
H.
Interaction with general social welfare provision and private insurance
72 As a general rule, INAIL is the fund of first resort (see art 67, DPR 30 June 1965, no 1124). 73 Compensation deriving from private insurance and the indemnity granted by INAIL may be cumulated.88 74 On the contrary, the indemnity granted by INPS (Istituto Nazionale della Previdenza Sociale, National Social Security Institute)89 and the indemnity awarded by INAIL may not be cumulated. 75 No other significant interaction between social health insurance and private insurance exists.
I.
Interaction with employers’ liability
76 As has been pointed out above, workers are protected by INAIL, INAIL being the fund of first resort (see art 67 DPR 30 June 1965, no 1124). 77 As a general rule, (‘types’ of) injuries excluded from the public insurance coverage are recoverable under the applicable contractual and/or tortious civil liability regime (so-called ‘complementary damage’). 78 Similarly, where the civil liability of the worker or of the third person exists, the injured worker may sue either the employer or the third person causing the injury in order to recover the ‘gap’ between the indemnity paid by INAIL and the amount to which they are entitled (ie the so-called ‘differential damage’).90 79 Employers benefit from an exemption of liability, unless they have either committed a crime liable to public prosecution or where their liability is 87 88 89
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See De Matteis/Giubboni (fn 3) 1018; Iarussi (fn 57) 291 ff. Obviously, benefits received by the worker from INAIL are deductible from compensation granted to the worker by private insurance. Whilst INAIL has the peculiar scope to cover risks deriving from work activities, INPS – which also provides mandatory insurance for all employees – protects individuals from risks such as disability, injuries and retirement. The main function of INPS is to administer pension payments. See no 50 ff above.
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ascertained in criminal proceedings, in which cases INAIL may bring a recourse action against them. Obviously, in the case of a claim against the employer, benefits previously 80 provided by INAIL to the worker will have to be considered in assessing damages due.
III. Employers’ Liability A.
Classification
As a general rule, employers’ liability is ruled in art 2087 CC, which 81 establishes that – in the carrying out of their activity – businesses have to adopt all measures which, depending on the particular nature of the work, on experience, and on technical knowledge, are necessary to assure the protection of the physical integrity and moral welfare of employees.91 Art 2087 CC may involve both contractual liability for the breach of obliga- 82 tions deriving from the employment contract (for instance, the violation of the duty to protect the worker from occupational hazards) as well as tortious liability for the infringement of the general rule of neminem laedere. According to prevailing Italian jurisprudence,92 liability arising from the 83 breach of the employers’ ‘duty to protect’ is the basis for contractual liability.93 Health and safety at work have also been regulated in Dlgs 9 April 2008, 84 no 81, which provides for specific duties bearing on employers, aimed at preventing occupational hazards. Non-compliance with such duties often constitutes a criminal offence by the employer. As has been pointed out above, employers’ liability toward employees 85 arises in cases where: ■
91 92
93
the ‘type of injury’ at issue is not covered by INAIL (ie with reference to ‘complementary damage’), provided there is a contractual or tortious liability by the employer or
See R Scognamiglio, Diritto del lavoro (2005) 275 ff. See Cass (Full Bench) 16 February 2009, no 3679, [2009] Massimario della giurisprudenza italiana (Mass giur it) 215; Cass (Labour Section) 13 August 2008, no 21590, [2009] Foro it I, 876 with a commentary by V Ferrari; Cass (Labour Section) 8 May 2007, no 10441, [2007] Foro it I, 2701; Cass (Labour Section) 24 February 2006, no 4184, [2006] Mass giur it 364; Cass (Labour Section) 26 June 2004, no 11932, [2005] Riv it dir lav II, 109, with a commentary by S Brun. The employment contract grounds a duty to prevent occupational hazards, the nonfulfilment of which is the basis for contractual liability pursuant to art 1218 CC.
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the amount compensated for is lower than damages which would be awarded to the employer under the applicable civil liability regime (ie with reference to ‘differential damage’).
B.
Elements of liability
86 The duty imposed on employers by art 2087 CC includes the respect of common sense and technical rules, ‘as well as the implementing of all (prevention) measures which, having regard to existing knowledge, are appropriate – according to the id quod plerumque accidit criterion – to safeguard the employees’ psycho-physical integrity’.94 Indeed, art 2087 CC establishes an obligation of safety (obligation de sécurité ) imposed on the employer. 87 As a general rule, the employer is liable for an injury which the employee suffers both when failing to take appropriate protective measures and when failing to supervise compliance with applicable safety standards.95 88 Although some decisions seem to require the employer to provide a probatio diabolica, art 2087 CC does not ground a strict liability regime, as employers will be exempt from liability should they succeed in proving that they have adopted all possible measures aimed at preventing workplace injuries. 89 On the contrary, a strict liability regime applies in the case of art 2049 CC,96 which is the basis for the establishment of vicarious liability, thus placing
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Cass 14 January 2005, no 644, [2005] Giurisprudenza italiana (GI) 1389. For an outline of practical implications of the application of art 2087 CC, see: Cass 19 August 2003, no 12138, [2003] Rep Foro it, keyword Lavoro (rapporto), no 1353; Cass 30 July 2003, no 11704, [2003] Rep Foro it, same keyword, no 1355; Cass 23 May 2003, no 8204, [2003] Rep Foro it, keyword Infortuni sul lavoro, no 1358; Cass 28 January 1997, [1997] Riv crit dir lav 657. See also Tribunal of Milan 31 July 2003, [2003] Riv crit dir lav 971; Local Magistrate’s Court (Pretura) of Turin 10 November 1995, [1996] Riv crit dir lav 727. Liability of employers for asbestos related diseases of their employees who had been exposed to asbestos was denied by the Tribunal of Leghorn 7 January 2003, [2003] OGL I, 577, and by the Tribunal of Chiavari 22 July 2003, [2003] OGL I, 589, on the grounds of the compliance of employers with the then relevant provisions ruling for the health requirements of work environments. Indeed, the aim of provisions ruling for the prevention of accidents at work is to avert dangerous situations, by granting full compensation also in the case of accidents resulting from lack of skill and/or carelessness of the worker and/or from their negligence: see nos 97 and 98. Art 2049 CC, headed ‘Liability of employers,’ rules that ‘Masters and employers are liable for damage deriving from a wrongful act of their employees in the practice of tasks to which they are assigned.’
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liability – in most cases – on the business regardless of any fault by the employer.97 According to prevailing jurisprudence, two requirements have to be met 90 in order to apply art 2049 CC. Firstly, there has to be a so-called occasionalità necessaria, to be understood in the sense that the wrongful act occurs as a consequence of a situation created by the employer. Secondly, the tortious act should not have been committed within the ‘private activity’ of the employee. Both criteria aim at affirming the liability of the employer whenever the wrongful act has to be considered as being ‘connected’ with the employee’s working activity.98 The interpretation given by jurisprudence of occasionalità necessaria sub- 91 stantially coincides with the but for test (ie conditio sine qua non).99 The jurisprudential trend to affirm liability of the employer (grounded on 92 art 2049 CC)100 is even clearer in a relatively recent decision in which the existence of ‘any relation’ between employee and employer has been considered as being sufficient.101
See PG Monateri, Illecito e responsabilità civile, in: M Bessone (ed), Trattato di diritto privato X, II (2002) 56. The contributor states that, even though art 2049 CC is applied to any employer, the – by far – socially most common case refers to the liability of businesses. 98 The doctrine followed by the Corte di Cassazione dates back to Cass 10 October 1957, no 3726, [1957] where the Court stated that the employer is not liable in the case where the employee falls from a balcony as a consequence of the fact that he/she leaned out in order to communicate with a friend (and, for instance, not in order to clean windows). 99 Monateri (fn 97) 72. 100 Jurisprudence regarding the unlawful behaviour of bank employees appears highly instructive. The standard situation considered refers to the handing over of a sum of money by the client of the bank to the bank employee, who then uses it for private purposes. In these cases there seems to be a general trend to affirm the bank’s liability. Jurisprudence argues this result on the basis of very dissimilar and conflicting arguments: sometimes the delivery of the money to the disloyal bank employee within the bank’s boundaries is considered as proof of the close connection between the wrongful act and the employment (see Cass 17 May 2001, no 6756, [2001] Archivio civile 969 = [2001] Diritto e pratica delle società no 21, 71). In another case the court held that – regardless of the place where the handing over of the money occurred – previous deliveries of money to the bank employee outside the bank’s boundaries are conclusive in order to affirm the existence of an occasionalità necessaria (see Tribunal of Lucca 15 January 1992, [1994] Rassegna di diritto civile 895): similarly, most recently, see Cass (Labour Section) 31 August 2009, no 18926, [2010] NGCC, I, 185 with a commentary by A D’Adda). Different decisions suggest that a determining role is played either by the mere fact that stricter internal controls could have prevented the wrongful act (see Cass 9 August 1994, no 7348, [1996] Foro it I, 685 = [1995] Corriere giuridico (CG) 79 = [1995] [Archivio civile] (AC) 508 = [1995] NGCC I, 773)) or that the client was given a receipt, even though the deposit was not listed in the statement of account approved by the client (see Cass 8 November 1984, no 5649, [1984] Rep Foro it, keyword Responsabilità civile, no 96). 101 Cass 5 January 1985, no 20, [1985] Diritto ecclesiastico II, 133: the dispute at issue involved a personal injury in a road accident which occurred during a car lift offered to 97
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93 It therefore is not really surprising that also in cases where the worker has been assigned by their employer (the ‘supplier’) to another employer (the ‘user’) the ‘supplier’ is still liable (pursuant to art 2049 CC) for injuries caused by that worker to any other worker within the ‘user’s’ premises.102 94 As far as causation is concerned,103 the injured worker has the right to sue the employer both for contractual breach as well as for tortious liability: should the injured worker seek compensation for breach of the employment contract, they will have to prove the damage suffered and causation between the breach and the damage suffered. In order not to be liable, the employer will have to discharge the burden of proof that they have adopted all possible measures in order to prevent the occupational hazard.104 95 In specific cases, the causal connection does not refer to the relationship between the breach and the damage, but to the relationship between the breach and the risk of the occurrence of damage.105
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the parents of a clergyman by the treasurer of a religious institute, and approved by the director of the institute. According to Monateri (fn 97) 67, the finding of liability on the part of the religious institute has to be argued on the grounds that ‘the institute normally is the subject who is in a position to effectively pay damages’. See Cass (Labour Section) 11 January 2010, no 215, [2010] Rep Foro it, keyword Lavoro (rapporto) no 64. See also Cass (Labour Section) 16 March 2010, no 6325, [2010] Rep Foro it, keyword Responsabilità civile, no 57. See above no 25. See Cass (Labour Section) 20 May 2010, no 12351 (see http://dejure.giuffre.it); Cass (Labour Section) 13 August 2008, no 21590, [2009] Foro it I, 876 with a commentary by V Ferrari; Cass (Labour Section) 21 April 2004, no 7629, [2004] Orient giur lav I, 384. See, with reference to the (risk of) developing asbestos-related diseases, Scarso, Lex Medicinae – Revista Portuguesa de Direito da Saúde [2008], 27, 28 ff. With reference to the vast majority of illnesses allegedly due to asbestos exposure, the discharge of the burden of proof is particularly difficult, as their development may not be excluded even in cases of ‘extremely low’ levels of exposure to asbestos. Indeed, there is no way of identifying, even on a balance of probabilities, the source of the fibre or fibres which initiated the genetic process which culminated in the death of the employee. Given the practical impossibility of an exact identification of the cause that led to the development of typically asbestos-related illnesses, the Corte di Cassazione (see, for instance, Cass 14 January 2005, no 644, [2005] GI 1389) held that the ‘increased risk,’ due to asbestos exposure, constitutes ‘sufficient evidence’ of the causal connection between the breach by the employer (ie the failure to adopt all possible measures in order to reduce asbestos exposure of the employee) and the development of the disease. According to jurisprudence (see Cass 23 May 2003, no 8204, [2003] Rep Foro it, keyword Infortuni sul lavoro, no 1358), the adoption – at the time of exposure – of every possible measure in order to reduce the exposure to asbestos would have appreciably diminished the dust which was in the air to inhale, and – as a consequence – the risk of developing asbestos related diseases. Therefore, the causal connection does not refer to the relationship between the breach and the damage, but to the relationship between the breach and the risk of the occurrence of a damage, ie of the development of asbestos-related diseases. See also, N Coggiola, Il risarcimento dei danni da esposizione ad amianto: dall’utilizzo del concetto dell’aumento del rischio all’inversione dell’onere della prova sul nesso di causalità, [2005] GI 1392.
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Both the founding of the breach of duty by employers on art 2087 CC and 96 the adoption of the ‘increased risk’ criterion result in an inversion of the burden of proof of both the breach of duty and the causal connection (between the breach and the injury), which – thus – de facto no longer is on the claimant/employee, but on the defendant/employer.106 Apportionment of liability in the case of workers’ contributory negligence 97 is narrowly applied by Italian jurisprudence. No relevance will be ascribed to the worker’s conduct, unless their behaviour is characterised by ‘abnormality, unpredictability and extraneousness’107, which – in the end – imply that it will have to be considered as the sole cause triggering the injury. However, workers’ contributory negligence may affect the quantum of 98 compensation108 as employers may be entirely relieved of liability when workers undertake the so-called ‘elective risk’ (rischio elettivo) or in the case of their intentional wrongdoing.109 99
An ‘elective risk’ is undertaken when: ■
the worker’s act is both intentional and abnormal, ie arbitrary and unrelated to work purposes;
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the worker’s conduct reflects mere ‘personal purposes’ (initiatives by the worker which are related to work purposes, and, although contrary to the assignments of the employer, do not fall within the notion of ‘personal purpose’);
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no causal connection between the worker’s conduct leading to the harmful event and their work activity exists.110
106 See Coggiola [2005] GI 1393. 107 See Cass (Labour Section) 2 October 2009, no 21113, [2009] Rep Foro it, keyword Infortuni sul lavoro, no 66; Cass (Labour Section) 28 October 2009, no 22818, [2009] Giust civ Mass 10; Cass (Labour Section) 10 September 2009, no 19494, [2009] Giust civ Mass 9; Cass (Labour Section) 23 April 2009, no 9689, [2009] Giust civ Mass 673; Cass (Labour Section), 10 January 2007, no 238, [2007] RCP 1637, with a commentary by F Puccinelli. 108 See Cass (Labour Section) 4 August 2008, no 21112, [2009] Foro it I, 876, with a commentary by V Ferrari; Tribunal of Piacenza 22 November 2007, [2008] ADL 1515, with a commentary by F Alvaro. 109 Ferrari/Ferrari (fn 21) 172 ff; I Cairo, Responsabilità civile del datore di lavoro in materia di infortuni sul lavoro, rilevanza del cd rischio elettivo e del concorso colposo del lavoratore, [2010] ADL 264; A De Iuliis, Limiti all’indennizzabilità dell’infortunio sul lavoro. Linea di discrimine tra rischio elettivo e infortunio in itinere, [2010] GI 364; G Corsalini, Infortunio da mancato rispetto dello ‘stop’: colpa o rischio elettivo? [2007] Danno e responsabilità (Danno resp) 1111. 110 See Cass (Labour Section) 2 October 2009, no 21113, [2009] Rep Foro it, keyword Infortuni sul lavoro, no 66; Cass (Labour Section) 23 April 2008, no 10529, [2008] Guida lav, no 29, 23; Cass (Labour Section) 20 April 2007, no 9421, [2007] Guida lav, no 24, 48; Cass 24 April 2007, no 16442, [2007] Guida lav, no 20, 74; Cass (Labour Section) 10
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C.
Scope of protection
100 As a general rule, compensation is awarded whenever a significant interest protected by the legal system has been infringed: in contrast to indemnity granted by INAIL, any unfair damage may be recovered; in addition, damages awarded are not subject to any cap or threshold.111 101 In the case of personal injuries, courts grant compensation for both pecuniary and non-pecuniary loss.112 102 Both sexual harassment and dignitary injuries such as abuse, defamation or discrimination can lead to the establishment of tortious liability. 103 In the case of sexual harassment113 or sexual crimes, trade unions may also bring an action in order to seek compensation of the damage they have suffered, inasmuch as the damage suffered by the worker constitutes an indirect damage to the trade union’s specific purpose to protect workers.114 104 Dignitary injuries constitute an infringement of art 9, Statute 20 May 1970, no 300 to the extent that they affect the worker’s mental and physical integrity, psychic balance as well as their ‘grip on reality,’ ie in the end their moral personality and – consequently – their general health.115
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113 114
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January 2007, no 238, [2007] Guida lav, no 8, 37; Cass (Labour Section) 17 February 2003, no 2357, [2003] Guida lav, no 13, 39. See no 45 ff above. According to Italian jurisprudence, non-pecuniary damages are granted by courts whenever there is ‘an injury of non-economic interests – pertaining to individuals – protected by the Constitution’: see Cass 31 May 2003, nos 8827 and 8828, [2003] Danno resp 816, with a commentary by FD Busnelli/G Ponzanelli, La Cassazione ‘rimedita’ l’art 2059 CC. In the Italian legal system, sexual harassment is a crime punished by art 609-bis CrC. See Cass (Criminal Section) 7 February 2008 (without a no), [2008] Dir prat lav 1058 = [2008] Il Lavoro nella giurisprudenza 1010, with a commentary by A Pizzoferrato = [2008] Responsabilità e risarcimento 6, 73, with a commentary by V Santoro = [2009] Dir prat lav 81, with a commentary by M Bellina = [2009] GI 171. See, A Scarcella, Violenza sessuale sul luogo di lavoro e legittimità iure proprio del sindacato dell’iscritto a costituirsi parte civile, [2009] Cassazione penale 1603. Similarly, according to the Corte di Cassazione, associations representing workers exposed to asbestos in the workplace premises may sue – iure proprio – employers who have infringed statutory provisions aimed at safeguarding workers’ health, regardless of whether the associations had already been established or not at the time of the wrongdoings by the employers, and are – consequently – entitled to recover the damage they suffer: see Cass 4 November 2010, no 38991 (see ). Indeed, the concept of ‘workers’ health’ encompasses not only physical integrity, but also the ‘moral personality of workers’: see art 2087 CC and art 17, para 1, let a), Dlgs 19 September 1994, no 626.
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The same applies to mobbing which, according to Italian jurisprudence, has 105 to be understood as a ‘variable plurality’ of behaviour by the employer – in terms of both omissions and conduct – which harass or are otherwise hostile to a subordinate worker (so-called bossing), or a colleague (so-called horizontal mobbing), or their officers or agents (so-called vertical mobbing).116 In the case of property damage, the employer has to compensate the 106 worker pursuant to art 2043 CC. On the contrary, as a general rule, compensation for pure economic loss is 107 not contemplated in the Italian legal system.
D.
Heads and levels of damages
The amount of damages awarded in the case of employers’ liability is the 108 same as in other cases of personal injuries. Recoverable damages are both pecuniary losses and non-pecuniary losses. 109 110
As far as pecuniary losses are concerned, damages embrace: ■
the loss of earnings: according to jurisprudence,117 reductions of the ability to work due to workplace injuries preventing the worker from applying for a new job do not represent a ‘loss of chance,’ but rather a loss of earnings they would have received had they had the possibility to exercise it;
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any costs of medical care and rehabilitation assistance deriving from the workplace injury.
With reference to non-pecuniary losses, according to recent judgments by 111 the Full Bench of the Supreme Court,118 in cases of personal injury due to an unlawful act, the injured person is entitled to claim damages for nonpecuniary loss (danno non patrimoniale) as a unitary category, ie including – 116 See the decisions quoted in R Scognamiglio, A proposito di mobbing, [2004] Riv it dir lav 489 ff. Mobbing may also be carried out by a plurality of workers and may also occur in the case single acts per se are lawful. According to Cass (Labour Section) 9 September 2008, no 22858, [2009] ADL 460, with a commentary by S Ferrario, an instantaneous conduct does not constitute mobbing. Generally speaking, a time frame of six months during which a worker has been harassed or the victim of other ‘hostile conduct’ is considered as being sufficient to ground the employer’s liability for mobbing. 117 See Cass (Labour Section) 8 October 2007, no 21014, [2008] RCP 1177 = [2007] Danno resp 1289 = [2008] Dir prat lav 93. 118 The Supreme Court has rendered four judgments, referred to as the four ‘twin judgments’ (nos 26972, 26973, 26974 and 26975): see Cass (Full Bench) 11 November 2008, no 26972, [2009] RCP 1 ff, with commentaries by PG Monateri/E Navarretta/ D Poletti/P Ziviz.
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from a descriptive point of view – different types of non-pecuniary loss:119 for instance, danno biologico120 (which is intrinsic in the injury of the victim’s personal integrity) and danno morale (soggettivo)121 (intrinsic in the ‘pain and suffering’ related to the harmful event: it refers to the ‘psychological suffering’ of the injured person, to their ‘internal sphere’). 112 Compensation for danno biologico and for ‘pain and suffering’ aim at different purposes, inasmuch as they refer to different aspects of personal life.122 113 According to the Supreme Court123, ‘pain and suffering’ constitutes a prejudice to the ‘moral integrity of the person, protected by arts 2 and 3 of the Constitution (with reference also to the social dignity of a person 119 So-called danno esistenziale, which relates to the change of the victim’s everyday habits resulting from the harmful event and therefore refers to the ‘external sphere’, as distinct (from danno biologico and danno morale) and autonomous types of non-pecuniary loss has been rejected by jurisprudence: see Cass (Full Bench) 11 November 2008, no 26972 (fn 118); Cass 20 April 2007, no 9510, [2007] Giust civ Mass 4, which explicitly excluded its ‘autonomous’ nature. Nevertheless a few subsequent judgments have affirmed the ‘autonomous’ nature of danno eistenziale: see, for instance, Cass (Labour Section) 14 September 2010, no 19517 (see http://dejure.giuffre.it), which granted compensation to the wife of an injured worker for the impairment of family relations (ie the impairment of sexual activity): similarly, Cass 31 March 2009, no 7875, [2009] Danno resp 761, with a commentary by G Ponzanelli, Conferme ed incertezze della Cassazione dopo le Sezioni Unite; Cass (Labour Section) 16 May 2007, no 11278, [2007] Giust civ Mass 5, according to which ‘danno esistenziale represents an autonomous theoretical category within art 2059 CC [non-patrimonial damages].’ Similarly, some legal scholars still share the opinion that danno esistenziale should rather be considered as being a non-pecuniary loss distinct and autonomous from danno biologico and danno morale: see P Cendon, La giurisprudenza ‘esistenzialista’ post 26972/08, in: , who has severely criticised the Supreme Court’s Full Bench judgment. For an outline of danno esistenziale, see Cass 24 March 2006, no 6572, [2006] Foro it I, 2334 = [2006] GI 1359 = [2006] RCP 1041 and 1477 = [2006] Giust civ 1443 = [2006] Danno resp 852 = [2006] CG 787 = [2006] Corriere del merito (Corr mer) 1165; [2006] Guida dir, no 16, 64 = [2006] Riv crit dir lav 473; Cass 12 June 2006, no 13546, [2006] RCP 1439 = [2006] Danno resp 843 = [2006] CG 1382. 120 The commonly accepted doctrine of danno biologico sets out that compensation for damage has to be awarded in the case of physical or psychological injury, regardless of the victim’s ability to earn. On danno biologico, see – ex multis – E Navarretta, Diritti inviolabili e risarcimento del danno (1996), passim. 121 According to the Italian Supreme Court, ‘pain and suffering’ constitutes a prejudice to the ‘moral integrity of the person, protected by arts 2 and 3 of the Constitution (with reference also to the social dignity of the person, to be jointly appraised with “health” as a fundamental value for biological and genetic identity)’: see Cass 4 March 2008, no 5795, [2008] RCP 1548, with a commentary by D Chindemi, Danno non patrimoniale a favore della moglie per assistenza al marito. 122 Therefore damages for ‘pain and suffering’ may be higher than those granted for a disability or an illness: see Cass 23 May 2003, no 8169, [2003] RCP 1342, with a commentary by G Facci = [2004] Archivio della Circolazione 42. 123 Cass 4 March 2008, no 5795, [2008] RCP 1552, with a commentary by D Chindemi.
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and in a joint assessment/appraisal with “health” as a fundamental value for one’s biological and genetic identity’). In the case of the death of the victim of an unlawful act, jurisprudence 114 grants compensation to relatives of the deceased for both pecuniary as well as non-pecuniary losses they directly suffer as a consequence of the death (so-called claims iure proprio).124 Depending on the length of the ‘surviving period,’ ie the period of time 115 between the harmful event and the death of the victim, Italian jurisprudence allows the relatives to succeed in their claim for compensation for non-pecuniary losses the victim themselves suffered (ie danno biologico and danno morale): a time period of a few days is usually considered as being sufficient to determine the acquisition by the (subsequently deceased) victim of the right to compensation of non-pecuniary losses suffered, which is thus passed to their relatives after the death (so-called claims iure hereditatis);125 on the contrary, the immediate death of the victim excludes compensation for ‘pain and suffering.’126 In the case of personal injury leading to the death of the injured person 116 within a short time from the harmful event,127 jurisprudence holds that, as far as the assessment of non-pecuniary losses (so-called ‘terminal damages’) is concerned, the amount awarded should take into account to a significant extent the subjective situation of the victim. A mere mathematical assessment of damages is therefore not permitted.128 The justification of the different treatment of general non-pecuniary da- 117 mages and ‘terminal damages’ lies in the fact that health conditions of the victim progressively deteriorate.129 In order to assess damages it thus becomes essential ‘to evaluate “pain and suffering” actually suffered by the victim, the seriousness of the offence and all other elements of the case
124 See below fn 126. 125 See Cass 14 July 2003, no 11003, [2003] RCP 1049. 126 See Cass 22 March 2007, no 6946, in [2007] Rep Foro it, keyword Danni civili, no 80, according to which ‘the injury to personal integrity leading to death immediately or within a short lapse of time from the harmful event does not ground any compensation for danno biologico, as death does not constitute the maximal possible violation of the right to health, but affects the different “legal asset” of life’. The Supreme Court states that danno biologico suffered by the victim – for whose compensation their heirs may sue the tortfeasor iure hereditatis – arises solely in the case an ‘appreciable lapse of time between the harmful event and the death due to it elapses’. 127 See Cass 28 August 2007, no 18163, [2008] Giust civ I, 689; Cass 30 January 2006, no 1877, [2008] Rep Foro it, keyword Danni civili, no 301; Cass 14 July 2003, no 11003, [2003] RCP 1049. 128 Ibid. 129 Ibid.
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at issue, in order to quantify precisely the compensation awarded in the specific case.’130 118 No specific benefits for employees exist. Jurisprudence nevertheless grants compensation to relatives of the deceased worker both for pecuniary as well as non-pecuniary losses they directly suffer as a consequence of the death.131 119 As a general rule, in the event of an unlawful act, compensation for damage is granted in the form of a lump sum payment.
E.
Administration of claims
120 As has been outlined above,132 claims are considered by the Labour Sections of first-instance ordinary courts (which do not constitute a special jurisdiction).133 121 In order to settle a lawsuit in court, the worker must first attempt to settle the dispute (pursuant to art 410 Code of Civil Procedure). Should the worker fail to reach an amicable settlement, the former may sue the employer.
F.
Rights of recourse
122 Employers are under a duty to ensure that their employees have insurance covering the latter’s tortious liability towards third persons (pursuant to art 5, Statute 13 May 1985, no 190).
130 See G Facci, La Cassazione ed il risarcimento del c.d. danno terminale, [2003] RCP 1060. Recent decisions of the Corte di Cassazione seem to confirm the extension of the discretion of the court when setting the amount of damages for non-pecuniary loss. On the one hand, in order to prevent diverging assessments of damages, pain and suffering is determined as a fraction of the compensation awarded as danno biologico (see Cass 19 January 2010, no 702, [2010] Rep Foro it, keyword Danni civili, no 171; Cass 14 July 2003, no 11003, [2003] RCP 1049; Cass 16 May 2003, no 7632, [2003] RCP, 1049). On the other hand, courts state that the assessment of ‘pain and suffering’ cannot be reduced ‘automatically to a mere fraction [of danno biologico]’ ‘Compensation for “pain and suffering” and compensation for danno biologico aim at different purposes, inasmuch as they refer to different aspects of personal life, with the result that damages set for pain and suffering could well be higher than those for a disability or an illness.’ The problem of assessing non-pecuniary losses is bound to acquire greater importance due to the affirmation of the compensation of any infringement of values protected by the Constitution (Cass 24 February 2010, no 4484, [2010] Rep Foro it, keyword Danni civili, no 189; Cass [Labour Section] 24 May 2010, no 12593, [2010] Rep Foro it, same keyword, no 208; Cass 23 May 2003, no 8169, [2003] RCP 1342, comment by G Facci). 131 See no 115 ff above. 132 See no 66 ff above. 133 Litigation related to pension rights is regulated by arts 409– 441 CPC.
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In any case, pursuant to art 2049 CC, employers are liable for the damage 123 deriving from a wrongful act their employees committed when carrying out tasks to which they have been assigned.134 However, in the event of contributory negligence by the employee or the third person, the employer has a right of recourse against the employee or the third person (socalled azione di regresso or rivalsa, recourse action) in order to recover the portion of damages attributable to them.135
G.
Interaction with social welfare systems and private insurance
With reference to the deductibility of social welfare benefits, it is clear that 124 benefits received by the worker from INAIL will be deducted from compensation granted to the worker by private insurance. Similarly, in the case of a claim against the employer, benefits previously provided by INAIL to the worker will have to be considered in assessing damages due. As has been discussed previously, INAIL has a right of recourse – under 125 specific circumstances – both against the employer for recovering the indemnity granted to the worker and against third persons according to the general rule laid down in art 1916 CC, which provides for a subrogation action. Obviously, employers may take out special insurance to recover the 126 indemnity which they have to pay to INAIL as a consequence of the recourse action brought by INAIL. Furthermore, injuries not covered by INAIL may be insured by the 127 employer by having recourse to private insurance. The right of recourse of private insurers against the employer does not 128 play a major role in practice, as it is restricted to cases where accidents have been caused by fraud or gross negligence of the employer. The rule is laid down in art 1900 CC which provides that ‘The insurer is 129 not liable for accidents caused by fraud or gross negligence of the contracting party, of the insured, or of the beneficiary, unless there is an agreement to the contrary for cases of gross negligence’. Obviously, private insurers may also bring an action against third persons pursuant to art 1916 CC.
134 See fn 96 above. 135 D Carusi, Forme di responsabilità e danno, in: N Lipari/P Rescigno (eds), Trattato di Diritto civile (2009) IV, III, 490.
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H.
Insurance
130 Besides compulsory public insurance by INAIL, the employer is not obliged to stipulate any other form of private insurance for their liability towards the workers. Obviously, employers may conclude a private insurance covering their liability, ie in order to transfer prospective costs related to compensation for damage not covered by INAIL to the insurance company. 131 No relevant empirical evidence is available with reference to the conclusion of private insurance contracts by employers.
IV. Evaluation and Conclusions A.
Compensation
132 The Italian system is characterised by both workers’ compensation and employers’ liability: this approach allows for an extensive protection of workers’ rights, as damages not covered by INAIL are recoverable under the employers’ liability regime. 133 Should certain type of damages not be covered by INAIL and/or insurance does not cover the total amount of the damages to which the injured worker would be entitled under the ordinary civil liability regime, the latter may bring an action to seek full compensation of the damage they have suffered (ie to recover both danno complementare and danno differenziale), provided the civil liability of the employer or a third person can be affirmed.136 134 Obviously, in order to prevent a duplication of damages, Italian jurisprudence will take into account damages compensated for by INAIL. 135 No relevant empirical evidence is available with reference to the adequacy of compensation levels.
B.
Prevention
136 Dlgs 9 April 2008, no 81 – which implemented art 1, Statute 23 August 2007, no 123, on health and safety standards in the workplace – has established the National Information System for Prevention at the Work-
136 See no 49 ff above.
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place, which aims to provide information in order to address, plan and evaluate the effectiveness of activities which aim to prevent accidents and occupational diseases, as well as to guide the supervisory action through the integrated use of information available both in the current information systems and the setting up of unified data banks. Besides, INAIL (with a leading role regarding the technical and information management), the Ministry of Labour, the Ministry of Health, Regions and selfgoverning Provinces, IPSEMA (Istituto di Previdenza per il Settore Marittimo, Social Security Institute for the Maritime Sector) and ISPESL (Istituto Superiore Prevenzione e Sicurezza sul Lavoro, High Institute for Prevention and Work Safety) and CNEL (Consiglio Nazionale dell’Economia e del Lavoro, National Council of the Economy and Labour)137 are involved in the setting up of such information systems INAIL pursues prevention activities jointly with other governmental 137 agencies and with all involved parties, in particular, employers’ and crafts’ associations and trade unions.138 In order to solve the most relevant problems related to the improvement 138 of safety, legislation has recently entrusted INAIL with the setting up of an incentives system to finance technological innovation projects in the field of workplace accidents’ prevention and information and training to workers.
C.
Overall costs
It is difficult to deal with the issue concerning the efficiency of the Italian 139 social security system and the question whether costs related to workers’ compensation systems are reasonable in the light of the benefits provided both to employers being favoured by the exemption of liability and to workers enjoying a ‘secure’ indemnity by INAIL. Costs related to the workers’ compensation system are borne exclusively 140 by employers. No official data exists in order to verify the amount of the
137 INAIL’s specific task is to provide information, assistance and advice to support the full implementation of rules and regulations in the fields of health and safety at work, mainly in craft companies, small and medium size enterprises and the respective trade and industry associations. 138 Within the workers’ integrated protection system and with a view to curbing the social costs resulting from accidents, INAIL’s fundamental commitment is to promote and encourage a prevention culture by helping all those concerned to develop a full conscience of existing risks and an awareness that no working activity may be considered as being completely safe.
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costs as a percentage of the payroll. INAIL premiums are calculated on the basis of the salary, taking into account the dangerousness of the activity carried out by the employee. The calculation is based on different coefficients. From 2008, INAIL has granted premium reductions in favour of employers who promote occupational health and safety. 141 As a first response, it may be pointed out that costs of administering the social security system are absorbed – at least partially – by preventing a larger recourse to ordinary courts of civil justice. Furthermore, costs of establishing requirements for employers’ liability are saved by the nofault workers’ compensation system.
D.
Interaction between workers’ compensation and private law
142 The workers’ compensation system was established for reasons of policy in order to distribute the costs of workplace injuries deriving from industrial development. 143 The workers’ compensation system grants a secure – even though incomplete – indemnity to workers in the event of workplace accidents or occupational diseases.139 144 At the same time, employers benefit from a (limited) exemption of liability. Employers are liable solely in cases for which criminal or civil courts ascertain their violation of statutes regulating prevention, safety and health at the workplace. 145 INAIL and employers are not jointly and severally liable for the injury suffered by the worker. Therefore, in the event of a workplace accident not deriving from the employer’s fault, employers will not be liable. 146 No relevant empirical evidence exists in order to verify the efficiency of the system.
E.
Plans for reform
147 At present, there are no plans to reform the system of either workers’ compensation or employers’ liability.
139 Dlgs 23 February 2000, no 38 has extended INAIL’s Worker’s Compensation to include personal injuries (danno biologico). See no 34 ff above.
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F.
Overall quality of each system independently and in combination
With reference to workers’ compensation, the principal advantages are: a 148 secure indemnity, a quicker and easier procedure in order to receive compensation and direct coverage of medical expenses. Disadvantages lie in the incomplete nature of the indemnity awarded to 149 victims, as it does not allow for the compensation of the total damage suffered. Employers’ liability also grants the cover of both ‘complementary da- 150 mages’ and ‘differential damages’, provided the employer has violated statutes regulating prevention, safety and health at the workplace.
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Employers’ Liability and Workers’ Compensation: Japan Keizo Yamamoto and Tomohiro Yoshimasa
I.
Introduction
A.
Basic system of compensation and liability
Japan has three public systems in place to provide relief for workers who 1 suffer from workplace injuries: workers’ compensation (WC) under the Labour Standards Act (LSA, Act No 49 of 1947), workers’ compensation insurance (WCI) under the Workers’ Compensation Insurance Act (WCIA, Act No 50 of 1947), and compensation of damage under the Japanese Civil Code (JCC, Act No 89 of 1896). WC is provided to workers who become injured or die from accidents 2 arising out of and in the course of their employment, or those who suffer from certain diseases arising out of their employment. Employers must compensate for the damages suffered by their employees even if the fault does not lie with the employers. WCI is a public insurance system operated by the state to ensure compen- 3 sation. This insurance system was introduced in 1947 along with the enactment of the LSA. At that time, the degree of the protection under WC and WCI was the same. In subsequent reforms, however, WCI has come to provide greater protection to workers. In 1973, protection for commuting accidents, which are not covered by WC, was introduced. Furthermore, WCI provides more benefits to employees; for example, it provides pension benefits as severe disability compensation and bereaved family compensation, and nursing care compensation benefits if the victim worker requires care. In this regard, although the basis of the workers’ obligation is still WC under the LSA, WCI plays a central role in protection of the workers today. Participation in WCI is compulsory for employers, who are obligated to 4 pay premiums. In the event of workplace injuries, the state pays insurance 333
Keizo Yamamoto and Tomohiro Yoshimasa
benefits directly to the injured workers. If WCI benefit payments are made, employers will be exempted, up to the amount of such payments, from their obligation to compensate for damage whether arising under WC or the JCC. In this sense, WCI is similar to liability insurance for employers. 5 Compensation of damage under JCC covers losses caused by breach of contract or tort. This means that Japan has adopted a dual compensation system, that is, the coexistence of workers’ compensation under the LSA and compensation of damage under the JCC. The amount of WC (WCI benefits) is determined independent of any reference to the victim worker’s individual situation. WC (WCI) does not cover non-pecuniary damages. Damages that are not covered by WC (WCI) may be compensated under the JCC, provided that the damage was caused by the employer’s breach of contract or negligent act.
B.
Interaction with other institutions
6 The Japanese social security system consists of social insurance (which imposes contribution requirements on the insured), public assistance (which imposes no contribution requirements but requires means testing), social welfare services (mainly personal services for individual life accidents that are not covered by social insurance), and social allowance (which provides programmed financial benefits without imposing contribution requirements). Of these, the social insurance system is comprised of medical insurance programmes (Employees’ Health Insurance, National Health Insurance, etc), pension insurance programmes (Employees’ Pension Insurance, National Pension, etc), Unemployment Insurance, WCI, and Long-term Care Insurance. 7 WCI covers, in principle, injuries arising out of and in the course of employment. But in some cases, WCI provides more benefits to workers than workers’ compensation under the LSA, and such benefits are increasing. As WCI benefit payouts are higher than those of other general social security programmes, workers are provided with a higher degree of protection with increase of WCI benefits.
C.
Empirical evidence
8 According to an annual survey in 2010 approximately 107,800 workers became victims of work accidents, including 1,195 workers who lost their 334
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lives.1 The number of victim workers has largely decreased since the 1960s, when more than 6,000 deaths were reported every year. In 2010, WCI had covered approximately 52.5 million workers. Whereas 9 approximately 784 billion yen (E 7.13 billion) were collected as premiums, approximately 744 billion yen (E 6.76 billion) were paid as benefits. 574,958 workers had become new recipients of the benefits.2 As for civil litigation for damages, there are no current statistical data 10 available on the number of suits filed. A survey released in 2001 shows that about 270 suits were instituted every year. The number of suits has been recently increasing.
II.
Workers’ Compensation
A.
Scope of cover
WC (WCI) covers all employees ie those who receive wages for their work 11 (except for civil servants, who are protected under an independent scheme). The self-employed may also participate in WCI when certain requirements are met. Whereas WC does not cover commuting accidents, WCI provides benefits 12 for injuries or deaths caused by commuting accidents.
B.
Compensation trigger
Workers’ compensation (workers’ compensation insurance) is provided 13 when workers become injured or die from accidents arising out of and in the course of their employment, or when they suffer from certain diseases arising out of their employment (occupational diseases). Ordinance of the Ministry of Health, Labour and Welfare provides a non-conclusive list of the occupational diseases.
1 Data available at (in Japanese). 2 Data available at (in Japanese).
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C.
Scope of protection
14 WC (WCI) covers injuries, diseases, disorders or death, ie personal injuries arising out of employment. 15 WC (WCI) covers so-called karoshi, or death from overwork, if confirmed to have arisen out of employment. Brain or heart disease often develops from a worker’s underlying disease with the addition of other elements such as age and lifestyle. In practice, even when the worker had an underlying disease, compensation is provided to the worker if the disease has worsened beyond its normal progress due to the heavy workload. Currently, criteria are set to facilitate the decision; for example, the worker’s brain or heart disease will be considered occupational if he/she had worked overtime for more than 100 hours during a month before its onset, or for more than 80 hours a month during the two to six months before its onset. 16 Mental disorders arising out of employment are also covered by WC; for example, mental disorders that workers suffer as a result of being unfairly forced to retire, burdened with a quota that is difficult to meet, continually ordered to work overtime for long periods of time, subjected to terrible harassing or bullying including sexual harassment, or subjected to unjust discrimination. WC will also cover mental disorders arising from dignitary injuries suffered by workers. A mental disorder will be considered occupational when the victim worker has suffered psychological burdens arising out of his/her work with the potential risk of mental disease, and when no other cause is recognisable for about six months before the onset of mental illness. Should the worker commit suicide as a result of the mental disorder, WC (WCI) will provide protection as well. 17 In contrast, WC (WCI) does not cover property damage and pure economic loss incurred by workers arising out of their employment.
D.
Heads and levels of benefit
1.
Medical compensation
18 If the worker receives medical care for an occupational injury or disease, WC (WCI) will provide him or her with medical compensation (benefit) (hereinafter, benefits from WCI are indicated in parenthesis). This should be granted by his/her employer (the state as the insurer), who pays medical treatment costs directly to the medical institution where the worker undergoes the treatment. This medical compensation (benefit) will be 336
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provided until the medical care becomes unnecessary because of symptom stabilisation. No costs for further medical care and rehabilitation, if any, will be covered by WC.
2.
Compensation for absence from work
If the worker takes medical leave from work, WC will provide him or her 19 with compensation for absence from work. The worker can receive, during medical leave, an amount of money equivalent to 60 % of his/her average wage (that is, the average wage of workers employed under the same conditions in the same occupation). This leave compensation will be provided beginning on the day when the worker becomes unable to work due to medical treatment until the medical care becomes unnecessary because of symptom stabilisation. On the other hand, WCI will start to pay 60 % of the worker’s average wage as a leave compensation benefit four days after the day on which the worker becomes unable to work due to medical treatment. WCI will also pay 20 % of the worker’s average wage as a special leave payment to promote social rehabilitation of him or her. The worker’s lost earnings will therefore be compensated up to 80 % of the average wage. Damages that are not covered by WCI are compensated only under the JCC.
3.
Compensation for disabilities
If the worker remains disabled after the medical care has become unne- 20 cessary because of symptom stabilisation, WC (WCI) will provide him or her with disability compensation (disability compensation pension or a lump-sum). The amount of the compensation varies with the degree of disability, which is divided into 14 grades. Depending on the grade, the amount of the worker’s average wage ranging from 50 days to 1,340 days will be paid. The disability compensation (benefit) will be provided in pension form for higher grades of disability suffered or in a lump-sum form for lower ones. However, the disability grades do not take account of the worker’s personal attributes, such as age, occupation, experience, and competency. In other words, this disability compensation is intended to compensate for losses incurred due to the loss of the worker’s average labour capacity because of the disability. Damages that are not covered by WCI are compensated only under the JCC.
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21 In addition, care compensation (benefit) is provided to workers who receive nursing care at home because of remaining severe disability.
4.
Compensation for bereaved family
22 If the worker dies, WC (WCI) will provide the worker’s family with bereaved family compensation (survivors’ pension or a lump-sum). The amount of the compensation is equivalent to the worker’s average wage for 1,000 days. If his/her spouse (aged 60, or over if male), children (under 18), parents (aged 60 or over), grandchildren (under 18), grandparents (aged 60 or over) or siblings (under 18 or aged 60 or over; or at a certain level of disability) has or have been dependent on his/her earnings, bereaved family compensation (benefit) will be provided in pension form to the person who ranks highest on the list. If his/her spouse, children, parents, grandchildren, grandparents or siblings do not qualify for the pension, bereaved family compensation (benefit) will be provided in a lump-sum form. The dependents’ benefits are covered up to this extent. In addition, the amount of the worker’s wage for 60 days will be paid as funeral expenses. Damages that are not covered by WCI are compensated only under the JCC.
5.
Non-pecuniary losses
23 WC (WCI) does not cover the worker’s non-pecuniary losses. These are covered only by compensation of damage under the JCC.
6.
Medical examination benefits
24 In 2001, it was approved that benefits may be paid to prevent death by overwork under WCI. The benefit is provided to workers who, in their regular medical examination (primary check-up), are diagnosed as showing abnormalities in blood pressure tests, blood tests or other tests concerning physical conditions related to the occurrence of a cerebrovascular or heart disease resulting from an employment-related cause. Those workers can receive, free of charge, a check-up (secondary check-up) to examine their cerebrovascular and cardiac conditions and health guidance by a doctor to prevent brain and heart disease.
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E.
Funding systems
Premiums are collected from business operators. They are calculated by 25 multiplying the amount of total wages paid by the business operators by insurance rates. The insurance rate varies with the class of business activity; it is higher for dangerous activities while lower for safe activities. A system (called the ‘merit system’) is adopted for businesses above a 26 certain size that allows the premiums to increase or decrease within a 40 % range depending on how often workplace injuries have occurred in the past three years. This is intended to ensure equitable sharing of the burden among business operators and give an incentive to prevent workplace injuries.
F.
Administration and adjudication of claims
All businesses employing workers must pay for WCI. Participation in WCI 27 is mandatory for employers. This insurance is operated by the state. In other words, the state is the insurer. Many companies provide, under their labour agreement or working rules, 28 higher compensation than WC for workplace accidents. For this additional compensation, they use liability insurance plans offered by private insurance companies. The state has set up a Prefectural Labour Office in every prefecture and a 29 Labour Standards Inspection Office in every jurisdiction across the nation to enforce the WCIA. Prefectural Labour Offices are subject to direction and supervision by the Ministry of Health, Labour and Welfare, and Labour Standards Inspection Offices are subject to direction and supervision by the Prefectural Labour Office in the prefecture where they are located. Workers who suffer workplace injuries, or their bereaved families, can 30 submit a claim for WCI benefit payments to the head of the Labour Standards Inspection Office with jurisdiction over their workplaces. The head of the Office will decide on the claim. If dissatisfied with the decision made, claimants may submit a request for 31 a review of the decision to a WCI examiner of the Prefectural Labour Office. If dissatisfied with the examiner’s decision, they may submit a further request for a review to the Labour Insurance Appeal Committee within the Ministry. In 2010, 644 requests were made to the Committee.
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According to a survey conducted over the last few years, original decisions were nullified in approximately 5 % of the cases.3 32 If dissatisfied with the Committee’s decision, claimants may file a lawsuit to a judicial court for nullification of the decision. Such lawsuits cannot be instituted until the Committee has made its decision.
G.
Right of recourse of workers’ compensation institutions
33 If WCI benefit payments are to be made, employers will be exempted, up to the amount of such payments, from the obligation to provide WC (art 84 (1) of the LSA). Even if the state actually pays WCI benefits to workers, it will not have recourse against their employers. This means that WCI is similar to liability insurance for employers. 34 However, if the state pays WCI benefits to workers – or their bereaved families – who suffer workplace injuries caused by third parties, the state can acquire damages claims, up to the amount of such payment, that the workers or their bereaved families have against the third parties. This subrogation is intended to prevent victims from achieving double benefits and third parties from being exempted from the liability. ‘Third parties’ here means those who are held liable to victim workers under tort law or other statutory provisions. They may thus include co-workers.
H.
Interaction with general social welfare provision and private insurance
1.
Interaction with general social welfare provision
a) Correlation between WCI and medical insurance 35 In Japan, all citizens are covered by medical insurance: employees of certain private-sector workplaces and their dependents are covered by Employees’ Health Insurance; public employees and their dependents by Mutual Aid Association Insurance; and other workers and their families by National Health Insurance.
3 Data available at Labour Insurance Appeal Committee’s homepage (in Japanese).
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There is a clear distinction between these medical insurance plans and 36 WCI. While WCI covers injuries and diseases arising out of and in the course of employment, the medical insurance plans (Employees’ Health Insurance, etc) cover injuries and diseases not arising out of and in the course of employment.
b) Correlation between WCI and pension plans The Japanese pension system consists of employees’ pension programmes 37 – the Employees’ Pension Insurance for private-sector employees and Mutual Aid Association Pensions for public-sector employees – and the National Pension as a basic pension programme for all citizens. Employees’ Pension Insurance provides employees with old age, disability or death insurance benefits. If employees suffer disability, the disability employees’ pension will be provided to those who remain disabled at higher grades of severity a year-and-a-half after they started to undergo medical treatment. The disability allowance will be paid to those who remain at lower grades of severity. If employees die, the survivors’ employees’ pension will be paid to their bereaved families. The relationship between these pensions and WCI varies depending on 38 whether WCI is paid in pension or lump-sum form. If the WCI disability and bereaved family compensation benefits are 39 provided in pension form, the amount to be paid will be reduced by the amount of the pension multiplied by a certain rate. The disability pension or survivors’ employees’ pension of the Employees’ Pension Insurance will be paid in full. Here, adjustment is made on the WCI payment. In contrast, if the WCI disability or bereaved family compensation benefit 40 is provided in lump-sum form, the disability allowance of the Employees’ Pension Insurance will not be paid. The payment of disability or survivors’ employees’ pension of the Employees’ Pension Insurance will be suspended for six years. The WCI disability or bereaved family compensation benefit will be paid in full. Here, adjustment is made on the payment from the Employees’ Pension Insurance. As for old-age benefit payment, adjustment is not made between the 41 Employees’ Pension Insurance and WCI.
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2.
Interaction with private insurance
42 Workers who personally obtain accident insurance cannot receive benefits under the accident insurance up to the amount of WCI benefits that they have received, on the assumption that they have been compensated for the damages to such extent. Even when insurers paid accident insurance benefits to the victim workers before WCI benefit payment, they cannot have recourse against the state for that payment. This is because WCI is considered as liability insurance for employers, not as accident insurance for workers. 43 Employers can obtain liability insurance for their liability against their victim workers. Its purpose is to cover liability for losses not covered by the WCI benefits. It therefore has no effect on WCI.
I.
Interaction with employers’ liability
44 Workers – or their bereaved families – who suffer workplace injuries caused by negligence of their employers may seek damages under the JCC. They can do so even when they have received WC payments. Their employers will be exempted, up to the amount of such payments, from liability for damages (art 84 (2) of the LSA). This means that the collateral source rule is not adopted in relation to WC payments. 45 There is no provision governing cases where the workers or their bereaved families have received WCI benefit payments. However, the Supreme Court has ruled that their employers will be exempted, up to the amount of such payments, from liability for damages in such cases.4 This means that the collateral source rule is not adopted in relation to WCI payments either. 46 On the contrary, in the case that the WCI benefits are paid in pension form, the Supreme Court has ruled that the amount of the pension to be paid in future will not be deducted from the damages claim against the employer.5 This means that the Court has adopted the collateral source rule in relation to the benefits paid in pension form. In 1980, however, the WCIA was reformed. Under the current WCIA, employers may refrain from paying compensation of damage up to the amount of the advance lump-sum until the expiry of their workers’ or their bereaved families’ right to receive a
4 Supreme Court Judgment 25 October 1977, Minshu (Civil Reports) vol 31, no 6, 836. 5 Supreme Court Judgment 25 October 1977, ibid.
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pension. In this case, when a pension or advance lump-sum is paid, the employers will be exempted, up to the amount of such payment, from liability for damages. In other words, the collateral source rule is not adopted here either after all. The reason is that if this rule were adopted, it would not only allow double compensation to victim workers but also greatly diminish the significance of employers’ participation in WCI. As described in no 33 f above, WCI is similar to liability insurance for 47 employers. Therefore, even if the state pays WCI benefits to victim workers or their bereaved families, subrogation into the claims of the workers against their employers is not permitted.
III. Employers’ Liability A.
Classification
In the first place, employers assume tort liability against their workers. 48 According to general tort law (art 709 of the JCC) ‘a person who has intentionally or negligently infringed any right of others, or legally protected interest of others’ shall be liable to compensate any damages incurred by the victim. Under this provision, employers who have intentionally or negligently infringed a right of their employees are held liable. There is also a special category of tort law on employers’ liability (art 715 49 of the JCC). It provides that ‘a person who employs others for a certain business shall be liable for damages inflicted on a third party by his/her employees with respect to the execution of that business; provided, however, that this shall not apply if the employer exercised reasonable care in appointing the employee or in supervising the business, or if the damages could not have been avoided even if he/she had exercised reasonable care.’ A ‘third party’ in this provision includes workers employed by employers. Secondly, employers will also assume contractual liability. According to the 50 Supreme Court, either or both of ‘the parties who have entered into a special social contact under a certain legal relationship’ assume, under the principle of good faith and fair dealing, an obligation to ensure safety for the other party.6 The Court states that employers assume the obligation to give due consideration to protect the safety of their workers’ lives and bodies from danger in the course of their labour.7 If employers violate this obliga-
6 Supreme Court Judgment 25 February 1975, Minshu vol 29, no 2, 143. 7 Supreme Court Judgment 10 April 1984, Minshu vol 38, no 6, 557.
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tion, they will be held liable under the general provision on contractual liability (art 415 of the JCC) to compensate for the damages incurred by their employees. The most significant difference from tort liability lies in the prescription period; under tort law, claims for damages prescribe three years after the victim learned of the damage and who had caused it, whereas under contract law, claims prescribe ten years after the breach of contract. 51 Based on this judge-made law, the Labour Contract Act (No 128 of 2007), instituted in 2008, provides in art 5 that ‘under labour agreement, employers shall give due consideration to ensure the safety of their workers’ lives and bodies while working.’
B.
Elements of liability
52 Employers’ liability under general tort law is, as described in no 48 ff above, fault-based. 53 As also described in no 49 above, the special category of tort law (art 715 of the JCC) provides that an employer is liable for damages inflicted on an employee by another employee provided that the employer is exempted from this liability if they had appointed and supervised the latter employee without fault. In other words, this liability is a negligence liability of the employer, where the burden of proof of fault is shifted. However, the employers’ exemption is admitted only in very few cases. Employers’ liability is, therefore, substantially strict liability. 54 Contractual liability requires non-performance of the employers. The employers will not be held liable when there has been no fault. As for liability arising from a breach of the obligation to give due consideration to safety, however, non-performance of the employer lies in the breach of that obligation. This in practice means that there has been fault on the part of the employer. Therefore, this liability can be substantially regarded as negligence liability. 55 Under either tort law or contract law victim workers need, in principle, to prove causation between the cause of the damage and the damages suffered by him or her. As described in no 49 above, however, the special category of tort law (art 715 of the JCC) provides that an employer is liable for damages inflicted on an employee by another employee with respect to the execution of business. In this case, to be exempted from liability, the employer must prove that the damages could not have been avoided even if he/she had exercised reasonable care in appointing and supervising the victimising employee. The burden of proof of causation is shifted onto the employer. 344
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When the fault lies also with the victim worker, the amount of damages 56 will be reduced in proportion to his/her fault (as for tort liability, see art 722 sec 2 of the JCC; as for contractual liability, see art 418 of the JCC).
C.
Scope of protection
Liability under general and special tort laws is accepted when any right or 57 legally protected interest of victim workers is infringed. This includes personal injuries, invasion of personal rights by sexual harassment or injury to dignitary and property damage such as loss of workers’ belongings. In contrast, tort liability is not accepted in the event of pure economic loss where no infringement of any right or legally protected interest of victim workers exists. Contractual liability is accepted when a worker suffers damages caused by 58 breach of the employer’s obligation to give due consideration to safety. This applies to cases where the employer has caused personal injuries, invasion of personal rights by sexual harassment or injury dignitary injuries, or property damage such as loss of the worker’s belongings. As for general contractual liability, art 416 of the JCC provides that damages covered by contractual liability include both damages that may generally arise from that breach of contract and those that have arisen from special circumstances provided that the party foresaw such circumstances. As far as these requirements are fulfilled, damage for pure economic loss is not precluded. It is generally unlikely however that pure economic loss arising from the breach of safety obligations will be compensated under this provision. In this regard, liability for breach of the obligation to give due consideration to safety is similar to tort liability.
D.
Heads and levels of damages
The heads and levels of damages in employers’ liability are the same as in 59 other cases of personal injury. Recoverable damages usually consist of positive and negative damages and 60 mental damage. The main heads of positive damages include medical care costs, attendant nursing costs, outpatient costs, rehabilitation assistance costs and care costs. Negative damages include lost earnings, loss of earning capacity and loss of pension entitlement. Mental damage will be compensated by solatium.
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61 According to Japanese courts, if a victim dies, the right to claim damages for violation of life is granted to the victim him or herself and then is subsequently passed on to their bereaved family.8 If dependent family members are successors of the victim, their interest will thereby be covered. Under this rule, the claimants and the extent of damages will be clearly determined. This rule, however, is strongly opposed by legal scholars who argue that when the dependents’ interest in maintenance of their lives has been infringed, the dependents should be allowed to ask for compensation of that interest. 62 Employers must, in principle, pay damages in lump-sum form. However, courts may order periodical payments at the plaintiff’s request.
E.
Administration of claims
63 Lawsuits concerning employers’ liability proceed in judicial court under general civil procedure. 64 Japan has adopted a three-tiered judicial system. In most cases, the first instances are handled in District Courts. Appeals against the judgments made by these courts are brought to the High Court, and appeals against these judgments are handled in the Supreme Court.
F.
Rights of recourse
1.
Against another employee
65 Damage caused by another employee is usually dealt with under the special category of tort law, which allows the employer to exercise his/her right of recourse against the employee (art 715 (3) of the JCC). According to the Supreme Court, however, the employer’s recourse is admitted ‘to an extent that is considered reasonable under the principle of good faith and fair dealing from a standpoint of equitable sharing of damage,’ taking account of the nature and scale of the employer’s business, the employee’s job description, the description of the harmful act, to what extent the employer considered preventing the harmful act and the dispersion of loss arising from the act.9
8 Great Court of Cassation 20 April 1920, Minroku (Civil Case Reports) vol 26, 553. 9 Supreme Court Judgment 8 July 1976, Minshu vol 30, no 7, 689.
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As for contractual liability, there is no legal provision on rights of 66 recourse. However, if the employee who caused the damage had violated any of his/her obligations under the labour contract, the employer may ask for damages arising from the breach of contract by the employee. In this case, if the fault lies also with the employer, the amount of compensation will be reduced according to the rule on comparative negligence (art 418 of the JCC).
2.
Against third parties
If the employer is also at fault in the case that a third party has caused 67 damage, the employer and the third party will be treated as joint tortfeasors (art 719 of the JCC). In this case, if the employer has compensated the damage, the employer may have recourse against the other employee in proportion to his/her fault. There is no specific provision regarding cases where the employer assumes 68 contractual liability. In such cases, rules on joint tortfeasors might be applicable by analogy, although there is no discussion yet on the possibility of such application.
G.
Interaction with social welfare systems and private insurance
Benefits under social insurance programmes do not aim at covering 69 damages incurred by victims. Therefore, as a general rule, the social insurance benefits received by the victim will not be deducted from compensation of damage under the JCC. In other words, the collateral source rule is adopted here. According to the Supreme Court, however, such a deduction may be exceptionally allowed when there is homogeneity between the compensation of damage and social insurance benefits.10 As described in no 61 above, in Japan, if a victim dies, the right to claim damages for violation of life is granted to the victim himself and is subsequently passed on to the victim’s bereaved family. This means that the bereaved family will succeed the right to demand compensation for the victim’s lost earnings. In such a case, for example, the pension that the bereaved family receives for life security through social insurance will be deducted from the compensation of damage.11 10 11
Supreme Court Judgment 24 March 1993, Minshu vol 47, no 4, 3039. Supreme Court Judgment 20 December 2004, Hanrei Jiho (Precedent Times) no 1886, 46.
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70 Even when the state pays social insurance benefits to the victim, the state cannot have recourse against the employer for the benefits. In contrast, if a private insurer pays insurance benefits to the victim, the conclusion varies depending on the type of insurance. In the case of accident insurance, the insurer will take over the claim for damages that the victim has against the employer (art 25 of the Insurance Act No 56 of 2008). This conclusion is justified on the ground that both accident insurance benefits and compensation of damage aim to compensate the same loss. In contrast, in the case of fixed return insurance, such as life assurance, recourse (subrogation) is not allowed.
H.
Insurance
71 There are private liability insurance plans available for liability that employers should assume in relation to their victim workers. These are general liability insurance plans which employers can obtain on a voluntary basis. The private liability insurance plans cover liability for damages not covered even by WCI benefits.
IV. Evaluation and Conclusions A.
Compensation
72 In terms of compensation for work accidents, the Japanese WCI programme can be evaluated as achieving a considerably high level of protection for workers. 73 The current programme has six main advantages: it (1) reimburses workers almost the full amount of the costs that he/she spends on medical treatment; (2) effectively provides workers with 80 % of the average wage as leave compensation; (3) provides nursing care charges according to certain criteria if the worker requires nursing care; (4) provides severe disability compensation and bereaved family compensation benefits in pension form; (5) provides workers’ compensation (insurance) protection for workers with brain, heart, mental or other disorders even when their underlying disease, personal characteristics or lifestyle contributed to some extent to this if their job is identified as having made a larger contribution to the disorder; and (6) provides WCI benefits not only for accidents arising out of and in the course of employment but also for commuting accidents.
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On the other hand, the programme has two main disadvantages: (1) 74 workers’ compensation (insurance) protection is provided only for employees (although there is a special scheme in place for the self-employed to participate in the insurance), which means that, for example, non-paid voluntary workers are not protected under WC (WCI); and (2) the benefit payouts of the WCI are higher than those of other social security plans. As social security benefit payouts have recently been cut because of financial difficulties, there is a large difference in the protection offered depending on whether WCI benefits are provided or not. Looking at the social security system as a whole, it is questionable whether such unequal treatment should remain unresolved.
B.
Prevention
As described in no 25 f above, a system has been adopted for businesses 75 above a certain size that will allow the WCI premiums to increase or decrease within a 40 % range depending on how often workplace injuries have occurred in the past three years. This actually gives employers an incentive to prevent workplace injuries. It is, however, likely that it is not this system but rather the enforcement 76 of the Industrial Safety and Health Act (No 57 of 1972) and other regulations to ensure the safety of workplaces that has had a greater effect on the decrease of workplace injuries.
C.
Overall costs
The WCI premium collection rate is very high (96.5 % according to 77 statistics in 2010). This is because several measures have been taken to raise the premium collection rate; for example, labour insurance agencies (Labour Insurance Associations) are organised to handle WCI affairs for medium and small business operators. Meanwhile, the number of workplace injuries is on the decrease.12 The programme therefore has a healthy balance sheet currently without becoming a subject of discussion. However, the number of those eligible to receive pensions is increasing every year as the average age of the population increases.
12
See (in Japanese).
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D.
Interaction between workers’ compensation and private law
78 WC (WCI) covers the victim’s pecuniary damage to a significant extent. When the victim wishes to ask for compensation for the uncovered part of the pecuniary and non-pecuniary damages, he/she may pursue the employer’s liability. But, this is permitted only when the employer had acted negligently or had breached his/her obligation under the contract (and when the victim can prove it). 79 The number of lawsuits seeking this kind of damage has been on the rise since the 1980s. This is because the Supreme Court has acknowledged that employers assume an obligation to give due consideration to protect the safety of their employees, allowing the victims to pursue the contractual liability of their employers.13
E.
Plans for reform
80 In 2003, a proposal to privatise WCI was brought before the Council for Regulatory Reform within the Japanese government within the context of the government adopting a deregulation policy under a neo-liberalistic approach in the beginning of the 2000s. The government, however, subsequently reconsidered its extremely neo-liberalistic policy and the proposal for WCI privatisation was shelved.
F.
Overall quality of each system independently and in combination
81 There is little support for an argument that civil litigation against employers should be abolished. Many believe that a dual system, ie the coexistence of WC (WCI) under the LSA (WCIA) and employers’ liability under the JCC, should be maintained. This is mainly because while it is necessary to determine the amount of WC (WCI benefits) as programmed to ensure swift payment, victim workers may not be able to receive complete compensation under WC (WCI). It has also been pointed out that civil litigations would contribute towards shedding light on the causes of work accidents and thereby to the enhancement of workplace safety.
13
350
See Supreme Court Judgments 25 February 1975, Minshu vol 29, no 2, 143 and 10 April 1984, Minshu vol 38, no 6, 557.
Employers’ Liability and Workers’ Compensation: The Netherlands Siewert D Lindenbergh
I.
Introduction
A.
Basic system of compensation and liability
In the Netherlands the compensation of loss resulting from work-related 1 health injuries has been primarily regulated by private law liability based on fault of the employer since 1967. The employer is, according to art 7:658 Burgerlijk Wetboek (Dutch Civil Code, BW), obliged to take reasonable care for the safety of his employees. Non-fulfilment of the duty of care results in liability of the employer to compensate the employee, according to the general standards of liability, for his entire loss. In the Netherlands there is no (other) form of workers’ compensation.
B.
Interaction with other institutions
The discussion regarding the specific protection of employees in the 2 Netherlands dates back to around 1880, when it was recognised that traditional tort law did not provide sufficient protection for several reasons.1 First, labour contracts usually did not have any provisions on employers’ liability and workers were discouraged from suing their employers because they were not protected against dismissal. Secondly, under traditional tort law the concept of fault was interpreted very strictly as ‘contrary to any written rule’. At the end of the 19th century there was increasing support for the idea that the inequality of power between employer and employee resulted in an unequal legal relationship and that legal safeguards had to be implemented to secure the safety and
1 HB Greven/JC de Marez Oyens, De wenselijkheid van een dwangverzekering ten behoeve van arbeiders (1887).
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financial position of employees.2 This resulted in 1901 in the Ongevallenwet 1901 (Accidents Act 1901). According to this Law, the employee who suffered from a work-related injury was entitled to (limited) compensation of the costs of medical care and of (part of) his loss of income up to a certain level of income. The employer was obliged to pay a contribution and was, in exchange, provided with an exemption from liability except in cases of intent or gross negligence. 3 In 1967 the Ongevallenwet was replaced by the Wet op de arbeidsongeschiktheidsverzekering (Occupational Disability Insurance Act, Wao), a form of social security, providing each employee with a right to (limited, but substantial) compensation of loss in case of incapacity to work, regardless of the source of this incapacity (work-related or not). This social security provision did, thus, not distinguish between risque professional and risque social, but provided equal compensation for both work-related and non work-related injuries. This may be related to the post-war situation in which many workers appeared to be disabled, some due to work-related injuries, others due to war-related injuries, and it was considered unfair to treat work-related injuries financially better.3 The post-war economic growth has of course been a significant driver behind this model as well. 4 At the same time, the employer lost his exemption from liability according to private law, meaning that he became liable for breach of his duty to ensure the safety of his employees. This resulted in a revival of art 1638x BW (the predecessor of art 7:658 BW), providing a duty of care of the employer with regard to the safety of his employees. Although this article had existed since 1907, it had not been applied because of the employer’s exemption from liability under the regime of the Ongevallenwet 1901. 5 As of 1990 the level of protection by social security has, however, decreased substantially while, at the same time, the courts have become stricter in their interpretation of the duty of care of the employer. This is thought to increase the pressure on employers’ liability. Furthermore, case law has developed a duty to provide the employee with coverage of ‘adequate insurance’ for risks resulting from work-related traffic accidents, even when the employer could not be blamed for the accident. This development creates a tension as regards employers’ liability based on art 7:658 BW, which is based on fault. It raises the question as to why
2 This did not change until Hoge Raad (Dutch Supreme Court, HR) 13 January 1919, Nederlandse Jurisprudentie (NJ) 1919, 161 with comment EM Meijers (Lindenbaum/ Cohen) in which the concept of tort was expanded to a broad concept of negligence. 3 YRK Waterman, De aansprakelijkheid van de werkgever voor arbeidsongevallen en beroepsziekten (2009) 53.
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Netherlands
the employee is better protected against the financial consequences of certain risks which are not the result of a fault of the employer (workrelated traffic accidents), while the financial consequences of other workrelated risks are not compensated in the absence of fault. In case of mesothelioma resulting from exposure to asbestos, the regular 6 rules of employers’ liability apply, but a mediation institute (Asbest Instituut) exists, offering protocols and mediation services.4 Furthermore, when the loss cannot be recovered from the employer as a result of prescription or insolvency or discontinuance of the enterprise, the employee obtains an advance payment from the institute. The institute is financed publicly.
C.
Empirical evidence
The availability of data with regard to work-related health injuries has been 7 limited by the fact that, according to the structure of the Wao, the difference between risque professionel and risque social was not relevant. As of 2000 more data have been collected, especially by the Nederlandse Organisatie voor Toegepast Natuurwetenschappelijk Onderzoek (Dutch Organisation for Applied Scientific Research, TNO) and the Nederlands Centrum voor Beroepsziekten (Dutch Centre for Occupational Diseases, NCvB). According to TNO in 2008 approximately 230,000 work-related accidents resulted in personal injury. The number of work-related accidents per annum seemed to decrease between 2000 and 2005, but appeared to be stable between 2005 and 2008.5 NCvB estimates that every year 50,000 to 100,000 employees suffer from a 8 work-related disease, although in 2007 only 5,974 new cases of industrial diseases were officially reported. There appear to be no reliable data on the number of claims filed or granted in private law litigation regarding work-related accidents or diseases.6
II.
Workers’ Compensation
Since in 1967 the model of the Ongevallenwet 1901 was abandoned for a 9 combination of social security and civil liability, the Netherlands no 4 . 5 TNO, Monitor Arbeidsongevallen in Nederland (2008). 6 See for an analysis, NJ Philipsen, Industrial Accidents and Occupational Diseases: Some Empirical Findings for the Netherlands, Belgium, Germany and Great Britain, in: S Klosse/T Hartlief (eds), Shifts in Compensating Work-Related Injuries and Diseases, Tort and Insurance Law Series, vol 20 (2007) 161–171.
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longer has a form of workers’ compensation in the strict sense. Injured employees may however collect benefits from social security. These will be described here briefly.7 10 In 1967 the Ongevallenwet 1901 was replaced by the Wet op de arbeidsongeschiktheidsverzekering (Wao). In addition, the payment during the first 104 weeks of illness was covered by the Ziektewet (Illness Act, Zw), offering full payment of an employee’s salary. The Wao provided an insurance benefit to employees who were disabled for a period longer than 104 weeks, irrespective of the origin of their injury (both risque professionel and risque social). The Wao covered, depending on the severity of the incapacity, initially up to 80 % and later up to 70 % of the last earned income. 11 In 1996 the Zw was replaced by the Wet uitbreiding loondoorbetalingsverplichting bij ziekte (Act on Extension of the Duty to Prolong Payment of Salary in case of Illness, Wulbz) and several other Acts, which placed the burden of paying the 70 % of the salary for the first 104 weeks of illness on the employer. Individual or collective labour agreements may (and usually do) provide for a higher percentage. In 2006 the Wao was replaced by the Wet werk en inkomen naar arbeidsvermogen (Work and Income Ability Act, Wia), which concentrates more on reintegration/rehabilitation than on protection of income. Furthermore, the Wia only covers a certain amount of loss of income in case the loss of income due to incapacity exceeds 35 %. Persons who are disabled at a rate of 35–80 % receive a limited benefit that might decrease over the following years (Regeling werkhervatting gedeeltelijk arbeidsongeschikten, Act on Resumption of Labour for Partially Disabled, WGA). Persons who have lost over 80 % of their ability to earn income receive a benefit of 75 % of their last earned income (Regeling Inkomensvoorziening Volledig Arbeidsongeschikten, Act on Income Provision for Completely Disabled, IVA). Overall the provisions of the Wia are substantially less generous than what the Wao used to cover. Furthermore, it has become much more difficult to apply for such benefits and their duration has been limited. 12 Persons who are not, or no longer, entitled to any benefit from the Wia are entitled to a benefit regulated by the Algemene Bijstandswet (National Assistance Act, Abw). This Act guarantees the absolute minimum level of income for every individual, (former) employee or not.
7 See for an (English) overview also EFD Engelhard, Shifts of Work-Related Injury Compensation. Background Analysis: The Concurrence of Compensation Schemes (ch 6.3: The Current Dutch Compensation Scheme) in: Klosse/Hartlief (fn 6) 56 ff.
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Netherlands
III. Employers’ Liability A.
Classification
Employers’ liability for loss resulting from work-related health injuries is 13 primarily regulated in art 7:658 BW. This article states: 1. An employer is obliged to make such provisions for the organisation and maintenance of the places in which and the implements and tools with which he has the work performed and to take such measures and issue such directions for the performance of the work as may reasonably be deemed necessary to prevent the employee from suffering loss in the course of his work. 2. An employer shall be liable to an employee for any loss which the employee suffers in the course of his work, unless he shows that he performed the obligations referred to in paragraph 1 or that the loss was to a large extent the result of intent or deliberate recklessness on the part of the employee. 3. There shall be no derogation from paragraphs 1 and 2 and from the provisions of Title 3 of Book 6 with regard to the liability of the employer to the detriment of the employee. 4. A person who, in the conduct of his profession or business, causes work to be performed by a person with whom he does not have a contract of employment shall be liable in accordance with paragraphs 1 to 3 for the loss suffered by such person in the conduct of his activities. The subdistrict court has jurisdiction in respect of claims based on the first sentence of this paragraph.8 Article 7:658 BW is part of the statutory regulation of the labour contract 14 (art 7:610 ff BW). These statutory provisions provide contractual obligations in addition to that which has been agreed upon by the individual or collective parties. Non-fulfillment of the duty of care formulated in the first section of art 7:658 BW therefore, results in contractual liability. Furthermore, the third section of art 7:658 BW, states that the employer cannot limit or exclude this liability or tortious liability or any tort-related form of vicarious or strict liability (art 6:162 ff BW). The employee can, therefore, choose to combine contractual and non-contractual sources of liability. The relevant provisions with regard to the nature, assessment
8 H Warendorf/R Thomas/I Curry-Sumner, The Civil Code of the Netherlands (2009).
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and quantum of damages are found in art 6:95 ff BW, which are applicable irrespective of the source of liability (contractual or non-contractual). 15 In addition to the protection under art 7:658 BW, the Hoge Raad (Dutch Supreme Court, HR) has founded specific contractual duties of the employer in art 7:611 BW regarding ‘good employership’. This general clause is used to keep the entire area of labour law up to date, but it has shown to be a source of relevance with regard to employers’ liability more specifically. The HR has stressed the relevance of art 7:611 BW in two types of cases. First, art 7:611 BW may offer the employee protection (and a source of compensation) in case the employee suffers an injury not in the course of his work, but in an otherwise work-related situation in which his employer did not meet a duty of care. Examples are injuries suffered during work-related team building activities9 or the realisation of a work-related risk the existence of which the employer was aware, such as the attack of a prison guard at home by a former prisoner who had, as was known to the employer, threatened the guard frequently.10 In these cases liability of the employer is still based upon the violation of a duty of care for the safety of the employee. Secondly, in 2008 the HR explicitly derived from art 7:611 BW a duty of the employer to provide his employees with ‘adequate insurance’ for loss suffered as a result of work-related traffic accidents.11 In these cases the employer who did not provide his employees with such ‘adequate insurance’ is liable, not because he did not prevent the accident from happening, but because he did not provide his employee with adequate insurance against the consequences. Furthermore, the employer is ‘only’ liable for the loss the employee suffers as a result of this failure (which may be less than full compensation as it is not yet clear what ‘adequate insurance’ should cover). The duty to provide adequate insurance is limited to persons carried by motor vehicles or bicycles, also when they are involved in ‘one-sided’ accidents that is, accidents in which no vehicle is involved. One-sided accidents of pedestrians are not covered.12
9 HR 17 April 2009, Landelijk Jurisprudentie Nummer (LJN) BH1996, Rechtspraak van de Week (RvdW) 2009, 552 (M/V Communicatie/Van den Brink-Bos). 10 HR 22 January 1999, LJN AD2996, NJ 1999, 534 with comment PA Stein (Stichting Reclassering Nederland/S). 11 HR 1 February 2008, LJN BB4767, NJ 2009, 331 with comment T Hartlief (Kooiker/ Taxicentrale Nijverdal). 12 HR 11 November 2011, LJN BR5215, NJ 2011, 597 with comment T Hartlief (TNT Post/ Wijenberg).
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Netherlands
B.
Elements of liability
The most common ground upon which to hold the employer liable is the 16 failure to live up to the standard of care required by art 7:658 sec 1 BW. This standard is primarily to be applied to the acts or omissions of the employer himself. However, case law shows that the employer is also responsible for the acts and omissions of persons upon whom the performance of the duty of care lies. These may be temporary employers13 or even (senior) employees, who are seen as ‘helpers’ of the employer.14 Furthermore, art 7:658 sec 4 BW states that the duty of care of sec 1 also rests upon anyone who has a person working in the line of his enterprise, but not under an employment contract. This provision was intended to protect temporary workers and trainees and has also been applied to volunteers.15 The scope of protection of this provision is, however, disputed as it is unclear whether self-employed persons are also covered.16 Employers are liable for the acts or omissions of their employees which 17 cause injuries to other employees under art 6:170 BW as well. This article states: 1. The person in whose service a subordinate fulfils his duties shall be liable for damage caused to a third person by the fault of such subordinate if the risk of the fault is increased by the order to perform such duties and the person by whom he was employed had control through such juridical relationship over the conduct constituting the faith. 2. Where the subordinate was employed by an individual and did not work in the conduct of that person’s profession or business, the latter shall be liable only if the subordinate, when committing the fault, acted in the performance of his given duties. 3. If the subordinate and the person by whom he was employed are both liable for damage, the subordinate does not have to have contributed to the damage in their mutual relationship unless the damage results from his intent or deliberate recklessness. The circumstances of the case and the nature of their relationship may produce a result different from that provided in the preceding sentence.
13 14 15 16
HR 15 June 1990, NJ 1990, 716 with comment PA Stein (Stormer/Vedox) and HR 4 October 2002, NJ 2002, 557 (Excellent/Suares). HR 18 September 1998, NJ 1999, 45 (Van Doorn/NBM). Hof Arnhem 11 January 2005, Jurisprudentie Arbeidsrecht 2005, 47. See for an overview of case law and literature SD Lindenbergh/PLM Schneider, Over de grenzen van artikel 7:658 lid 4 BW, Tijdschrift voor de Arbeidsrechtpraktijk 2009, 22– 32.
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18 Article 6:170 BW has been applied in relation to employers’ liability, for example in a case in which a pharmacy employee left a drawer open which injured a fellow employee as he passed by,17 in a case where one employee gave another employee a karate kick18 and in a case where a fellow employee was injured as a result of fooling around at work.19 When the employer is held liable on the basis of art 6:170 BW for a work-related injury, with regard to contributory negligence of the injured employee the regime of art 7:658 BW is applied.20 19 With a restatement of art 7:658 BW in 1997, the legislator explicitly opted for fault-based liability in combination with a shift of the burden of proof regarding the (absence of) fault to the employer. In case law, however, the duty of care of the employer has been interpreted so broadly that it approaches strict liability. This lenient interpretation is, according to the HR, justified because of the financial and economic position of the employer and employee and the dependence of the employee, as the employer controls the circumstances under which the employee has to work.21 Nevertheless, the HR has not been willing to shift to a strict liability regime altogether, as it insists that art 7:658 BW ‘does not provide an absolute guarantee of the employee’s safety’.22 Employers’ liability arising from art 7:611 BW is, strictly speaking, also based upon fault.23 20 The duty of care provided in art 7:658 sec 1 BW finds its limits in what is reasonably necessary to prevent the employee from suffering damage in the course of his work. It is, however, undisputed that a very a high standard of care of the employer is required. The standard is not only derived from written sources, such as health and safety legislation, but also from unwritten standards of negligence. The HR has explicitly ruled that requirements of health and safety legislation, including European regulations, form the starting point of the standard of care.24 17 18 19 20 21 22
23 24
358
HR 9 November 2001, LJN AD3985, NJ 2002, 79 with comment PA Stein (Van Doesburg/ Tan). Hof Amsterdam 15 January 1998, NJ Kort 1999, 26. HR 30 October 2009, LJN BJ6020, NJ 2010, 52 with comment MR Mok (Blomaard/ Gemeente Utrecht). HR 9 November 2001, AD3985, NJ 2002, 79 with comment PA Stein (Van Doesburg/ Tan). See for this regime hereafter. HR 22 January 1999, LJN AD2996, NJ 1999, 534 with comment PA Stein (Stichting Reclassering Nederland/S). For example HR 12 December 2008, LJN BD3129, NJ 2009, 332 (Maatzorg/Van der Graaf). In literature strict liability has recently been advocated by CJM Klaassen, De aansprakelijkheid van de werkgever voor bedrijfsuitjes en personeelsactiviteiten, Aansprakelijkheid, Verzekering en Schade (AV&S) 30 (2009) 225–235. See under no 15 above. HR 12 December 2008, LJN BD3129, NJ 299, 332 (Maatzorg/Van der Graaf).
Netherlands
The relationship between the standard of care of art 7:658 sec 1 BW and 21 health and safety legislation is, however, somewhat complex. On the one hand, fulfilment of requirements of health and safety legislation may not always imply that the standard of care required by art 7:658 sec 1 BW is observed as the legislation may be outdated.25 On the other hand, nonfulfilment of requirements of health and safety law may not result in breach of the duty of care by definition, because the specific requirement may not serve to protect the specific interest at issue, as the establishment of a duty of care depends on all the specific circumstances of the case as to whether or not the employer has met the standard of care.26 In addition to written norms, the employer also has to meet the standard 22 of so-called unwritten law. In this respect, the Hoge Raad applies a standard very similar to the standard regarding negligence in tort law: whether or not the employer has met the required standard of care depends on all the circumstances of the case, but particularly relevant are the probability of carelessness of the employee, the risk that this may result in an accident, the severity of possible consequences and the difficulty of taking precautionary measures.27 Although art 7:658 sec 1 BW requires a very high standard of care and, 23 furthermore, requires the employer to prove that he has met this standard, the employee (first) has to prove that he suffers from an injury that was inflicted ‘in the exercise of his work’ (art 7:658 sec 2 BW). The employee must, therefore, prove the existence of a relationship between the injury and his work. Courts accommodate the employee in this burden of proof. First, the criterion ‘in the exercise of his work’ is interpreted extensively.28 Secondly, the employee does not have to prove how an accident exactly happened; sufficient is that he proves that the injury he
25 26
27
28
This has been ruled with regard to asbestos in HR 2 October 1998, NJ 1999, 683 with comment JBM Vranken (Cijsouw II). For instance, non-fulfillment of the employer’s statutory duty to provide for a risk assessment is in itself not sufficient to hold the employer liable for every accident that may happen. HR 12 September 2003, LJN AF8254, NJ 2004, 177 with comment GJJ Heerma van Voss (Peters/Hofkens). For tort law in general: HR 5 November 1965, NJ 1966, 136 with comment GJ Scholten (Kelderluik); regarding employers’ liability HR 11 November 2005, LJN AU3313, NJ 2008, 460 (Bayar/Wijnen). ‘Workplace’ is interpreted broadly: HR 1 July 1993, NJ 1993, 687 with comment PA Stein (Power/Ardross) and HR 12 December 2008, LJN, BD3129, NJ 2009, 332 (Maatzorg/Van der Graaf), and ‘work’ is interpreted extensively: HR 15 December 2000, LJN AA9048, NJ 2001, 198 (Van Uitert/Jalas).
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is suffering from was caused in the exercise of his work.29 Thirdly, the court may presume a causal relationship when the employer has not met a standard of care that is precisely meant to protect employees against a certain risk that has in fact materialised.30 Although these accommodations are certainly of help in cases of workplace accidents, the proof of causation of a disease remains problematic. The HR has accommodated the employee in that respect somewhat with regard to causal uncertainty in case of a possible plurality of causes by accepting proportionate liability.31 Nevertheless, especially the proof of causation of injuries or diseases with possibly multiple causes, such as burn out, remains problematic. 24 Contributory negligence may serve as a defence for the employer, but only in exceptional cases. According to art 7:658 sec 2 BW, the employer has to prove that the damage is primarily the consequence of intent or ‘deliberate recklessness’ of the employee. The latter is interpreted very strictly: the employee has only acted deliberately reckless if, during his act immediately preceding the accident, the employee was actually aware of the reckless character of his behaviour.32 The motive for this strict interpretation is, according to the HR, that art 7:658 BW aims to protect the employee by taking into consideration the ‘rule of experience’ that daily work leads to a certain level of carelessness.33 As the employer carries the burden of proof of contributory negligence, the success of this defence is limited to exceptional cases. A successful defence of contributory negligence in case of employers’ liability results in total absence of liability.34 When liability is based upon art 7:611 BW (‘good employership’), contributory negligence of the employee is judged not according to the rule of art 7:658 sec 2 BW but according to the general art 6:101 BW which takes into account lesser degrees of negligence than deliberate recklessness on
29
30
31
32 33 34
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HR 10 December 1999, LJN AA3837, NJ 2000, 211 with comment PA Stein (Fransen/ Stichting Pasteurziekenhuis), regarding a case in which a nurse had broken a leg as a result of a slipping accident, but the cause of her falling could not be proved. For example HR 21 June 1974, NJ 1974, 453 with comment GJ Scholten (Windmill/ Roelofsen), regarding an employee who fell down a staircase which was, contrary to safety regulations, not provided with a handrail. HR 31 March 2006, LJN AU6092, NJ 2011, 250 with comment TFE Tjong Tjin Tai (Nefalit/Karamus), regarding an employee who suffered from lung cancer after he had been both exposed to asbestos and smoking cigarettes for many years; his employer was held liable proportionate to the chance (55 %) that the lung cancer was, according to a medical expert, caused by the exposure to asbestos. HR 20 September 1996, LJN ZC2142, NJ 1997, 198 (Pollemans/Hoondert) and HR 11 September 1998, LJN ZC2702, NJ 1998, 870 (Van der Wiel/Philips). HR 20 September 1996, LJN ZC2142, NJ 1997, 198 (Pollemans/Hoondert). Whereas, in general, contributory negligence as a rule results in proportional liability (art 6:101 BW).
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the part of the employee and may result in proportionate liability, in contrast with the all-or-nothing approach under art 7:658 BW.35
C.
Scope of protection
The central provision on employers’ liability, art 7:658 BW, provides a 25 general duty of care to prevent the employee from damage. Although case law and literature illustrate that the article is mostly applied to compensate personal injury (both physical and mental injury36, for example resulting from overwork or witnessing a workplace accident), the provision protects against damage to property of the employee as well. Furthermore, protection of property may be provided by art 7:611 BW (‘good employership’), in case the employee suffers damage in a private vehicle, used in the line of his work, even if the employer has not violated any duty of care and even if the damage is the result of negligence (not being intent or gross recklessness) of the employee himself.37 The answer to the question to which heads of damages the employee is 26 entitled is to be found in the general title on damages (art 6:95 ff BW, see no 28 ff below). These articles do not allow compensation of pure economic loss. Sexual harassment is defined in art 1 sec 3 under a Arbeidsomstandigheden- 27 wet (Labour Circumstances Act). Damage as a result of sexual harassment or (other) dignitary injuries (discrimination) is, although it would strictly speaking not be impossible, usually not claimed under art 7:658 BW, but on the basis of art 7:646 BW (equal treatment) or art 7:611 BW (‘good employership’).38 The applicable law on heads of damages is found in art 6:95 ff BW.
35 36 37 38
HR 17 April 2009, LJN BH1996, RvdW 2009, 552 (M/V Communicatie-Van den BrinkBos). Explicitly for the latter HR 11 March 2005, LJN AR6657, NJ 2010, 309 with comment T Hartlief (ABN AMRO/Nieuwenhuys). HR 16 October 1992, LJN ZC0717, NJ 1993, 264 with comment PA Stein (Bruinsma/ Schuitmaker). Extensively on these issues: MSA Vegter, Vergoeding van pyschische schade door de werkgever [Compensation of psychiatric injury by the employer] (2008) ch 14 (Sexual intimidation and discrimination) and CGW de Graaf-Tolkamp, Seksuele intimidatie op het werk [Sexual intimidation in the workplace] (2008).
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D.
Heads and levels of damages
28 According to art 7:658 sec 2 BW, the employer is liable for the damage that the employee suffers in the course of his work. This duty to compensate damage is a statutory duty in the sense of sec 6.1.10 BW (arts 6:95/6:110 BW).39 Sec 6.1.10 BW regulates the nature, assessment and quantum of the compensation, regardless of the source of the duty to compensate. This means, for example, that the victim of personal injury in case of a workplace accident or industrial disease is entitled to the same level of compensation as victims who claim on another basis. In cases of personal injury, the court is entitled to order periodic payments with regard to future losses40, but in practice a lump sum is usually awarded. 29 The main heads of recoverable losses are costs of medical care, lost earnings, non-pecuniary loss and costs of legal assistance in out-of-court settlements.41 The costs of medical care are, in practice for at least a large part, carried by the (private) health care insurer.42 As far as lost earnings are concerned, it should be noted that the employer is, under Dutch law according to statute (art 7:629 BW), obliged to continue to pay at least43 70 % of the employee’s salary for the first 104 weeks of sickness, regardless of the cause of the sickness (but for the intent of the employee). Loss of earning capacity, loss of pension entitlements and loss of the ability to do unpaid work (housekeeping, gardening, maintenance work, etc) are regularly compensated as pecuniary loss. 30 According to art 7:658a BW, in case of sickness of his employee, the employer is obliged to assist in the rehabilitation of his employee. 31 Compensation of non-pecuniary loss is regulated in art 6:106 BW. A right to compensation of non-pecuniary loss exists in case of physical injury, defamation or ‘other injuries to a person’ (art 6:106 sec 1 under b BW). The latter category includes mental injury44 as well as serious infringements of
39 40 41
42 43 44
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HR 11 March 2005, LJN AR6657, NJ 2010, 309 with comment T Hartlief (ABN AMRO/ Nieuwenhuys). Art 6:105 BW. Art 6:96 BW: full compensation of reasonable costs. Once a case is brought to court, the compensation of costs of legal procedure is regulated by art 241 Wetboek van Burgerlijke Rechtsvordering (Dutch Code of Civil Procedure, Rv), which allows only modest compensation. See on recourse under nos 33, 35 and 36 below. Individual or collective labour agreements usually state that the employer has to pay 100 % for the first two years. HR 9 May 2003, LJN AF4606, NJ 2005, 168 with comment WDH Asser (Belien/Noord Brabant).
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personality rights.45 The amounts of compensation for non-pecuniary loss are in the Netherlands relatively modest. The highest figure awarded so far is E 150,000.46
E.
Administration of claims
Claims in case of employers’ liability are brought before regular civil 32 courts in a regular civil procedure. It is, however, estimated that less than 5 % of cases involving personal injury are decided in a court, as by far most of the cases are settled out of court.47 Procedures related to labour are assigned to the kantonrechter in first instance48 and to the gerechtshof in appeal. The HR, a court of cassation, is the final instance, but does not judge matters of fact. Reliable information on the speed of claims’ resolution and of the administrative costs in the Netherlands is not available.
F.
Rights of recourse
The right of recourse of the employer against fellow employees who 33 caused the harm or against their liability insurer is limited to cases of intent or ‘deliberate recklessness’ of the fellow employee (art 7:661 BW). The rationale behind this rule is that the job exposes the employee to enlarged risks, while the payment is usually not proportionate to the damage that can possibly be caused.49 The employer who seeks compensation of loss as a result of injury of one 34 of his employees by a third party (not being one of his employees) is, according to art 6:107a BW, only entitled to compensation of the salary he continued to pay to his injured employee and of the reasonable costs he incurred for the rehabilitation of the employee.
45
46 47 48 49
HR 9 July 2004, LJN AO7721, NJ 2005, 391 with comment JBM Vranken (Groninger Oudejaarsrellen) and HR 18 March 2005, LJN AI0346, NJ 2006, 606 with comment JBM Vranken (Baby Kelly). Rechtbank ‘s-Hertogenbosch 11 April 2007, Jurisprudentie Aansprakelijkheidsrecht 2007, 99 (severe disability after murder attempt). WCT Weterings, Vergoeding van letselschade en transactiekosten [Compensation of personal injury and transaction costs] (1999) 109. Art 93 Wetboek van Burgerlijke Rechtsvordering. HR 26 June 1959, NJ 1959, 551 with comment LEH Rutten (De Bont/Zuidooster).
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G.
Interaction with social welfare systems and private insurance
35 Benefits received from social welfare institutions are, according to statutory provisions in the social welfare acts, deducted from the amount the liable person should compensate. In turn, the social welfare institution is allowed a right of recourse against the party responsible for the injury. The right of recourse of social welfare institutions against the employer or against fellow employees is, however, limited to cases of intent or ‘deliberate recklessness’50, because these persons have contributed to the welfare funds as well and because their long lasting elationship with the injured employee should not be put under pressure. 36 The right of recourse by way of subrogation of private insurers of the injured employee against the employer or against fellow employees is excluded by law (art 7:962 sec 3 BW) because the insurance is considered to exist for their benefit as well, while a recourse action could disturb the long lasting relationship between the parties involved.
H.
Insurance
37 Employers’ liability on the basis of art 7:658 BW is covered under the common Aansprakelijkheidsverzekering voor bedrijven (Liability Insurance for Companies, AVB), which is voluntary insurance against the risk of liability of an enterprise. It is estimated that about 50 % of the companies in the Netherlands have such insurance.51 38 In its decisions regarding work-related traffic accidents, the HR has created a duty of the employer to provide for ‘adequate insurance’ against the risks of work-related traffic accidents.52 Although the insurance market offers several products that provide for compensation of personal injury to some extent in such cases, it is yet undecided what ‘adequate insurance’ should cover, both at present as well as in the past.53 It is, furthermore, uncertain whether the liability resulting from breach of the duty to provide ‘adequate insurance’ is covered under a present AVB, as
50 51
52 53
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See for example art 90 Wao (Occupational Disability Insurance Act). According to research by GfK Panel Services, TOF Zakelijk Onderzoek 2009, 51.7 % of the companies in the Netherlands have at least one Aansprakelijkheidsverzekering voor bedrijven. See under no 15 above. Hof ’s-Hertogenbosch 31 March 2009, LJN BH9968, ordered an expert opinion on the availability of insurance coverage in the past.
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this duty does not regard the prevention of injury, but a financial provision to secure compensation in cases where the employer is not at fault. The AVB usually covers ‘liability for damage suffered by third parties’. 39 The insurance policy, however, usually restricts the coverage to personal injury and damage to goods which is not the result of intent, and excludes pure economic loss. As of 1995, the AVB offers coverage on a claims-made basis and usually limits coverage to an amount of (at least) E 1,000,000 per incident, with – often – a maximum of two incidents per year. IV. Evaluation and Conclusions A.
Compensation
The Dutch model of workers’ compensation as laid down in the Accidents 40 Act 1901 was in 1967 abandoned for a combination of social welfare and private employers’ liability. The primary advantage of the social welfare model, provided by the Wao, is that it provides for a benefit in case of disability regardless of the origin of the injury. The disabled person does, therefore, not have to prove the cause of the injury, or the attribution to someone else’s fault. The apparent disadvantage of this rather generous model is that is tends to attract demand. The high costs of this system have over time led to very serious restrictions with regard to access to and duration as well as amount of the benefits provided (see, for example, Wet inkomensvoorziening naar arbeidsvermogen (Act on Income Provision according to Ability to Work, Wia).54 As a result, the protection of employees by social welfare has decreased so substantially that it is questioned whether this provision still meets the standard of obligations arising out of international labour treaties.55 Advantages of employers’ liability are that it provides for full compensa- 41 tion of both pecuniary and non-pecuniary loss by the party who is responsible for the risk. Evident disadvantages of this model are that it only covers loss as a result of work-related injuries that are attributed to fault, that the employee has to prove the cause of the injury and that compensation has to be sought in a civil procedure against the employer.
54 55
See on this development eg RIR Hoop, Shifts in Work-Related Injuries: An Explanatory Analysis (ch 3.2.3: A Third Shift?) in: Klosse/Hartlief (fn 6) 108 ff. This question was raised in 2008 by the Committee of Experts of the ILO () and by the Council of Europe ().
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42 As the protection by social welfare provisions has diminished over the past decades, it is plausible that employees have more frequently sought compensation on the basis of employers’ liability.56 At the same time, both the legislator and the courts have been willing to accommodate the employee in private law, for example by applying a very high standard concerning the employer’s duty of care, by shifting the burden of proof of negligence of the employer, by applying a very high threshold for contributory negligence, and by accepting a duty to provide ‘adequate insurance’ for work-related traffic accidents. The resulting regime appears to be substantially more lenient towards plaintiffs than the common regime of tort law, thereby developing a regime in private law liability that approaches a social welfare model.57
B.
Prevention
43 Because under Dutch law employers’ liability is based on fault, it can be assumed that the threat of liability has a preventive effect. However, there is in the Netherlands no substantial empirical material supporting this assumption. Furthermore, employers’ liability does not stand alone as a mechanism to further prevent work-related injuries. The contractual duty to continue to pay at least a substantial part of the salary for the first two years of absence due to sickness (art 7:629 BW) and the sanctioning of health and safety provisions by penalties in criminal and administrative law are assumed to contribute to prevention as well. However, the increase in private responsibility of companies regarding prevention of workrelated injuries and the intensification of company safety policy may also have adverse effects. Employees may experience these policies as a way to place the responsibility back on the individual worker, resulting in fatalism, and courts may compensate this by granting them extra protection.58
C.
Overall costs
44 In the Netherlands there is no clear view of the overall costs of compensation of work-related health injuries. One of the reasons appears to be that 56 57 58
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See S Klosse, WIA, prikkel tot werk of tot een toenemend gebruik van het aansprakelijkheidsrecht? Aansprakelijkheid, AV&S 2006, 23. See Klosse/Hartlief (fn 6). Y Bacharias/SD Lindenbergh/P Mascini, Preventie van arbeidsuitval: ontwikkelingen in arbeidsomstandighedenbeleid en civiele aansprakelijkheid, in: WH van Boom/I Giesen/AJ Verheij (eds), Gedrag en privaatrecht [Behaviour and private law] (2008) 283–301.
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the social welfare model does not distinguish between work-related and non work-related disability. Furthermore, there is no substantial information available of the transaction costs of shifting.
D.
Interaction between workers’ compensation and private law
As the Netherlands does not have a form of workers’ compensation, there 45 is no interaction with private law liability in this respect. Interactions with social security have been addressed before.
E.
Plans for reform
Presently, no specific plans for reform are under parliamentary discussion. 46 In 2003, when the introduction of the Wia caused a substantial fall in the level of protection by the social welfare model, the introduction of an Extra Garantieregeling Beroepsrisico’s (Extra Guarantee Regulation Occupational Risks, EGB) was considered in order to meet the international standards of protection of employees. This regulation should provide for a compulsory first party insurance of work-related health risks, financed by employers. The Sociaal Economische Raad (Governmental Advisory Council in Social and Economic Matters, SER), however, advised negatively, because it thought the present level of protection to be sufficient.59 In literature, several options for reform have been suggested in the past 47 years. The alternative that has been promoted most frequently is a compulsory first party insurance, financed by employers.60 More recently it was advocated to extend the duty to provide for ‘adequate insurance’ in case of traffic accidents for the future to all work-related risks.61 The HR has not shown to be willing to adopt this option.
59
60 61
Kamerstukken II 2003/04, 28 333, no 19, p 7 and Kamerstukken 2005/06, 30 118, C, p 54. This opinion was contested in literature: MG Faure/T Hartlief, Compensatie voor beroepsziekten en de zorg voor betere arbeidsomstandigheden, in: S Klosse, Arbeid en gezondheid, schipperen tussen verantwoordelijkheid en bescherming, Had Geers het geweten (2006) 179, 196. See for example M Faure/T Hartlief, Verzekering en financiering van beroepsziekten, enkele tips voor de SER, Nederlands Juristenblad 1998, 1135, 1142. Advocate General Spier in his opinions before HR 12 December 2008, LJN BD3129, NJ 2009, 332 (Maatzorg/Van der Graaf) and HR 17 April 2009, LJN BH1996, RvdW 2009, 552 (M/V Communicatie/Van den Brink-Bos).
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F.
Overall quality of each system independently and in combination
48 There is little literature on the perception of the quality of social welfare or employers’ liability by the persons who are concerned. An obvious disadvantage of employers’ liability, however, is that procedures take long and are stressful and that their outcome is uncertain. The main motives to file a claim for compensation arising from employers’ liability seem to be recognition and satisfaction.62
62
368
For example M Schaapman/W Eshuis/J Popma, Leerzame schadeclaims, Hugo Sinzheimer Instituut, Amsterdam 2009.
Employers’ Liability and Workers’ Compensation: Poland Dominika Dörre-Nowak
I.
Introduction
A.
Basic system of compensation and liability
In Poland, the issues of employee accidents and occupational diseases belong 1 to two branches of law: labour law and social insurance law. As a rule, it is the Social Insurance Company (Zakład Ubezpieczen´ Społecznych, ZUS) which is exclusively liable – on the principle of insurance risk – for consequences of employee accidents, accidents equivalent to employee accidents and occupational diseases. The consequences of employee accidents and occupational diseases constitute a social insurance risk and are covered by a special accident fund to which contributions are paid. The social insurance system includes, therefore, insurance of employee accidents and occupational diseases.1 The benefits are paid from a special accident fund organised within the Social Insurance Fund. The fund’s income comes from, among other sources, social insurance premiums. The amount of the premium depends on the level of the risk in a profession and the degree of the probability of occurrence of an accident at work or an occupational disease. Provisions of labour law regulate the duties of the employer which pertain 2 to the prevention of employee accidents and occupational diseases and the technical and procedural issues which define in detail the rules of conduct in the event of an employee accident or occupational disease. The employer is obligated to systematically analyse the causes of accidents at work, occupational diseases and other diseases connected to the working environment and, on the basis of the results of this analysis, to apply appropriate preventive measures.
1 Act of 30 October 2002 on Social Insurance in Employee Accidents and Occupational Diseases, Dziennik Ustaw (Journal of Laws, Dz U) 2009, no 167.1322 with amendments, further herein referred to as the Accident Act.
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3 Regarding the employer’s damage liability which is regulated directly by the provisions of the Labour Code, the employer is liable for objects of personal use and objects which are necessary to perform a given task and which were lost or damaged by the employee who had an accident.2 4 The employer can bear liability for the employee’s detriment to health pursuant to the provisions of the Civil Code but only in the event that he has violated regulations relating to health and safety at work and he is responsible for the employee’s accident or occupational illness.
B.
Interaction with other institutions
5 In the context of establishing liability – for instance preparing the accident report – the National Labour Inspectorate (Pan´stwowa Inspekcja Pracy) and procurator are involved in some cases. This is especially in the event of fatal or collective accidents. 6 In the context of liability and providing compensation for the injured employee or for his family, the Social Insurance Company (Zakład Ubezpieczen´ Społecznych, ZUS) or private insurance institutions are involved.
C.
Empirical evidence
7 An analysis of jurisprudence was carried out within the research, which indicated that employees usually sue the employer for supplementary disability benefits and financial redress under the provisions of the Civil Code.
II.
Workers’ Compensation
A.
Scope of cover
1.
Workers covered
8 With the exception of farmers, all persons are covered by the right to social insurance for employee accidents and occupational diseases. The Social Insurance Company is exclusively liable, on the principle of insurance risk, for consequences of employee accidents, accidents equivalent to employee accidents and occupational diseases. The consequences of em-
2 Art 237[1] § 2 Labour Code.
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Poland
ployee accidents and occupational diseases constitute a social insurance risk. Hence, social insurance also covers employee accidents and occupational diseases. The types of benefits which can be received following employee accidents 9 and occupational diseases are defined by the Accident Act, which is applicable to all persons who are subject to social accident insurance pursuant to the Act on Social Insurance. Employees are obliged to take out retirement, disability, illness, and accident insurance from the day of establishing an employment contract until the day of its termination. The benefits resulting from the Accident Act for employee accidents are 10 also applicable when the event, pursuant to the definition of an employee accident, took place while performing work under agreements in civil law (a contract of mandate, a contract for specific work, an agency agreement, etc).
2.
Spatial, temporal and other limitations
Spatial, temporal, and other limitations issues are discussed below in 11 addressing the definition of an accident (see no 21 ff).
3.
Effect of the victim’s contributory conduct
Sometimes, despite the occurrence of an employee accident as a result of 12 specific conduct on the part of the insured person, the employee is not entitled to benefits from accident insurance. This occurs when: ■
the exclusive cause of the accident was a proven violation by the insured person of the regulations regarding protection of life and health caused deliberately by him or as a result of gross negligence, and
■
the insured, when under the influence of alcohol or under the influence of narcotics or psychotropic substances, grossly contributed to causing the accident.
In order to deprive an (insured) employee of the right to benefits pursuant 13 to the Accident Act, his/her violation of the regulations on the protection of life and health must have occurred on purpose or as a result of gross negligence. Furthermore, such a violation of the regulations should be the only cause of the accident. It should be noted that it is not exclusively about the Health and Safety at Work regulations because the Act mentions
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only the concept of regulations pertaining to protection of life and health, that is the norms which pertain to this protection. 14 As a rule, if an employee performs his duties when intoxicated, he is not entitled to accident insurance benefits if under the influence of alcohol or narcotics or psychotropic substances, he significantly contributed to causing the accident. 15 According to art 46 of the relevant Act3, the state of intoxication exists when the content of alcohol in the blood is or leads to: ■
the concentration of alcohol in blood above 0.5 per mill, or
■
the presence of more than 0.25 mg of alcohol in 1 dm3 in the breath.
16 Therefore, being under the influence of alcohol alone when causing an accident at work is not tantamount to being intoxicated, because the Accident Act provides for the possibility to deprive an employee of his/ her right to the benefits set forth in the Act on the fact that the employee, at the time of the accident, was intoxicated, thus that the content of alcohol in his/her blood exceeded 0.5 per mill. 17 Members of the family of the deceased employee who had an employee accident or an accident on his or her way to work are always entitled to accident benefits regardless of the employee’s degree of contributing to the accident. According to the Accident Act, only such a state of an employee’s intoxication excludes the admissibility of granting him or her the benefits under the Act which remains in a causal connection with the accident at work; also, the employee’s contribution to the accident caused by his/her intoxication must be significant. 18 If there is a justified suspicion that the insured was intoxicated or under the influence of drugs or psychotropic substances, the employer can oblige the employee (the insured) to undergo tests necessary to establish the content of alcohol, drugs or psychotropic substances in the body. The employee has a duty to undergo the tests. His refusal to do so, or other behaviour which makes it impossible to conduct the tests, leads to the employee being deprived of possible benefits unless the employee has proved that there were reasons which made his submission to the tests impossible. 19 Depriving an individual of accident benefits means that acquiring the rights to social insurance benefits must be considered on the grounds of
3 Act of 26 October 1982 on Upbringing in Sobriety and Alcoholism Prevention (a unified text: Dz U 2007, no 70.473 with amendments).
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Poland
the Act of 17 December 1998 on Retirement and Disability Pensions from the Social Insurance Fund.4 The Act makes the right to benefits dependent on a specific insurance seniority. It may happen, then, that an injured person who had a work-related accident in circumstances which deprives him or her of the right to accident benefits will not have the right to a disability pension either, because he or she does not have the required period of insurance. Such an injured person would also not be able to claim damages in a civil case due to the fact that he or she was at fault which usually excludes or balances out the employer’s fault. In the event of the employee’s death, the fact of violating the regulations 20 on the protection of life or health as well as the state of intoxication are of no importance, that is, they do not cause the loss of rights to benefits which are due to the family.
B.
Compensation trigger
1.
Accidents
a) Employee accidents The definition of an employee accident for insurance purposes is provided 21 in the Accident Act as: ■
a sudden event;
■
caused by an external cause;
■
causing an injury or death;
■
which took place in connection with work.
In the matters which were subject of the Sa˛d Najwyz· szy (Polish Supreme 22 Court, SN) rulings, it was accepted that an event which is a cause of an employee accident can be considered sudden only when it took place in the time period which is not longer than the duration of a working day.5 The element of suddenness pertains to an accident event, not its consequences. The Supreme Court excluded as an employee accident a long term influence of harmful employment conditions on the employee’s body which led to the sudden appearance of the effects of an illness in a situation where the external cause of the sudden attack of an illness was
4 A unified text: Dz U 2009, no 153.1227 with amendments. 5 SN 30 June 1999, II UKN 24/99.
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the result of harmful working conditions (toxic fumes and draughts) which caused a slow development and accumulation of the symptoms of an illness. Making the recognition of an employee accident dependent on the suddenness of an event, not because it has a sudden course but that it is a result of a brief outside effect – being a cause of the accident – on an employee’s body, constitutes a useful argument for distinguishing the employee accident risk from the risk of an occupational illness. The suddenness feature may pertain only to the duration of the event while the necessary characterisation of the cause of the event is its externality and directness.6 23 In order to accept an occurrence as an employee accident it is not required that the cause and effect take place at the same time. Usually considered as the one being outside the injured person, like forces of nature, the movement of machinery or the behaviour of another employee, the cause of an accident usually takes place suddenly and unexpectedly causing an immediate effect. Still, it also happens that the result is caused by reasons which in themselves happen over a longer period of time. 24 The external cause of an event is understood in a broad sense and is not exclusively limited to a situation where the only cause of an accident is a reason external to the victim’s body. A particular example is an employee accident in the form of a heart attack which can be caused by external factors in connection with the work and which influence the development of the cardiologic illness. 25 The court rulings show a generally uniform view which allows this type of change in an internal organ to be considered the result of an accident if the employee’s performance of his work required extraordinary efforts or if it was particularly stressful. The jurisprudence also accepts that a heart attack could be regarded as an employee accident because it may have been caused by exhaustion at work. Accepting this line of the jurisprudence must lead one to arrive at the conclusion that, if overwork is a possible cause of the accident, one cannot deny the assumption that the cause has developed over time, increasing in intensity and that, at a certain point, it becomes the cause of a heart attack. An accumulation of this negative influence on the employee’s health and its transformation into a cause of the employee accident does not have to take place in the course of just one working day. A different formulation of the issue would have led to the preposterous conclusion that prolonged work lasting for a few days, especially in adverse conditions, and causing over-tiredness would not
6 SN 3 July 2001, II UKN 465/2000.
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have led to the effect assessed as an employee accident whereas overtiredness which happened after a short period of time during a working day would have constitute its unquestionable cause. The suddenness feature refers therefore, to the duration of an occurrence, and the external character and directness refer to its cause. The connection with work takes place when the occurrence happened: ■
during or in connection with the employee’s regular work activities or his superiors’ orders;
■
during or in connection with the employee’s activities for the employer even without explicit instructions;
■
when the employee remains at the employer’s disposal on his or her way to the work place and the place of fulfilling his or her duties in accordance with the employment contract.
26
Such situations are mentioned alternatively, which means that, in order to 27 establish a connection between an accident and work, it is sufficient to prove the existence of one of the listed situations. In order to state whether a sudden occurrence caused by an external reason is an employee accident, it is sufficient to establish that the event took place during or in connection with the employee’s appropriate performance of his or her regular activities or orders of his/her superiors without the need to examine whether performing the activities was in the interest of the employer. The situation mentioned in the second bullet point arises when the 28 employee, acting in the employer’s interest, undertakes activities which are not connected to his duties as an employee, for example, during his or her free time. However, the interest of his/her employer is not taken into consideration when the employee performs work which belongs to his or her scope of duties due to the fact that, in accordance with the employment contract, the employee’s duty is to perform the work set forth in his or her employment contract and ordered by his or her superiors and, in this context, it is not up to the employee to evaluate the interest of the employer. A motor accident on one’s way from one’s place of residence (home) to the 29 place of performing one’s duties resulting from the employment relation is not an employee accident even when the employee is working within his/her working hours. The last condition which must be fulfilled is a specific effect, namely an 30 injury or the death of the injured. The Accident Act defines an injury as damage to body tissues or human organs as a result of an external factor. 375
Dominika Dörre-Nowak
31 A fatal employee accident is considered to be an accident as a result of which death occurred within six months from the day of the accident. 32 A grave employee accident is defined as one as a result of which the employee suffered a gross bodily injury, such as loss of sight, hearing, speech, reproduction ability or other bodily injury or deterioration to one’s health which has a detrimental effect on basic bodily functions as well as an incurable or health threatening disease, a permanent mental illness, complete or partial disability to work in one’s profession or a permanent, significant deformation or disfigurement of the body. 33 A collective employee accident is considered to be an accident which, as a result of the same event, resulted in at least two persons being injured.
b) An accident equivalent to an employee accident 34 An accident which is equivalent to an employee accident in the context of rights to benefits set forth in the Accident Act is an accident which an employee was subjected to: ■
during a business trip in circumstances which do not allow the characterisation of a given event as an employee accident unless the accident was caused by an employee’s actions which are not connected with the tasks he or she was assigned to do;
■
during training in general self-defence;
■
while performing work commissioned by the workers’ unions operating at the work place.
35 The Supreme Court holds a firm view that the protection which an employee is guaranteed when on a business trip is very broad, excluding a connection to work only when the accident was caused by the employee’s conduct which was not connected to the tasks7 he/she was assigned to do because, when on a business trip, the employee preserves the right, for example, to rest, to go for a walk and to eat away from the place of his or her duties.8 It is necessary to state, therefore, that an employee, while on a business trip, can be deprived of protection when he/she severed the relation with work by his/her reprehensible conduct. All actions outside work remain connected with the employment relation, except for behaviour which cannot be reconciled with the purpose of his or her business trip, that is, with the need to perform the tasks he or she was assigned to do.
7 SN 6 December 1990, II PRN 10/90. 8 SN 13 May 1997, II UKN 98/97.
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c) Accident on the way to or from work The Accident Act currently in force does not include a concept of an 36 accident on the way to or from work. The previous Act on accident and occupational illness benefits did provide for benefits in this respect. In the current legal state, the definition of an accident on the way to or from work is included in the Act of 17 December 1998 on Retirement Pensions and Disability Benefits from the Social Insurance Fund.9 Pursuant to the Retirement Act, an accident on the way to or from work is 37 defined as: ■
a sudden event,
■
caused by an external factor,
■
which took place on the way to or from the place of employment or another activity constituting a basis for disability insurance if the journey was: – the shortest and – was not interrupted.
The Supreme Court rulings state that an accident took place on the way to 38 or from work despite the fact that the journey was interrupted if the break was justified and its duration did not exceed the limits of the need for it as well as when the journey, in spite of not being the shortest, was the most convenient for the insured for transportation reasons. The journey to or from work, except for the journey from home to work 39 and from work home, is also a journey to a place or from a place: ■
other than the place of employment or other activity constituting a basis for disability insurance,
■
where regular professional or social activities or tasks take place,
■
where an employee eats,
■
where an employee attends school or studies.
The start of the journey to work has been a subject of many Supreme Court 40 rulings. The Supreme Court accepted as an accident on one’s way to work the case of an employee who, when returning from work, had an accident in a staircase of a block of flats in front of his flat (other further conditions were also fulfilled which allowed the event to be regarded as an accident to
9 A unified text: Dz U 2009, no 153.1227 with amendments, further herein referred to as the Retirement Act.
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or from work).10 In practice, the circumstance that the journey from work of an employee who lives in a block of flats also includes the moment of his/her entry to the staircase is important. In the case of a detached house, the journey to work begins the moment the employee leaves private property, that is, steps on a pavement adjacent to a public road or enters a public road. 41 In another analysed ruling, the Supreme Court stated that an employee going to or from work by his/her own car does not discontinue the journey if he or she undertakes repairs on the car and has an accident while doing so. The event is an accident on the way to or from work independent of who owns the area where the accident happened.11 42 If an employee has an accident on his/her way to a colleague who lives nearby in order to give him/her a certificate of disability to work with a request to deliver it to the workplace is also considered an accident on the way to or from work if this manner of notifying the workplace about the reasons for absence from work was the most appropriate in the situation. It must be noted that the employee was performing a duty as an employee (thus, there was an employment relation). On the other hand, the employee’s work relation is terminated when, after finishing the work-related activities, he/she remains at the workplace only to consume alcohol. Consequently, the journey the employee takes after leaving the workplace when intoxicated is not considered as being on the way from work to his/her home.
d) An accident under special circumstances 43 The issue of accidents under special circumstances is regulated separately in the Act of 30 October 2002 on the provisions for accidents or occupational diseases which occur under special circumstances.12 44 The Act includes accidents which, among others, happened: ■
when rescuing other persons from life threatening situations;
■
when protecting public property against damage;
■
when providing aid to a representative of a state organ or a representative of an organ of the territorial self-government when performing their official duties;
10 11 12
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when pursuing or capturing persons suspected of committing a crime or when protecting other persons against assault;
■
when performing one’s duties as a council member or a member of a committee within a council of all units of territorial self-government or when performing one’s duties as a village administrator in connection with the position;
■
when sitting on a jury in a court of law;
■
during academic, educational or advisory activities conducted by organisational units within the educational system, classed as institutions of tertiary education, or during PhD courses, or during training provided for in the organisation of studies or education;
■
when working in the Voluntary Labour Corps under terms other than employment contract terms;
■
when working as an occupational therapist in organisational units of social welfare centres and public health care institutions;
■
when performing direct acts of protection against acts of God.
2.
Disease (occupational diseases)
An occupational disease is an illness which is registered on the list of 45 occupational diseases if, as a result of the assessment of working conditions, it can be ascertained indisputably or with a high probability that it was caused by factors which are harmful to health in the working environment or in connection with the manner the work is performed referred to as a ‘occupational risk’. The diagnosis of an employee’s or former employee’s occupational illness 46 can be made during his/her employment when exposed to the occupational risk or after the end of exposure to such a risk, provided that the documented symptoms of the illness occurred during the period as listed in the chart of occupational diseases. The list of occupational diseases is included in the attachment to the 47 regulation of the Council of Ministers of 30 June 2009 on occupational diseases.13 The list includes illnesses which – according to medical knowledge – are acquired in the working environment, with a stipulation that, at the time of ascertaining occupational diseases, the illnesses on the list
13
Dz U 2009, no 105.869.
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are provided for only when, as a result of the assessment of working conditions, it can be stated indisputably or with a high probability that the illness was caused by factors that are harmful to health and that appear in a given working environment or in connection to the manner a given work is performed (so-called professional risk). Hence, when ascertaining an occupational illness, the conditions in which an employee was performing his/her job are important. 48 Establishing a list of occupational diseases has paramount legal effects consisting in a presumption of a professional origin of the illness listed and excluding the possibility of considering as an occupational disease a disease which is not on the list, irrespective of a possible connection to the work performed. Ultimately, if an employee was diagnosed as having an illness which is included in the list and he has been performing his work under conditions conducive to its occurrence, it is not necessary to prove the existence of the impact of the working conditions on its occurrence. The employee is not required to prove the actual influence of the working conditions on his health condition. The employment conditions which endanger health leads to the assumption of the existence of such a connection even if such an illness could also have had a source unrelated to the employment. The manner of defining an occupational disease, this concluding the reason from the effect, leads to the presumption that the development of illness on the list has occurred in connection with the employment. The prerequisite for such a presumption is that performance of the work has exposed an employee to such an illness. This presumed causal connection can be refuted only by indicating that the illness on the occupational diseases list was caused by factors outside of the occupation and resulted from the natural course of development of the illness. 49 Examples of occupational diseases are: ■
dust disease in coal miners;
■
nasal septal perforation caused by caustic or irritant substances;
■
chronic diseases of vocal chords caused by excessive vocal strain over a period of at least 15 years;
■
dermatophytosis in persons who have had contact with biological material of animal origin.
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C.
Scope of protection
1.
Personal injury
The circumstance which in general entitles an employee to accident (and 50 accidents equivalent to employee accidents) benefits is an injury or death of the injured. According to the Accident Act, an injury is damage to bodily tissues or human organs as a result of an external factor.
2.
Sexual harassment
Sexual harassment is not subject to accident insurance. Dignitary Injuries 51 (for example, resulting from discrimination) are not subject to accident insurance either.
3.
Property damage
Accident insurance does not cover compensation for property damage.
4.
Pure economic loss 53
Accident insurance does not cover damages for pure economic loss.
D.
52
Heads and levels of benefit
The following benefits can be paid from the Social Insurance Company for 54 an employee accident or an occupational disease:
1.
Medical care
a) General benefits General benefits include: ■
■
55
illness benefits – for an insured whose work disability was caused by an employee accident or an occupational illness; disability benefits – for an insured who has become unable to work as a result of an employee accident or an occupational disease; 381
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lump sum compensation – for the insured who incurred a permanent or prolonged harm to his or her health;
■
nursing allowance;
■
reimbursement of medical treatment expenses in dentistry and for immunisations and orthopaedic supplies to the extent covered by the Act.
b) Specific regulations 56 An employee who had an accident on the way to or from work is entitled to disability benefits for inability to work caused by the accident. Other benefits for the those injured on their way to or from work are: ■
sickness payments,
■
rehabilitation benefits, and
■
workers’ compensation benefits.
The insured (who is entitled to sickness payments) who has an accident on his/her way to or from work shall, therefore, acquire the right to 100 % sickness payment payable from the Sickness Insurance Fund. Furthermore, pursuant to art 92 § 1.2 Labour Code, for the first 33 days for the above reason, of the disability, the employee maintains the right to guaranteed remuneration from the employer due to the disability to work caused by that accident in the amount of 100 % of the illness remuneration. 57 The persons who became unable to work as a result of an accident in special circumstances (ie those identified in no 43 f above) are entitled to: a disability pension; a lump sum compensation payment; health care benefits set forth in the regulations on health care financing from public funds to the extent necessary to treat the consequences of an employee accident or an occupational disease provided that the persons are not covered by health insurance. 58 A person who incurs funeral costs for a person who had an employment accident or an occupational disease, or a person receiving a disability pension under the Act is entitled to a funeral allowance. 59 A person who became fully or partially unable to work as a result of an accident under special circumstances is entitled to a disability pension: permanently if the disability is permanent, or for a period indicated in the decision rendered by a pension agency if the disability is temporary.
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A person who incurred a permanent or long-lasting injury to health 60 caused by an accident under special circumstances is entitled to a lump sum compensation payment for the injury if the person became unable to work as a result of the accident.
2.
Rehabilitation assistance 61
Benefits available by way of rehabilitation assistance include: ■
■
3.
rehabilitation benefits – for an insured who, having exhausted illness benefits, remains unfit for work and further treatment or rehabilitation would improve the chances of him or her returning to work; training allowance – for an insured who is deemed eligible for professional re-training due to the employee’s inability to work in his/her previous occupation as a result of an employee accident or an occupational disease. Lost earnings, loss of earning capacity and loss of pension entitlements 62
Benefits available in respect of lost earnings, etc, include: ■
■
4.
compensation benefits – for an insured who is an employee whose remuneration was decreased due to a permanent or prolonged harm to his or her health; lump sum compensation payment – for the members of the family of a deceased insured or pensioner. Non-pecuniary losses 63
Non-pecuniary losses are not covered by the social security system.
5.
Dependant’s benefits 64
These include: ■
■
family benefits – for the deceased person’s family members or a pensioner who is entitled to a disability pension due to an employee accident or occupational disease; disability pension allowance – for an orphan. 383
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65 Members of the family of an employee who died in an accident when on his or her way to or from work and whose death was caused by the accident are entitled to family benefits and a lump sum compensation payment assessed in accordance with the regulations of the Accident Act. 66 Family members of persons who died as a result of accidents in special circumstances are entitled to family pensions and a lump sum compensation payment.
6.
Comparison with damages in tort
67 This varies in different types of cases. In general it might be stated that benefits from the social security system are lower than probable damages in tort. The difference is approximately 50–60 % more than that of the lump sum compensation payment. However, in some cases it is also possible that there will be no liability from tort and in some cases that the percentage will be higher than stated above.
7.
Lump sum or periodical payments
68 Most benefits are paid as periodical payments. In the case of a lump sum being awarded, this is paid only once for the injured and once for a family of the deceased employee.
E.
Funding systems
1.
Type of system
69 Accident insurance is a part of the general social insurance system and this is mandatory insurance. 70 Natural persons are subject to mandatory accident insurance in the following periods: ■
■
employees – from the date of starting their employment relation to the date of the end of the relation; persons who perform home-based work and contractors – from the date set in the contract as the day of its commencement to the date of the termination or expiration of the contract;
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persons conducting non-agricultural business activities – from the day of starting the business activity to the day of the end of the business activity with the exclusion of the period for which the business activity was suspended.
Contributions to the workers’ compensation fund come from various 71 sources, as detailed in the following paragraphs. In the case of employees, the employer pays the contributions. The 72 percentage amount of the contribution for accident insurance for a given contribution year is determined by the Social Insurance Company. The contribution year commences on 1 April of a given year and ends on 31 March the following year. The discretion of the Social Insurance Company in this matter is de facto excluded because the regulations contained in the Act and administrative Acts specifically indicate the criteria and indicators based on which the amount of the percentage rate of the contribution on the part of a given contributor are determined. The fundamental criterion which differentiates the percentage rate for 73 accident insurance is the number of persons that a contributor declared for this insurance. The contributors can be divided into two groups: those who declare up to nine persons and those who declare at least ten insured. This differentiation, which makes it easier to determine the percentage rate of a contribution for small businesses employing only a few employees, is, in the light of other criteria such as the category of a risk dependent on the number of the injured, fully understandable and justified. The occurrence of even one employee accident in respect of such a small number of persons declared for the insurance would have a disproportionate impact on the risk category and the resultant amount of the contribution percentage rate. The percentage rate of the contribution for accident insurance for a given 74 business activity group is determined on the basis of the risk category set for the group. The risk category for a business group is determined based on the risk defined by frequency indicators of: ■
the total number of the injured in employee accidents;
■
the number injured in fatal and serious employee accidents;
■
the number of occupational diseases ascertained;
■
the number of those employed in dangerous conditions. The risk category for a group of business activities is determined on the basis of the data of the Main Statistical Office (GUS) for the last three calendar years. 385
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2.
Incentives
75 The current Accident Act provides for a slightly reversed regulation; namely, the Labour Inspector may file a motion with the Social Insurance Company to increase the contribution amount paid by an employer by 100 % of the percentage rate for accident insurance determined for the next contribution year when in the previous two consecutive inspections a gross violation of the Health and Safety at Work (Bezpieczen´stwo i Higiena Pracy, BHP) regulations were found. The decision to increase the percentage rate of the contribution is issued by the Social Insurance Company. F.
Administration and adjudication of claims
1.
Organisational framework of workers’ compensation institutions
76 A detriment to health and its connection to an employee accident or an occupational disease are ascertained by a medical doctor who is employed at a special adjudicating health care unit. An employee or a former employee who disagrees with the content of the medical decision in the matter of an occupational disease my file a petition for a new medical examination by an adjudicating unit of a higher instance. 77 The decision ascertaining an occupational disease or the decision establishing insufficient grounds to ascertain an occupational disease is issued by an appropriate state district public health inspector. 2.
Reviews and appeals: Special tribunals or general civil justice system?
78 In Poland both reviews and appeals may be pursued in the administrative and the civil justice system. 79 The decision issued by an appropriate district health inspector may be appealed against with an appropriate regional health inspector whereas a complaint should be appealed with the regional administrative court. 80 Based on the decision, after the examination by an adjudicating medical doctor from the Social Insurance Company, the district health inspector issues a decision whether to grant or deny a specific benefit. 81 The Social Insurance Company’s decision can be appealed against at a Social Insurance Department at a designated common court. 386
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3.
Speed of claims’ resolution and administrative costs
The decisions issued by the Social Insurance Company are usually taken 82 over a period of a few months, however, together with the appeal procedure to a common court due to almost two years.
G.
Rights of recourse of workers’ compensation institutions
The Social Insurance Company (ZUS) has no right of recourse against the 83 employer or a victim’s co-worker, or even an equipment manufacturer or a supplier. The limitation of the employer’s liability is justified by the principle of accident insurance.
H.
Interaction with general social welfare provision and private insurance
Accident insurance is an independent, separate insurance system which 84 covers benefits for harmed persons. The fund of first resort (that is, the initial bearer of the costs) is the Social Health Insurance (and in part employer). Benefits provided by social and private health insurance are not deductible 85 from workers’ compensation. An injured employee may obtain both social benefits and benefits from the private insurance company if he or she has been subject to both types of insurance (that is, if he/she had paid additional contributions to obtain private insurance).
I.
Interaction with employers’ liability 86
This is described in more detail in Section III below.
In the event that an employee receives a specific benefit from the Social 87 Insurance Company, the amount goes toward the possible claim against the employer and thus decreases the employee’s pecuniary damage. The fact of receiving or not receiving benefits from the Social Insurance 88 Company has no impact on specific legal claims in civil law against the employer.
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III. Employers’ Liability A.
Classification
1.
Contract or tort?
89 The employer can be liable in tort for damage to the employee’s property other than items indicated in the Labour Code under the regulations of the Civil Code. Similarly, in the case of injury to a person, the employee or members of the deceased employee can, under the provisions of civil law, sue the employer for damages for the injury caused by an employee accident or an occupational disease. The employer will be liable only when the employer’s actions or omissions led to the injury to the employee, that is, where they stand in an adequate cause and effect relation. When filing such a suit, in the court proceedings, the employee cannot adduce only the occurrence of the employee accident, which was ascertained in a post-accident report, or the fact of having been granted a decision on the occurrence of an occupational disease. In the court proceedings, the employee is obligated to prove all circumstances of damages liability and specifically: ■
The employer’s liability for an unlawful act,
■
the occurrence of injury (injury to health), and
■
a cause and effect relation between the event – the employee accident or occupational disease – and the occurrence of the damage.
2.
General law or special category?
90 Basically the liability of the employer is general law with its origin in the ordinary law of civil liability.
B.
Elements of liability
1.
Liability of employers for their own acts and omissions
91 The employer is liable for his own acts or omissions which led to the injury to the employee seeking damages. 92 Failure to meet the health and safety requirements on the part of the employer or persons responsible for health and safety is a liability condition on the part of the employer.
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2.
Liability of employers for the acts or omissions of their employees and others
The employer is liable for acts or omissions of his employees if they led to 93 the injury of the employee seeking damages.
3.
Overall a fault-based or strict liability?
The courts’ jurisprudence is not consistent on this matter. In the majority 94 of cases, the liability is based on the risk of the business activity whereas, in some cases, the employer’s liability is fault-based. In order to be held liable in damages for an employee accident or an 95 occupational disease, it must have been the employer’s fault that the accident occurred. When an employee (or his/her family) claims damages for the employee accident or an occupational disease in a civil suit it has, therefore, to be proved that it was the employer (or a person acting on the employer’s behalf) who caused the accident or contributed to the injury, which is not always easy or possible.
4.
Causation
An adequate cause and effect relation between the working conditions and 96 the injury to health is required.
5.
Effect of the victim’s contributory conduct
The injured person’s contributory conduct may have the effect of decreas- 97 ing the degree of the employer’s liability, broadly in line with the general law of civil liability – but seen with labour law spectacles. C.
Scope of protection
1.
Personal injury
For the purposes of civil liability, bodily injury includes violating the 98 integrity of the body which leaves clear traces of both an external character (for example, loss of a limb, deformation) and damage to internal organs. Damaging the employee’s body is subject to the employer’s civil-legal 389
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liability for occupational tort in the event that the remaining conditions have been fulfilled.
2.
Sexual harassment
99 In Polish law, following the EU regulations, sexual harassment is considered a form of discrimination in respect of sex and is regulated in the Labour Code. 100 In accordance with its definition in the Labour Code, sexual harassment is every unwelcome behaviour of a sexual character or referring to the employee’s sex, whose aim or effect is to violate the employee’s dignity, in particular, creating a frightening, hostile, humiliating or insulting atmosphere for him or her; such behaviour can consist of physical, verbal, or non-verbal elements. 101 In the event that the Labour Court ascertains that sexual harassment took place, liability for damages is borne by the employer even if another employee acted in the prohibited manner which may be unknown to the employer. To this extent, the employer’s liability is close to liability on the principle of risk because the employer is responsible for counteracting the occurrence of sexual harassment. 102 Although the current jurisprudential approach is not fully fixed, it appears that the damages that may be awarded under the Labour Code for violating an employee’s dignity by sexual harassment include elements of both compensation for pecuniary loss (for example the employee’s lost income, costs of therapy related to the breakdown of emotional health, etc) and pecuniary damages for non-pecuniary harm (reparation of feelings of emotional loss). The Courts take into consideration the entirety of the losses incurred by the wronged person. 103 The employer who should incur costs related to damages for this form of violating the principle of equal treatment may, in a recourse action, claim compensation from the direct offender. 104 Although deprived of sexual reference, mobbing remains close to sexual harassment and is also considered a form of discrimination, being undesired conduct the aim or effect of which is to violate an employee’s dignity and to create a frightening, hostile, humiliating, or insulting atmosphere. 105 From the point of view of the effects and the scope of employers’ liability, there is no difference between molesting and sexual harassment. In practice, the claims based on the premise of sexual harassment are hardly 390
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ever present while employees focus on claims based on sexual harassment and mobbing charges.
3.
Dignitary injuries
The Labour Code provides for damages to an employee who terminated 106 the employment contract due to mobbing and pecuniary compensation for emotional breakdown caused by mobbing. Both claims are pursued against the employer before a common labour court. According to its definition in the Labour Code, mobbing encompasses 107 actions or behaviour relating to an employee or directed against an employee which constitute persistent and prolonged harassment or bullying, which causes the employee to have a lowered assessment of his/her usefulness for work. This evokes feelings of humiliation in the employee and leads to him or her becoming isolated from co-workers. Damages pursued from the employer in relation to terminating the 108 employment agreement by the employee due to mobbing is calculated with respect to the loss of income over the period in which the employee was unable to work due to his/her experiencing mobbing at the previous employer. Sometimes, damages are treated as a sanction for the employer and the amount of damages reflects the degree to which the employer has violated the obligation to counteract mobbing at the workplace. In such a case, the employer also has a possibility to sue the individual who 109 had mobbed the employee for damages in separate recourse proceedings. 110
Neither harassment nor mobbing is treated as an employee accident.
4.
Property damage
Under the provisions of the Labour Code, the employee who suffered an 111 employee accident is entitled to damages related to the accident for loss or damage to objects of personal use and objects necessary to perform his/her work, except for the loss or damage to motor vehicles and pecuniary assets. Damages for other property damage as well as injuries to health are due under the regulations of the civil code.
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5.
Pure economic loss
112 The employer may be liable for real damage of an economic nature that is incurred by the employee (eg lost earnings), though most often the court awards a global sum rather than dividing the damages into different components. In practice, such losses may be difficult to prove.
D.
Heads and levels of damages
113 In the event of bodily injuries or a breakdown in health, damages are to cover all resultant costs.
1.
Main heads of recoverable damages
114 Upon the harmed employee’s demand, the party obligated to repair the damage should pay in advance the sum necessary to cover the costs of treatment and, if the injured has become an invalid, also the sum necessary to cover the retraining costs for another profession. If the harmed has lost completely or party his/her earning ability or his/her needs increased or his/her prospects for the future diminished, he/she can demand that the obligated party rectify the damage, eg an appropriate pension. 115 The harmed can also pursue compensation for non-material damage, a socalled harm caused by disorder of health. Depending on the kind of claim, these are periodical benefits (pensions) or on-time payments (costs of treatment, costs of retraining, monetary compensation). 116 In addition, damages may be awarded for loss of earnings, non-pecuniary loss and, in fatal cases, loss of dependency.
2.
Costs of medical care
117 The costs of medical care depend on the injured employee’s claim. The direct costs of medical care are limited to the documented costs of treatment. They may be increased to include rehabilitation expenses.
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3.
Costs of rehabilitation assistance
The cost of rehabilitation assistance may be included in the claim as a 118 documented medical treatment.
4.
Lost earnings, loss of earning capacity and loss of pension entitlements
If the injured has entirely or partially lost his or her ability to be employed 119 or his/her needs have increased or his/her perspectives for future success have decreased, he or she may demand from the obligated party an appropriate disability pension to repair the damage.
5.
Dependents’ benefits
In case of death of the injured employee, one who has borne funeral and 120 medical costs – may demand their reimbursement. Additionally the dependent (one towards whom the deceased had a duty 121 to pay alimony) may demand compensation in the form of a rent calculated with regard to the dependent’s needs and possibilities of the deceased through the hypothetical duration of the alimony duty. The same claim may be pursued by those closest to the deceased who had been financially supported by the deceased. In certain circumstances the closest family members may obtain compensation if their life situation deteriorated. They may also claim damages for non-pecuniary loss.
6.
Non-pecuniary losses
The injured may also claim compensation for non-property damage, a so- 122 called ‘harm’ caused by a breakdown of health. The ‘harm’ is to be defined differently in different circumstances – sometimes it could even be the mere fact of disability which causes pain and suffering.
7.
Form of payment
Depending on the kind of the claim, the form of payment is either 123 periodical benefits (disability pension) or lump sum payments (costs of treatment, costs of retraining, pecuniary compensation). 393
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124 The compensation and benefits could be adjudicated either as a lump sum or periodical payments, depending on the employee’s claim and court ruling.
E.
Administration of claims
1.
Courts or specialised tribunals?
125 All cases against employers are examined by common courts, departments of labour courts. Due to the fact that these are claims in civil law, there is no special procedure in matters related to labour law (which has numerous advantages for employees). As a rule, general evidence principles which burden the employee with the need to prove an adequate causal connection between the detriment to health and the working conditions apply.
2.
General civil procedure or special procedures
126 All cases are subject to general civil procedures.
3.
Reviews and appeals
127 One has a right to appeal against the judgment of the court of first instance in the court of second instance. In some cases, for example. when the plaintiff filed for compensation exceeding PLN 10,000, it is also possible to file a cassation appeal with the Supreme Court.
4.
Speed of claims’ resolution and administrative cost
128 These matters are complicated as regards evidence and require the involvement of experts in specialised fields of medicine depending on the employee’s illness. This results in proceedings lasting a minimum of one year or, at times, longer.
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F.
Rights of recourse
1.
Against employees
The employer who has paid compensation in accordance with a valid 129 judgment has a right of recourse against the direct offender (employee acting within the scope of his duties) in case of damage. In this case, when the direct offender was acting in an unintentionally faulty manner within his duties, the employer’s recourse is limited to three times the employee’s monthly salary.
2.
Against third parties
The right to recourse is the same as in the case of recourse from employees. 130 However there is no limitation even in case of the unintentional fault of the direct offender.
G.
Interaction with social welfare systems and private insurance
There is no such regulation for the deductibility of benefits received from 131 welfare agencies. Recourse of social welfare agencies and private insurers against the employer is theoretically allowed under the regulations but in practice, it does not take place.
H.
Insurance
1.
Voluntary or mandatory?
Employers usually take out additional civil liability insurance (not man- 132 datory). However, this is normally the case for larger business entities which, for the most part, operate as branches of international concerns. Within such additional coverage, there is often a special option which has the form of an amount paid in the event of employee claims resulting from employee accidents and occupational diseases.
2.
General liability insurance or special policy?
Additional Liability Insurance is subject of agreements with the Insurer. 395
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3.
Basic principles of employers’ liability insurance
134 As it is not mandatory, basic principles of employers’ liability insurance depend on a special liability agreement with the insurer. Employers who have civil liability insurance may indicate the insurer and then the damages are covered from the guaranteed sum, not directly from the employer.
IV. Evaluation and Conclusions A.
Compensation
135 The system consisting in obtaining benefits from social insurance is assessed by employees as insufficient due to the fact that the obtained benefits fail to fully cover their needs. 136 In practice, the complementary civil liability of the employer is linked with prolonged court proceedings which do not always terminate with a settlement that is favourable for the employee because more often than not the employee accident happened for reasons for which the employer is not liable due to the fact that he was not at fault in respect of violating the principles of health and safety at work. Accident insurance as mandatory insurance consisting of the employer’s monthly contributions is, in the insured’s opinion, inadequate to the benefits received from the social insurance company. The system is not favourable for the employer because the specific benefit payments due the employee from social insurance in connection with the employee accident or occupational disease do not prevent the employee from claiming further benefits from the employer by way of a civil proceeding.
B.
Prevention
137 The National Labour Inspectorate may fine employers for their failure to observe the regulations concerning health and safety at work. The National Labour Inspectorate’s notification of the employer’s failure to observe these regulations may cause a 100 % increase in the premiums for accident insurance. When it is ascertained that, in a specific situation, the employer failed to observe the health and safety at work regulations, in a civil proceeding the employee will find it easier to claim damages connected with harm to his/her health.
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C.
Overall costs
As explained above, it is the opinion of employees that the costs of the 138 overall system are inadequate to the aim of providing benefits that fully cover the needs of the injured.
D.
Interaction between workers’ compensation and private law
As a rule, in practice, there is no interaction between the systems. They are 139 fully independent, which is to the detriment of employees who, in order to obtain compensation, are forced to file and conduct two separate procedures (an administrative procedure to obtain insurance benefits and a civil procedure against the employer).
E.
Plans for reform
The accident insurance and the occupational insurance systems have been 140 revised recently. The changes in the scope of occupational diseases failed to bring regulations regarding so-called illnesses connected with working conditions expected by employees, that is, those illnesses which occurred in connection with work but which are not registered on the list of occupational diseases upon which insurance benefits depend.
F.
Overall quality of each system independently and in combination
In Poland employees who seek adequate compensation are forced to 141 initiate the two procedures. Although the systems are complementary, they do not always lead to the satisfaction of the injured employees.
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Employers’ Liability and Workers’ Compensation: Romania Christian Alunaru and Lucian Bojin
I.
Introduction
A.
Basic system of compensation and liability
Generally speaking, employers can be responsible for their acts from a 1 criminal, administrative and civil point of view. The principle that governs the administrative and criminal responsibility of the employer is that, for the employer to be liable, an act must have occurred that is prohibited by law (nullum crimen sine lege). No employer shall be responsible criminally or from an administrative point of view unless the act for which he/she is responsible is prohibited by law and fulfils the conditions for liability – the principle of legality. From an objective point of view, the difference between a criminal act and an unlawful act from an administrative point of view (contravention) is the degree of social danger involved. According to the law, sanctions imposed in the case of crimes or contraventions are imprisonment, a fine or an admonition.1 In labour law, civil liability is governed by the principle that the person who causes damage to another must compensate for the damage caused, in other words, a civil sanction aimed at compensation. In this case, any unlawful conduct that caused damage to another person generates the obligation to repair the damage caused.2 The Romanian system of employer’s liability and workers compensation in cases of workplace injuries and disease, however, constitutes an exception to this general principle of labour law.
1 V Popa, Raspunderea angajatorului pentru accidentele de munca (1994) 34. 2 S Ghimpu/A Ticlea, Dreptul muncii (2nd edn 2001) 51 ff.
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2 The first legislative measure on social insurance for workplace injuries in Romania dates back to 18953 (the Mines Act)4 and was limited to the protection of miners. In 1902, the system was extended to craftsmen and subsequently in 1915 to all workers with a labour contract with a corporation. The whole system was thoroughly reformed in 1933 and, between the two World Wars, the first private insurance systems was introduced.5 During the communist regime, the most important piece of legislation concerning social insurance for workplace injuries was Act no 21/1967 concerning the State social insurance and social assistance.6 The social insurance system was managed by the Labour Ministry (and previously by the Central Committee of the Trade Unions).7 Contributions were due in terms of the ‘socialist undertakings’ on a risk-rate basis. The insured benefited from the insurance irrespective of whether their employer paid its contribution. The results were that the main traits of this system are the same as the system currently in force. 3 According to the current legal provisions in force in this field (see art 4 of Act no 346/2002 concerning social insurance for workplace injuries and occupational diseases) civil liability is borne by the insurer. The public insurance schemes cover workplace injuries and cases of occupational diseases. The insurance for workplace injuries and diseases is part of the social insurance system, which is guaranteed by the State and dictates the specific terms on which social protection is assured in this field. 4 Employer’s liability will only be activated, according to the principles of contractual liability, if the employee is able to prove that some of the damage she has suffered is not covered by the public insurance system. Employer’s liability thus plays a subsidiary and supplementary role.
B.
Interaction with other institutions
5 Insurance for workplace injuries and disease is part of the social insurance system and is governed by the principles of social security law. Social
3 B Murgescu, Romania si Europa. Acumularea decalajelor economice (1500–2010) (2010) 142. 4 The Mines Act of 21 April 1895. See . 5 . 6 L Theodoru, Unele consideratii asupra raspunderii pentru accidentele de munca, Revista romana de drept 2/1968; online . 7 M Witzman, Natura raspunderii intreprinderilor si institutiilor pentru accidentele de munca, Justitia Noua 7/1957; online .
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security law is that branch of public law which regulates social insurance and social assistance relations. 6
The social insurance system covers: ■
health social insurance,
■
insurance in cases of workplace injuries and occupational diseases,
■
unemployment insurance, and
■
social insurance, in terms of which benefits are granted in cases of temporary work incapacity, parenthood, death and in cases where it is requested that the right is granted to the insured’s pension.
Labour law and social security law constitute two distinct branches of law. 7 Labour law falls under private law and represents an ensemble of legal norms that regulates the social work relations between the employer and the employee. As we have already mentioned, social security law is part of public law and is considered an independent branch of law. However, the interaction between these two branches of law is evident as most social insurance rights have their roots in the labour relations between employers and employees. Furthermore, even if one recognises them as two separate branches of law, the doctrine nevertheless refers to ‘social law’, acknowledging the indivisible connection between labour law and social security law arising from social politics.8
C.
Empirical evidence
The relative scarcity of available statistics as regards the legal conse- 8 quences of workplace injuries in Romania is noteworthy for a report such as the present one. Nevertheless, there are some available data provided by the territorial labour inspection9 and the Labour Ministry regarding the number and percentage of workplace injuries. For example, for the year 2010, a frequency survey showed that the rate of victims of workplace injuries amounted to 0.079 %, while the rate of workplace injuries causing death was 0.006 %. The same data for the year 2010 show that the seriousness rate of workplace injuries is 41.3 ‰ (meaning 41.3 work incapacity days per 1000 employees), while the average duration of the work incapacity period per injured employee was 63 days.
8 S Ghimpu/A Ticlea/C Tufan, Dreptul securitatii sociale (1998) 22. 9 See last visited 22 January 2012.
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II.
Workers’ Compensation
A.
Scope of cover
9 Social insurance for workplace injuries and occupational diseases covers mandatorily some of the categories of insured persons established by the Act no 346/2002 regarding social insurance for workplace injuries and occupational diseases, namely: ■
persons that act on the basis of an employment contract and civil servants. These categories are insured by law, mandatorily, no matter the duration of the contracts concluded;
■
persons that act in elective functions or are appointed within executive, legislative and judicial bodies, to the extent of their mandate, as well as the cooperative members of a cooperative organisation. The rights and obligations of the persons in the categories mentioned above similar to those of persons employed under a labour contract;
■
the unemployed, during training courses organized for such persons; and
■
apprentices, pupils and students during their practical training.
10 This type of insurance is neither available nor applicable to some categories of personnel, for example, civil and military personnel that provide services in the army and to the personnel that provide services in the Justice Ministry and its subordinated structures. These personnel benefit from special types of insurance that is governed by specific laws. 11 This type of insurance can be acquired by other categories of persons that are not subjects of a labour contract. For instance, it can be acquired by those who are partners in partnerships or companies, independent service providers, persons that work in international organisations, owners of real assets, and all persons that are interested in concluding this type of insurance and act on the basis of some other type of legal relations. In these particular cases we are not talking about compulsory insurance but rather, persons in these categories have the possibility to choose to either conclude or not conclude the individual contract of insurance. In cases where they conclude this type of insurance, they benefit from the same rights and are subject to the same obligations as persons that are insured by law. 12 Not only Romanian workers benefit from these insurance but also foreign workers that provide services for Romanian employers who are domiciled in Romania. Romanian workers that work aboard in terms of a labour 402
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contract with a Romanian employer are also subject to this type of mandatory insurance. We can analyse the limits of the scope of workers’ compensation from 13 several points of view:
1.
Spatial limits
From this point of view, the meaning of ‘workplace’ is not limited to the 14 confines of the building of the company or to other places situated in the vicinity of the company to which the employees have access. The insurance also covers injuries that occurred in other places situated in 15 Romania or abroad where the employee carries out his work activities. The benefits of the insurance are conditional upon the injuries taking place during the course of work activities. The insurance also covers injuries that occur during work-related travel 16 under the following conditions: ■
the injury occurred on the normal travel route from the workplace to the domicile of the employee and vice versa;
■
the injury occurred during the employee’s regular lunch break in a place designated by the employer for this purpose or on the normal route from the workplace to such places and vice versa; or
■
the injury occurred on the normal route from the workplace to the place where the employee cashes his salary or vice versa.
Work-related travel injuries are not covered by Romanian law separately 17 from workplace injuries but are treated as a workplace injury. In this case, the law makes no difference between a work-related travel injury and a workplace injury from the point of view of the levels of benefits.10 In sum, in order to be classified as of a workplace injury the injury must 18 occur at the workplace or in places related to the workplace by law.
10
Popa (fn 1) 226.
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2.
Temporal limitations
19 From this point of view, we can note that the following are considered workplace injuries: ■
an injury that occurs during the work schedule is considered a workplace injury;
■
an injury that occurs during regular breaks is considered a workplace injury;
■
an injury that occurs during the time in which the employee moves from his workplace to his domicile and vice versa is considered a workplace injury; and
■
an injury suffered before or after work hours during which the employee was receiving or rendering work tools or changing his/her work clothes, protection equipment or any other equipment delivered by the employer.
B.
Compensation trigger
20 The risks that are covered by the insurance are workplace injuries and occupational diseases as defined by the provisions of Act no 319/2006 regarding security and health in labour practices. 21 According to the provisions of this law workplace injuries refer to bodily injuries or poisoning that occur during work or in carrying out job-related activities and that cause temporary work incapacity for at least three days, invalidity or death. 22 ‘Workplace injuries’ include: ■
injuries that are suffered by persons visiting the company with the employer’s authorisation;
■
injuries that are suffered by persons that fulfil State tasks or tasks of public interest, including when these injuries occur in cultural or sporting activities in Romania or abroad during and because of the fulfilment of these tasks;
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injuries that are suffered during workplace-related sports or cultural activities, during and because the fulfilment of these activities;
■
injuries that are suffered by any person as a result of an intervention on their own initiative to save human lives;
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injuries that are suffered by any person as a result of an intervention on their own initiative to prevent or remove a danger that threatens the public or private property;
■
injuries that are caused by activities that have no connection with work processes if they occur at the employer company’s premises or at the house of the individual employer or in another workplace organised by such persons during work hours and are not exclusively due to the actions of the person injured;
■
injuries that arise from a travel accident if the accident occurred on the normal route from the employee’s place of domicile to the workplace or vice versa;
■
injuries that are suffered while travelling from the headquarters of the legal person or employer’s individual address to the workplace or from the workplace to another workplace in order to fulfil a job activity;
■
injuries that are suffered while travelling from the headquarters of the legal person, the employer’s individual address or from another workplace organised by such persons to another legal or natural person in order to fulfil a job activity during the normal period for travel;
■
injuries that are suffered before or after work hours while the employee is receiving or using work tools, changing his/her work clothes, or dealing with protection equipment or any other equipment delivered by the employer, or if the victim is travelling from his workplace to its exit and vice versa;
■
injuries that are suffered during regular breaks at locations designated by the employer for these purposes or on the way to or from these locations;
■
injuries that are suffered by Romanian employees or other nationals carrying out their work activities aboard during the time period and on the route cited in the relevant travel documents;
■
injuries that are suffered by Romanian personnel providing services in the territories of other countries on the basis of labour contracts, conventions or other legal agreements concluded between Romanian companies and foreign companies while carrying out work activities during the operation of these contracts;
■
injuries that are suffered by employees while carrying out activities required in the course of specialisation training;
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injuries that are suffered as the result of natural disasters and events such as storms, blizzards, earthquakes and floods during the period of the employee’s work or while he/she is fulfilling work activities;
■
the disappearance of an employee in the context of a workplace injury and in circumstances that lead to the presumption of his death; and
■
injuries that are suffered by an employee while carrying out his/her work activities as the result of an aggression.11
23 Occupational diseases are diseases that occur because of a job or profession, caused by harmful chemical, physical, or biological agents typical to the work place or caused by excessive physical stress during the work process. Diseases incurred by students during practical training are also considered occupational diseases. The law does not provide a list of professional diseases. 24 The distinction between a workplace injury and an occupational disease rests on how it has occurred: while an injury has its immediate cause in the workplace accident, an occupational disease is a phenomenon that develops over time. Acute poisoning with a chemical substance qualifies as a workplace incident while a disease caused by a chemical substance is due to a long period of inhaling this substance. 25 As it can be seen, to be considered a workplace injury, the injury does not have to have occurred while fulfilling work tasks; it may have occurred while carrying out activities connected to work duties or interests, such as putting on or taking off work clothes or protection equipment.12
C.
Scope of protection
1.
Personal injury
26 In order to benefit from workplace injuries’ insurance, the workplace injury must have one of the following consequences: ■
temporary incapacity to work for at least three days,
■
death, or
■
invalidity.
11 12
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Popa (fn 1) 221 ff, Ghimpu/Ticlea/Tufan (fn 8) 165 ff. Popa (fn 1) 224.
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From the definition of ‘workplace injury’, we can see that the scope of 27 protection covers only personal physical injuries caused to the employee’s physical person. ‘Injury’ is understood as violent harm to the human body, acute workplace-related poisoning, and disease caused by harmful chemicals, physical, or biological agents typical to the work place or excessive physical stress during the work process. Acute workplace-related poisoning is treated as a workplace injury and 28 can be defined as a pathological state due to the introduction into the body of toxic substances, with poisoning effect. To establish if it is acute workplace-related poisoning we must determine if the substances that induced the disease are toxic and if they have any connection to the workplace. The difference between acute workplace-related poisoning and a professional disease is the fact that in the case of acute poisoning the evolution of the disease is fast as a consequence of the accumulation of toxic substances in the human body in a short period of time.13
2.
Sexual harassment and injury to one’s dignity
These matters do not fall within the scope of the protection offered by 29 insurance for workplace injuries. However, the employer can nevertheless be liable on the basis of the general principles of labour law. They are not considered ‘workplace injuries’ according to the legal definition and there is thus no possibility for the employee to benefit from State insurance. Act no 202/2002 on equal opportunities between genders ensures protec- 30 tion against sexual harassment and the promotion of gender equality by providing that the employer is directly liable for the discrimination that arises in such cases. ‘Sexual harassment’ is understood as unwanted conduct with sexual 31 connotations, physical, verbal or non verbal, causing injury to the dignity of the victim and the creation of an intimidating, hostile, humiliating, degrading, or offensive environment. It is regarded as a form of discrimination, punishable by law. By imposing certain obligations on employers, the law institutes a system 32 that enables employees to request compensation directly from the employer for moral or material damage suffered in these cases. For example, the employer is obliged to include, as part of its internal regulations,
13
Ghimpu/Ticlea (fn 2) 531.
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sanctions for employees who breach the personal dignity of other employees and establish a procedure for resolving such cases. 33 In terms of labour relations, the employees can address their complaints to the employer in order to have the matter examined and resolved. thief the matter cannot be resolved by mediation by the employer, the employee who has suffered sexual discrimination has the right to bring the complaint before a competent court (a labour law court or a court with administrative jurisdiction), within one year from the date on which the harmful conduct occurred. In this manner, the employee has the right to request compensation from the perpetrator for moral or material damage suffered and the elimination of the discriminatory conduct. 34 Employer liability can arise in several fields in the context of sexual discrimination, including sexual harassment: ■
■
■
administrative law – the employer can be obliged to pay a fine determined by those bodies competent to ascertain unlawfulness in this regard, namely the inspectors from the labour territorial inspectorates and the National Council against Discrimination; civil law – employees may request compensation for moral or material damage suffered and the elimination of the discriminatory conduct. In cases where the employee has lost his/her job, he/she has the right to ask to be reinstated in the company and to be paid wages lost during the period of time between the termination of the employment contract and the re-integration and all other work benefits. In accordance with labour law, the employer bears the burden of proving that he/she did not breach the principle of equal treatment; criminal law – sexual harassment is regarded as a crime if certain characteristics are met.
3.
Property damage and pure economic loss
35 Insurance for workplace injuries and professional diseases is not intended to cover all damage caused to property or pure economic loss suffered by employees. The employer is responsible for and can be liable to cover such damage but not on the basis of insurance relations but rather according to the principles of contractual liability in labour law.14 Liability in such cases will be analysed in the next chapter.
14
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Ghimpu/Ticlea (fn 2) 601 ff.
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Nevertheless, damage to property is covered to some extent by workplace 36 insurance. For example, the insurer is legally obliged in cases of workplace injuries or professional disease to cover the costs of manufacturing glasses, acoustic devices or ocular prostheses where such items were damaged in a workplace accident involving bodily injury.
D.
Heads and levels of benefit
The insured persons have the right to the following services in terms of 37 the insurance system for workplace injuries: ■
medical care;
■
medical rehabilitation and assistance to recover working capacity;
■
rehabilitation and profession-conversion;
■
allowance for temporary work incapacity;
■
allowance for temporary relocation to another workplace and for reduced working hours;
■
compensation for damage to bodily integrity as well as in the case of death; and
■
refund of certain expenses.
1.
Medical care
The insured persons have the right to medical care corresponding to the 38 injuries or diseases caused by the work accidents. In this regard, they have the right to: ■
emergency medical assistance at the place of the incident, in specialised means of transport and in hospitals;
■
outpatient medical treatment, medical tests and medicines prescribed by the doctors;
■
medical services in hospitals and specialised clinics for professional diseases;
■
treatment for recovery of their work capacity in specialised units;
■
reconstructive surgery services;
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spa treatment; and
■
specialised tests and laboratory analysis needed in order to establish the professional character of the disease.
39 The insurer has the obligation to contribute towards the medical expenses until the complete recovery of the beneficiary or the amelioration of the health deficiencies arising from the insured risk. The insurer is also obliged to cover the cost of spa treatment prescribed by the insurer’s doctors for those who suffer temporary work incapacity due to a workplace injury or professional disease.15
2.
Rehabilitation assistance
40 In this regard the insurer is obliged to cover the costs of: ■
medical rehabilitation and assistance to recover work capacity; and
■
rehabilitation and profession-conversion.
41 Regarding the former, the insured persons benefit from individual rehabilitation programmes designed by the insurer’s doctors based on the nature of the disease. Such programmes can include spa treatment for a period of 15–21 days, as recommended by the insurer’s doctors. The criteria for qualifying for this kind of treatment are established every year by the insurer. The insurer also establishes which units may provide services to treat persons who have suffered workplace injuries. 42 With regard to rehabilitation and profession-conversion, the insurer is only obliged to provide the services required by law on the request of the insured if they can prove that, while they did not lose their working capacity entirely, they cannot fulfil their work activities as a result of a workplace injury or a professional disease. 43 The insurance covers the following expenses: ■
expenses for medical and psychological services used to assess the physical and mental state of the insured and his/her skills with a view to profession-conversion;
■
the cost of the conversion or necessary qualification courses; and
■
the payment of an allowance during the period of conversion or duration of the qualification courses. This allowance is granted every month
15
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Ghimpu/Ticlea/Tufan (fn 8) 198 ff.
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and represents 70 % of the basis wage of the insured person at the date of the workplace injury or contracting of the professional disease. In order to obtain this allowance conditions specified in the insurer guidelines regarding the institution that organises the courses, the training programme, and the mode of assessment of the trainees’ results must also be complied with. This allowance will not be granted if the insured person benefits from other social allowances triggered by the workplace injury or professional disease. 3.
Lost earnings, loss of earning capacity and loss of pension entitlements
In the Romanian system several types of allowances are granted in cases of 44 workplace injuries or professional diseases, corresponding to the consequences suffered. One is the allowance for temporary work incapacity. In this regard, 45 insured persons benefit from an allowance for temporary work incapacity for the duration of the time that they cannot provide services or fulfil their work activities. This allowance is granted on the basis of a medical certificate required by law. This certificate must be countersigned by the departmental public health Directorate and the territorial house of pensions (county pensions’ office) at the employer’s headquarters or where the employee is domiciled. The allowance for temporary work incapacity is 80 % of the average gross 46 wages received by the insured in the last six months prior to the workplace injury. In cases of surgical and medical emergencies, the allowance represents 100 % of the average gross wages received by the insured in the last six months prior to the workplace injury. The payment of the allowance is made by the employer for the first three 47 days of the temporary work incapacity and by the insurer from the insurance contribution for workplace injuries and professional diseases from the fourth day of the incapacity. The period for which this type of allowance is granted is 180 days in a year beginning on the first day of medical leave. The doctors can propose the extension of this period beyond 180 days if there is a real possibility to recover medically and professionally. The insurer’s doctor can also propose the extension of the medical leave to continue the rehabilitation programme with the grant of an allowance for temporary work incapacity, the resumption of the activity in the same or another workplace or a proposal of retirement due to invalidity. No extension for medical leave can extend beyond a period of 411
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90 days. The system does not recognise a permanent entitlement for permanent injury; in such a case the victim enters the pension system. 48 The allowance for temporary transfer to another workplace and allowance for a reduction of working hours. These types of allowances are granted in cases where the insured persons can no longer fulfil their previous work activities and are temporary transferred to another workplace or the normal duration of their work is reduced. 49 The allowance for temporary transfer to another workplace is granted only if the gross wage received by the employee in the new workplace is inferior to the average gross wages received by the insured in the last six months before the workplace injury. 50 An allowance for loss of earning capacity is granted if the employee has to reduce his/her work time by one quarter due to a workplace injury or a professional disease. The amount of the allowance is equal to the difference between the average gross wages received by the insured in the last six months prior to the workplace injury and the amount received by the employee at the new workplace or after the reduction of normal working hours, but cannot exceed 25 % of the calculation base. These allowances cannot be granted for more than 90 days in a year.16 51 The Romanian system does not provide for an allowance for the loss of pension entitlements. 52 In the case of permanent loss of working and earning capacity, the victim of a workplace injury does not benefit from the allowances provided for by the insurance system for workplace injuries. Instead, he/she will benefit from the work disability pension provided for by the general social insurance system, within the framework of Act no 236/2010 concerning the unitary system of public pensions.
4.
Expenses refund
53 The insurer has the legal obligation also pay the following expenses in the case of a workplace injury or professional disease: ■
expenses arising from emergency transportation, when the survival of the victim depends on the use of special means of transportation;
16
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Ghimpu/Ticlea/Tufan (fn 8) 143 ff.
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expenses arising from the manufacturing of glasses, acoustic devices or ocular prostheses where such items were damaged in a workplace incident involving body injury; and
■
expenses arising from surgical procedures necessary to rehabilitate the organic, functional or physical deficiencies caused by a workplace injury or professional disease.
5.
Non-pecuniary losses
This category covers compensation granted in cases of injuries affecting 54 bodily integrity and death. The compensation granted in cases of injuries affecting bodily integrity is 55 granted only to those insured persons who, after a workplace injury or incurring a professional disease, remain with permanent injuries that produce deficiencies and reduce their working capacity to between 20–50 %. This compensation represents a lump sum and is granted as a one-off payment without affecting the other rights or allowances that are provided by law for the insured and is not taken into account when determining those rights. The amount of compensation is established as a function of the gravity of the injury but cannot exceed 12 times the average gross wage of the injured person. In the case that the insured person dies as a result of a workplace injury or 56 professional disease only one person can benefit from the compensation granted. The compensation is granted to the surviving husband/wife, child, parent, heir, or, in the case that there are no heirs, the person that covers the costs of the death of the insured. The amount of the compensation is four times the average gross wage of the insured as defined by the national institute of statistics.17
6.
Dependants’ benefit
As we already mentioned above, the insured’s dependants only receive 57 compensation in the case of the death of the insured. We have to underline the difference between this type of compensation, granted by the insurer in cases of death as a result of a workplace injury or professional disease, and other types of benefits that can be obtained from private insurers or
17
C Comsa/B Scrob, Litigii de munca, Jurisprudenta relevanta a Curtii de Apel Bucuresti pe semestrul I 2010 (2010) 323 ff.
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employers. The former compensation is granted from social insurance State funds. The dependants can also benefit from other compensation, including private compensation arising from private life insurance that the insured may have had. There are cases in which the employer can be forced to pay compensation on the basis of general labour liability rules. These amounts do not have any effect on the amounts granted by the State via the public insurance system for workplace injuries or professional diseases. 7.
Comparison with damages in tort
58 Since the insurance system covers most part of the pecuniary damage and Romanian courts do not usually grant large amounts of non-pecuniary damages,18 the benefits granted under the workers’ compensation system are not significantly lower than the compensation that could be obtained through the ordinary tort law procedures. 8.
Form of payment
59 The public insurance system for workplace injuries and professional disease covers both lump sums and periodical payments situations. Lump sums are granted in cases of death or compensation for injuries affecting bodily integrity. These amounts are granted as one-off payments. The other allowances are granted periodically, in general every month, in order to continuously cover the pecuniary loss suffered by the insured. E.
Funding systems
1.
Type of system
60 The insurance for workplace injuries and professional diseases is considered personal insurance, is part of the social insurance system, is guaranteed by the State and represents a form of social insurance. As we already mentioned, this kind of insurance is mandatory for those who conclude labour contracts and use a workforce employed on the basis of labour contracts. This type of insurance is voluntary for those who provide services in other legal ways than via a labour contract. The system functions on a pay-as-you-go basis.
18
414
C Alunaru/L Bojin, Romania, in: H Koziol/B Steininger (eds), European Tort Law 2009 (2010) 525, nos 62–69.
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Insurance for workplace injuries and professional diseases is managed by 61 the National House of Pensions and Other Social Insurance Rights (NHPOSIR – CNPAS) from the insurance fund for workplace injuries and professional diseases.
2.
Contributions to the workers’ compensation fund
Contributions to the workers’ compensation fund are due from employers 62 and, if they concluded an insurance contract for workplace injuries and professional diseases, persons that legally obtain incomes in ways other than via the conclusion of a labour contract. The amount of the contributions is established in order to cover the 63 following costs: the benefits covered by the insurance and the services provided in the insured cases, the necessary expenses in order to prevent workplace injuries and professional diseases, and administrative expenses. The contributions are established according to the provisions determined 64 by the NHPOSIR – CNPAS and approved by the Government. The amount of the contribution due is calculated on the basis of what it is known as rates and risk classes. The risk rates are determined for each activity sector taking in consideration the risk for workplace injuries and professional diseases. The amount of the contribution for the year 2010 was established as between 0.15 % and 0.85 %, as a function of the risk rate, to be applied to the whole payroll of the employer.
3.
Risk-rating of contribution
Within the risk rates, the differentiation on the basis of activity categories 65 is accomplished by the use of risk classes. The contribution for the fund is due monthly; it has to be paid by the 25th of the month following the month for which the contribution is owed. The employer must calculate the contribution that is due by taking in consideration the amount of his gross income, the minimum gross salary guaranteed in the country, and the risk classes within which the employer falls. The risk classes are determined per economic activity on the basis of four 66 indicators:19 the frequency of workplace injuries, the frequency of serious workplace injuries causing death or invalidity, the frequency of profes-
19
Art 3 of the Government Decision 144/2008.
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sional diseases and the existence of special and difficult working conditions. According to some available statistical data,20 another factor that influences the risk of workplace injuries is the experience of the employee: employees with less than five years experience are more likely to get injured (38 % of workplace injuries in the first trimester of 2010 fell into this category, while employees with more than 20 years experience accounted for 20 % of the injuries, with the intermediary categories representing the difference). This element does not constitute an indicator that is taken into account in the establishment of risk rates. 67 Regarding persons that wish to benefit from this type of insurance but do not provide services on the basis of a labour contract, contributions are calculated according to the monthly insured income. The contribution due is 1 % of this income, no matter the activity undertaken. 68 The difference between these two categories of insured persons is that in the case that the contribution is not paid, employees will benefit from the services provided by the insurer but the voluntarily insured will not.
F.
Administration and adjudication of claims
1.
Organisational framework of workers compensation institutions
69 The insurance relation is between the insured person and the NHPOSIR – CNPAS, as an insurer. The NHPOSIR manages, coordinates and controls the entire activity of insurance for workplace injuries and occupational diseases. 70 The supervision of insurance for workplace injuries and occupational diseases is provided by the president of the NHPOSIR and a tripartite board. In the NHPOSIR the insurance activity for workplace injuries and occupational diseases is organised at the level of general direction. 71 Executive management of the insurance activity for workplace injuries and occupational diseases is ensured by a high-ranking general publicservant, appointed by the President of the NHPOSIR.
20
416
.
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Tripartite board members operate under a mandate for a period of four 72 years. The NHPOSIR president is also the chairman of the tripartite board. The tripartite board is composed of nine members: ■
three government representatives, including the president of the NHPOSIR, general manager-members by law and a representative of the National Agency for Fiscal Administration, appointed by the Ministry of Finance;
■
three employee representatives, appointed by consensus by the nationally-representative trade union confederations; and
■
three representatives of employers, appointed by consensus by the nationally-representative employer confederations.
In the organisational structure of the NHPOSIR specialised structures 73 were created to track or insure: a) activities to prevent workplace injuries and occupational diseases; b) medical rehabilitation, socio-professional rehabilitation and medical treatment; and c) the record of contributions, benefits and services provided and insurance costs. Internal by-laws of the NHPOSIR established the powers, organisation 74 and functioning at the central and territorial levels of the structures that provide insurance for workplace injuries and occupational diseases, and the powers of the tripartite board. At a county level, the specific duties associated with providing insurance for workplace injuries and occupational diseases are met by the territorial house of pensions. In the various territorial pension houses, tripartite advisory councils are constituted for this purpose. Under relevant legislation, specific responsibilities concerning insurance for workplace injuries and occupational diseases can be performed by insurance associations as service providers formed for this purpose in different sectors of the national economy.
2.
Who decides over claims for benefits?
Procedures are established to determine when the insurer’s services arise, 75 ie when the insured risks have been met and the insurance rights that form the basis of the insurance relationship are granted: ■
for workplace injuries, reference is made to the minutes of the injury investigation drawn up by the competent authority and
■
for occupational diseases, reference is made to the form of the final declaration of the occupational disease released by the competent authority. 417
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76 Employers are required to notify the insurer as soon as they are aware of accidents resulting in disability or death of insured workers. The obligation to communicate the injuries rests also on those persons that do not provide services in terms of a labour contract but are insured voluntarily or to their successors if the injury resulted in the death of the insured worker. 77 In order to establish the insured’s case and to determine the rights of insurance, the insurer has access to the minutes of the investigation released by the competent authority conducting research of injuries resulting in temporary work incapacity, disability and death. The insurer also checks that the necessary research was carried out and decides whether the injury followed by temporary work incapacity represents a case of a workplace injury. In order to establish the professional nature of the injury followed by temporary work incapacity, the insurer may directly coordinate the investigation of the injury, carry out its own investigation or access the research file prepared by the committee of the employer, if applicable.21
3.
Reviews and appeals: special tribunals or general civil justice system?
78 The judicial review of the insurance for workplace injuries and occupational diseases is carried out by social insurance departments or specialised panels for social security established within the county tribunals and courts of appeal. These panels are established as part of the general judicial system as there are no specialised courts in this area. 79 There are two levels of jurisdiction given the fact that the first instance court decisions can only be challenged by appeal. In the first instance courts resolve disputes concerning: a) the calculation of the contribution for workplace injuries and occupational diseases and increases or decreases the rate of contribution; b) the registration and contribution records of injuries and occupational diseases; c) the registration of an employer’s risk class; d) the unjustified refusal to resolve a claim regarding the rights to insurance for workplace injuries and occupational diseases; e) the establishment and payment of benefits and services due to insurance beneficiaries for workplace injuries and occupational diseases; f) complaints concerning fines in this area; and g) any other decisions of the insurer.
21
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Ghimpu/Ticlea (fn 2) 549.
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In terms of territorial jurisdiction, the courts having jurisdiction are those 80 in whose territorial range the defendant is domiciled. The exception is complaints against the NHPOSIR or territorial pension houses where competence belongs to the tribunals under whose jurisdiction the applicant is domiciled or located. The court decision can be appealed to the competent appeal court.22 On appeal, the court must substitute its own decision and cannot remit the case for re-hearing unless there was an irregularity concerning the notification of one of the parties during the first degree proceedings.
4.
Speed of claims resolution and administrative costs
The reviews, suits and all procedural actions in connection with a dispute 81 concerning the rights or obligations of insurance for workplace injuries and occupational diseases are exempt from judicial stamp duty. Requests regarding rights or obligations of insurance are subject to procedural rules established for labour disputes and are judged in an extraordinary system. To this end, the law provides that the procedural time cannot exceed 15 days between hearings and that the parties are considered legally summoned if the summons was handed to them at least one day before the trial. These provisions are not respected in practice, however − usually time limits between hearings are at least a month. There are no statistics about the average period for judicially settling a review, but as a general observation, the duration of the review and the appeal do not normally exceed one year.
G.
Rights of recourse of workers’ compensation institutions
1.
Recourse against the employer
As the employer is the one who is obliged to pay insurance contributions 82 for workplace injuries and occupational diseases, if he/she defaults on this obligation, the insurer will sue him/her to recover costs. According to the law, it is the insurer who is obliged to cover costs and 83 realise insurance rights for workplace injuries and occupational diseases. If the employer does not meet its legal obligation to pay contributions, the
22
IT Stefanescu, Tratat de dreptul muncii (2007) 721 ff; A Ticlea, Tratat de dreptul muncii (2nd edn 2007) 951.
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employee has no fault in this respect. In this case, the insurer will sue the employer to recover the cost of benefits and insurance services rendered. If the employer did not default on its obligation to pay the contributions, no recourse against him or her is granted to the insurer. 84 The situation is different for voluntarily insured persons on the basis of individual contracts of insurance. In cases where the contribution to the insurance fund is not paid, the insurer can deny the benefits to the insured. The insurer is also entitled to sue to recover benefits and compensation for services performed from voluntarily insured persons if they have not fulfilled their legal obligation to pay contributions. 85 Amounts wrongly granted by way of benefits and services for workplace injuries and occupational diseases can be recovered from beneficiaries during the general limitation period of three years, based on the decision of the competent organ which is enforceable. Amounts not recovered from deceased beneficiaries during this time are no longer recoverable.
2.
Recourse against a co-worker or against third parties
86 The insurer is not able to sue third persons to recover costs. Any such action is regarded as an action without legal standing. This arises from the fact that insurance against workplace injuries and occupational diseases is a compulsory personal insurance, imposing an obligation on the employer to pay insurance contributions to the fund. As such, the obligation of the insurer to grant the benefits provided by the law is automatically triggered by the occurrence of a workplace injury, irrespective of the causation or the contribution of third parties to it.
H.
Interaction with general social welfare provisions and private insurance
87 The rule is that until the nature of the injury or occupational disease is established, compensation for medical services provided will be granted by the Single National Fund of Health Insurance. When the nature of the incident has been established, a settlement will be made between the two funds; the National Fund of Health Insurance has a right of recourse against the workers’ compensation fund. 88 As workers’ compensation provided through the public insurance system is the primary source for the reparation of damage caused by workplace injuries, any benefits provided by private insurers or social health insur420
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ance are not deductible from these benefits, with the exception of those mentioned in the preceding paragraph.
I.
Interaction with employers’ liability
By concluding this type of insurance, the insurer takes on civil liability for 89 the provision to the employee of prescribed benefits. If the employee can provide proof of damage not covered by the insurance, he/she can sue the employer directly for compensation under general civil liability. It should be noted that the employer will only take responsibility after having determined the employee’s benefits under social insurance and only to the extent of the difference between those benefits and the full amount of material injury.
III. Employers’ Liability A.
Classification
The general rule applicable in employment law regarding the employer’s 90 liability towards employees is established by art 269 of the Labour Code, under which ‘The employer is obliged, under the rules and principles of contractual liability, to compensate the employee when he/she has suffered pecuniary or moral damage caused by the employer’s fault while carrying out work tasks or other tasks in connection with work’. As can be seen, civil contractual liability is applicable in situations where damage is caused by the violation of an obligation under the concluded employment contract.23 In the case of a workplace injury or occupational disease the employer will 91 be responsible according to the general principles of contractual liability, as covered expressly by art 4 of Act no 346 of 2002 concerning the insurance against workplace injuries and occupational diseases. The employer is obliged from the moment that the contract is concluded to insure his/her employees against the risk of injuries and occupational diseases. Based on the conclusion of that insurance, the insurer is the one from a civil point of view who will take over and be responsible for the cause of the insured risk. The employer’s liability arises only if the damage caused
23
C Statescu/C Birsan, Drept civil. Teoria generala a obligatiilor (2008) 135 ff; L Pop, Raspunderea civila (2001) 238 ff.
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to the employee by workplace injuries or occupational diseases is not entirely covered by the public insurance system concerning workplace injuries and occupational diseases.24 In this case, the employer’s liability is complementary and subsidiary. 92 Considering the fact that the employer is liable under the principles of contractual liability, the following legal conditions for such liability must be fulfilled: ■
■
■
■
the existence of an unlawful act − in this case it refers to the violation of the legal obligations concerning work health and safety; damage − the result of damage caused to the employee by the employer’s infringement of his/her duties; causation between the unlawful conduct and the damage – the unlawful conduct must have led to the harmful results. To determine causation involves a two-stage process: the first stage is to establish physical, chemical, or biological causality. This would include creating a work environment dangerous for the human body. The second stage is whether the damage can be attributed to human behaviour;25 and fault − to establish legal liability it is necessary for the action to have been caused by its author’s fault. According to the most renowned commentators, lack of fault on the part of the person that has committed the act precludes liability.26
B.
Elements of liability
1.
Liability of employers for their own acts or omissions
93 The legal person’s liability for its own actions is limited only to cases in which unlawful acts were committed by its organs or during the course of their work. Both the case law and literature have interpreted this requirement broadly. Thus, it is considered that the legal person is responsible for its own actions in cases of illegal acts committed by the management body abusing its position, deviating from its functions and if the action served no other purpose than to commit an unlawful act. It is sufficient to have a connection between the exercise of the function of the organ and
24 25 26
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Ghimpu/Ticlea (fn 2) 549; Stefanescu (fn 22) 652. Ghimpu/Ticlea (fn 2) 552. Ghimpu/Ticlea (fn 2) 549; Stefanescu (fn 22) 652; Statescu/Birsan (fn 23) 144.
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the unlawful action, whereby the function is the necessary condition for producing the damage. In such cases, the victim must be unaware of or could not have known that 94 the management body of the legal person had abused his position. If he had known that fact, the illegal acts of the governing body may not be considered as the action of the legal person and the victim will be unable to obtain compensation directly from the legal person. Following the general rules of liability, employers are liable in cases of 95 system or coordination failures, if these are due to negligence. If the failure could be classified as force majeure the employer is not liable. The natural persons who have the status of governing bodies or who 96 compose governing bodies within a legal person are responsible to the corporate legal person for the acts they commit; the employer has the possibility of a recourse action against them to recover the damages awarded.27
2.
Liability of employers for the acts or omissions of their employees and others
The employer may be liable for the infringements committed by his/her 97 employees or by other persons under art 1373, para 2 of the new Romanian Civil Code. The employer will be liable when all the conditions that trigger tort liability are fulfilled. In addition, two special conditions must be met: ■
the existence of a subordinate relationship between the employer and the author of the unlawful act causing injury, existing at the time of the offense and
■
the harmful act must be performed within the ambit of the functions entrusted to the employee. Case law has broadened the scope of employer’s liability to include cases where the harmful actions are committed by authors while exceeding the powers entrusted to them by the employer or by their abusive exercise. The connection between the entrusted position and the harmful act may refer to the moment of committing the unlawful act, the place where it is committed or to the means used to that end. If the victim knew that the author committed
27
Ghimpu/Ticlea (fn 2) 549; Stefanescu (fn 22) 652; Statescu/Birsan (fn 23) 144; Ticlea (fn 22) 825.
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the act in excess of his entrusted position, as the result of an abusive exercise of this position or of his own accord, the employer will not be responsible for the act.28 3.
Relevance of health and safety legislation in establishing liability
98 The legislation on health and safety at work is relevant in determining liability in the various circumstances outlined below. 99 Act no 319/2006 regarding security and health in labour practices sets out the employers’ obligations and determines the safety rules that they must meet in ensuring health and safety at work. If these rules are infringed the employer will incur administrative or possibly criminal responsibility as well as patrimonial liability towards his/her employee. Employers have patrimonial liability, according to the civil law, for damage caused to victims of work injuries or occupational diseases should the damage not be fully covered by social insurance. 100 The employer’s liability in the case of workplace injuries and occupational diseases is also related to the infringement of health and safety obligations at work because of the relevance of State compulsory insurance. It is the insurance for workplace injuries and occupational diseases that provides a set of services and benefits for insured persons in order to promote health and safety management and prevent workplace injuries and occupational diseases and to reduce and compensate for the consequences of workplace injuries and occupational diseases. 101 The infringement of the work health and safety standards imposed by law resulting in workplace injuries and occupational diseases attracts the insurer’s liability and possibly, as an alternative or subsidiary, the employer’s liability for damages not covered by the insurer.
4.
Overall a fault-based or strict liability system?
102 Both legal writers and case law share the idea that the employer’s liability is based on objective grounds independent of the employer’s fault. The motivation underlying this is that the subjective theories based on the idea of the employer’s fault cannot explain his/her ability to recover
28
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Pop (fn 23) 154.
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damages from his/her employees. Moreover, fault has a personal character and cannot be transposed from one person to another. Two main doctrines developed over time that removed the idea of fault, 103 basing the employer’s liability either on risk or warranty. According to the risk doctrine, the employer’s liability is justified by the idea that all those who have benefited from an activity performed by others must also bear the risk of any damaging consequences of that activity. This doctrine cannot explain the requirement of proving the employee’s fault and the employer’s right to bring an action for recourse against the perpetrators of an unlawful act in order to obtain full compensation for the damage paid to the victim. According to the warranty doctrine, the employer’s liability arises because the law considers the employer the guarantor of the victims’ interests in that it is able to obtain full and prompt compensation for the damage they have suffered provided that this does not result in the insolvency of the author of the unlawful act. At present the warranty doctrine is accepted by all the Romanian authors in the field as it provides the necessary arguments to explain the condition imposed by the requirement to prove fault and the employer’s recourse action against the perpetrators of the harm. One can conclude that the employer’s liability as treated by Romanian 104 courts and legal commentators is a fault-based liability. While fault must exist in order to trigger liability it must not necessarily be that of the employer; it can be fault on the part of another employee. Until now, Romanian courts do not seem to have adopted a strict liability approach to the subject matter.
5.
Causation
As shown above, the employer’s liability in cases of workplace injuries and 105 occupational diseases will be triggered if the victim can prove damages not covered by insurance for workplace injuries and occupational diseases. One of the prerequisites for triggering the employer’s liability is the existence of a workplace injury or an occupational disease. The investigation, the workplace injury’s record, the declaration of occupational diseases and the records of these events are regulated by law which establishes the competent authorities and their responsibilities in this regard. Minutes recording the result of the investigation must indicate the precise and concrete causes of and the circumstances under which the workplace injury or occupational disease occurred, which provisions on health and safety were not respected as well as the persons who are responsible for 425
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such things.29 To determine the causal link one must go through two stages: the first stage is to establish the physical, chemical and biological causality. Only the causal phenomena that determine and precede the damage will be considered in this regard. This will necessarily involve issues that fall outside the field of law. A work environment that poses danger to the human body must be attributable to unlawful human behaviour.30 More specifically, the creation of a dangerous work environment must be the consequence of the non-observance of legal norms. 106 The employer’s liability cannot be triggered when there is no causal link between the unlawful conduct and the damage suffered. There is no causal link in cases of workplace injuries due solely to force majeure, a third party’s act or the victim’s conduct. In terms of statistical data available31 it seems that only around 10 % of workplace injuries are due exclusively to employer’s fault.
6.
Effect of the victim’s contributory conduct
107 In the case of workplace injuries or occupational diseases, the employee will benefit from the services and benefits granted under the law regardless of whether he/she, by his/her conduct, has contributed to the production of the risks insured by the law. The employee’s contribution to the workplace injury affects only the amount of damages awarded directly by the employer. Thus, the joint fault determines the reduction of damages in relation to the extent that the employee has contributed, by his/her behaviour, to that damage.32
C.
Scope of protection
108 In this chapter we refer only to the employer’s liability as we have already analysed the risks covered by insurance against workplace injuries and occupational diseases and the limits of the damage incurred by the insurer from State funds.
29 30 31 32
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Ghimpu/Ticlea (fn 2) 555. Ibid, 552. p 8. Stefanescu (fn 22) 652.
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1.
Personal injury
The legal definition of workplace injuries and occupational diseases 109 makes it clear that in cases of personal injury the costs caused by the insured-against risk will be borne by the insurer. In these cases, the employer’s liability is a subsidiary and complementary one and will be triggered only if the damage is not fully covered by social insurance.33 The employer’s patrimonial liability will arise only after determining the employee’s benefits in terms of social insurance and only for the difference between their quantum and the full amount of the material damage.
2.
Sexual harassment and injuries to dignity
Employer’s liability for sexual harassment is regulated by Act no 202/2002 110 concerning the equal opportunities between genders. Employers are obliged to ensure equal opportunities and treatment between employees, both male and female, in labour relations of any kind, including via the introduction of provisions to prohibit discrimination in the organisation and operation regulations and in the internal order of the units. Any sexual harassment of one person by another at the workplace or 111 elsewhere during work activities is considered gender discrimination. In particular, gender discrimination includes conduct defined as sexual harassment aiming to: a) create an intimidating, hostile or oppressive atmosphere at work for the person affected or b) have a negative impact on the employee regarding his/her promotion, remuneration or income of any kind or access to training. It includes unwanted behaviour of a sexual nature. To prevent and eliminate all behaviour defined as sexual harassment the 112 employer must take preventive measures such as: establishing disciplinary sanctions in the internal regulations of the units for employees who violate the personal dignity of other employees, providing information to all employees on the prohibition of sexual harassment at work and imposing disciplinary sanctions in cases of sexual harassment at work. A specific procedure is provided by the law for such cases. The employees 113 are entitled to make complaints or claims to the employer or against him/ her, if he/she is directly involved in the harassment. If the complaint is not resolved within the company by mediation the employee who alleges
33
Ghimpu/Ticlea (fn 2) 555.
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infringement of his/her rights at work is entitled to bring the complaint to court (the labour law departments of ordinary courts or administrative courts) within one year of the unlawful act having been committed. The employee who considers him/herself the victim of gender discrimination is entitled to seek material and/or moral damages from the person who committed the unlawful act and/or to require that he/she eliminates the consequences of such acts. The extent of the damage will be determined by the court in terms of general principles of civil law. In such cases damage is borne entirely by the employer where their liability is not covered by social insurance. The employer is entitled to recourse action against the guilty persons to recover damages paid to the victim. 114 There are no specific legal provisions concerning the employer’s liability for harassment in general. Of course such acts may trigger liability in terms of the ordinary legal principles of tort.
3.
Property damage and pure economic loss
115 In such cases the provisions of art 269 of the Labour Code apply which state that the employer is obliged under the rules and principles of contractual liability to compensate the employee when he/she has suffered material or moral damage because of the employer’s fault while carrying out his/her work duties or in connection with his/her work. An employer who has paid this compensation can recover the amount from the employee responsible for the damage. The social security system does not cover damage caused to or loss of property (with some exceptions as mentioned supra). In these situations the entire extent of the damage will be covered by the employer.
D.
Heads and levels of damages
116 As already mentioned the employer is only financially liable with regards to workplace injuries and professional diseases in the alternative or in a complementary manner if the damage is not fully covered by social insurance. 117 Regarding the extent of damages in cases of an employee’s bodily injury, the case law provides guidelines: ■
if the employee’s bodily injury has short-term effects and the victim recovers completely, in determining compensation one must take into account all expenses incurred in the recovery as well as the difference between the revenues and amounts received during sick leave and the
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revenues that the employee has not benefited from during that period. The amount of damages will also depend on the moral damage suffered – physical, aesthetic damage. ■
if the damage to health or physical integrity has the effect of the loss or reduction of work capacity either permanently or for an indeterminable period of time, the employee will be entitled to receive, in the form of regular benefits, the difference between his/her pension or social allowance paid by social insurance and his/her monthly income that he has not received because of the injury suffered.34
In principle, in the event of workplace injury or an occupational disease, 118 the costs of medical care, the costs incurred as a result of professional rehabilitation or re-orientation and those incurred during medical recovery are covered by the insurer from State funds; they are not borne by the employer. There are no specific legal provisions nor is there specific case law concerning gratuitous care but under general tort law it should not be impossible to claim some compensation if an indirect loss or damage can be proved. The same goes for the costs of preventive care. In the case of the employee’s death, the extent of damages will be 119 determined taking into account all the costs incurred in the victim’s care before death and the funeral expenses. The employer may be required to indemnify, in the form of regular benefits, those who were entitled to support from the victim or who were actually in his/her care. If such persons are entitled to survivor’s benefits they may claim compensation only for the difference between the survivor’s benefits that they receive and the amount of the support that was provided to them by the victim. Depending on the circumstances, the employer may be required to pay 120 damages to the victim either globally, in the form of a sum to be paid immediately and in full, or in the form of regularly-paid amounts. The general rule is that lump sum compensation is granted for current 121 damages. This is also the case if the employer grants grace periods for payment and the payment is spread over time. Regular compensation is granted in cases of further damages when the total extent of the damage cannot be determined in advance. The extent of the damages awarded as a lump sum cannot be changed in principle. In terms of phased compensation in the form of regular benefits, their amount may be modified if the injury suffered by the victim increases or diminishes or ceases altogether.35
34 35
Ghimpu/Ticlea/Tufan (fn 8) 237. Pop (fn 23) 236.
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E.
Administration of claims
122 Disputes concerning the civil liability of the employer fall under the legal provisions concerning the settlement of labour disputes. As a consequence, applications for the settlement of labour disputes are adjudicated as a matter of urgency by the sections of the courts specialising in labour disputes. There is no mandatory pre-trial procedure. 123 Regarding the procedure for settling such disputes, some special regulations are applicable as these disputes are judged according to a fast-track regime: periods between hearings cannot be longer than 15 days, the procedure for summoning the parties shall be deemed satisfied if it is carried out legally at least 24 hours before the hearing, the proof of the work dispute is borne by the employer who is obliged to give evidence in his/her defence before the first day of appearance before the court, and the presentation of evidence is subject to an emergency regime in terms of which the court is entitled to penalise a party who unduly delays its presentation. 124 In the first instance, the county tribunal is competent to settle the dispute and its decisions are enforceable. Parties may bring an appeal against the decision of the first instance, within ten days from the communication of the decision. These cases are exempt from legal stamp tax and judicial stamp.
F.
Rights of recourse
125 According to art 269 of the Labour Code, the employer who has paid compensation can recover the amount from the employee responsible for the damage. Thus, the employer’s right of recourse is established against the employee responsible for the unlawful act in order to recover the damages awarded. This is possible because the employer’s liability is liability for another’s acts and is a measure to guarantee the victim’s interests. Finally, the tortfeasor shall bear responsibility for the damage caused by his/her act. The employer is entitled to recover the full damages paid from the liable employee. If there is a recourse action, the employee will be able to defend himself/herself by proving that the injury was caused wholly or partly because of the employer. In this case, the employee will be required to repay only the relevant part of his/her contribution to the event.36
36
430
Pop (fn 23) 167; Statescu/Birsan (fn 23) 269.
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The employer may bring a recourse action for recovery against third 126 persons if those individuals are responsible for the events. In this case, the principles of tort or contractual liability are applied if those individuals have not performed, or have performed in a defective way, an obligation under a contract concluded with the employer. This does not fall within the realm of the labour law but within the rules of civil law and the common civil procedure.
G.
Interaction with the social welfare system and private insurance
Are benefits received from Social Welfare agencies deductible? To answer 127 this question we must correlate art 44 of Act no 319/2006 regarding security and health in labour practices with art 4 of Act no 346/2002 concerning the insurance against workplace injuries and occupational diseases. Thus, employers have patrimonial liability under the civil law for damages caused to victims of workplace injuries or occupational diseases to the extent that the damage is not fully covered by social insurance benefits. The employer’s patrimonial liability in cases of workplace injuries and occupational diseases arise only in an alternative and complementary way; benefits obtained from social insurance are deducted from the total loss suffered by the employee. What is the recourse of Social Welfare agencies and private insurers 128 against the employer? As already mentioned, it is possible for the insurance body for workplace injuries or occupational diseases to claim benefits and costs of insurance services provided from the employer or the insured person based on individual contracts of insurance. This can happen in the case that, due to the employer’s or the insured person’s fault under the individual contract of insurance, the insurance contributions for workplace injuries and occupational diseases were not paid. If the employer has fulfilled its obligation to pay insurance contributions, the insurer cannot claim the cost of the services provided.
H.
Insurance
According to art 175 of the Labour Code employers must ensure all their 129 employees against the risk of workplace injuries and occupational diseases. Act no 346/2002 concerning the insurance against workplace injuries and occupational diseases established compulsory insurance for
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workplace injuries and occupational diseases as well as the applicable conditions. This insurance is regarded as personal insurance, is part of the social security system, is guaranteed by the State and contains specific provisions by which the social protection of the employees is insured against diminished or loss of working capacity and their death due to workplace injuries or occupational diseases. 130 The existence of such compulsory insurance does not prevent the employer from concluding a private insurance contract under Act no 136/ 1995 concerning insurance and reinsurance in Romania. The employer may conclude a voluntary insurance contract that covers his/her civil liability with regard to employees who are victims of workplace injuries or occupational diseases arising from the employer’s fault and resulting in bodily injury leading to death or permanent disability. The object of the insurance is the civil liability of the insured arising from the duty to indemnify the employee in cases where he/she has suffered a bodily injury due to employer’s fault while accomplishing his/her work tasks, to the extent that such damage is not entirely covered by State insurance benefits. 131 Through the conclusion of such optional insurance contracts various risks can be covered, for instance: a) the allowances which the insured person is obliged to pay to employees as indemnities and trial costs as a consequence of their bodily injury and b) the costs incurred by the insured person in the civil trial, if he/she was not entitled to compensation, as a result of the events that occurred during the insured period.
IV. Evaluation and Conclusions A.
Compensation
132 Most of the benefits granted under the workers’ compensation scheme reflect the real costs of the treatments undergone (such as medical care costs, medical rehabilitation costs, expenses refund) so their adequacy is ensured by the very way in which the system is conceived. Some of the other benefits are capped (such as non-pecuniary losses, allowances for temporary work incapacity). The levels of the cap are nonetheless acceptable and the difference can be recovered from the person responsible for the injury (the employer or a third party) according to contractual or tort law principles.
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The workers’ compensation system is conceived as a commutative system 133 and is thus limited to the employees as beneficiaries with the participation of employers as contributors. Presently, there are no initiatives to change the philosophy of the system and transform it into a distributive system granting protection to all persons. The protection of non-employees is realised through the social health insurance system where beneficiaries are not restricted. The two-track approach ie workers’ compensation scheme and subsidiary 134 employers’ or third-parties’ liability is regarded as achieving an appropriate balance between the interest of the employee in certainty regarding the means to recover following a workplace injury and the principle according to which the person who causes damage must compensate for it. There are no plans to alter the scope of the workers’ compensation system in order to extend the scope of employers’ liability. The contributions to the fund are not perceived by the employers as excessive so it can be said that the costs of the scheme are justified by the certainty offered to the employees.
B.
Prevention
Most of the incentives to ensure health and safety at the workplace fall 135 outside our focus here, namely the law of social insurance against workplace injuries and occupational disease. The measures for prevention are both of a penalty and incentive nature (‘stick and carrot’ approach). The ‘stick’ side is represented by the provisions of Act no 319/2006 regarding security and health in labour practices. This legal instrument dictates the measures the employers are bound to take and the sanctions that will be applied in the case of breaches of these obligations. As for the ‘carrot’ side, there are incentives that take the form of public subsidies for investments in improving the work environment in order to comply with higher standards of health and safety, especially EU funds. During the last decade a particularly effective initiative was the introduction of standards that multinational companies contracting out parts of production processes to local undertakings were required to meet. In addition to the conditions to be met in order to be selected as a contractor, many of these corporations inserted an audit on health and safety conditions at the workplace that encouraged the local employers to implement the required improvements. Within the system of social insurance against workplace injuries and occupational diseases the most effective incentive is the differentiated contribution on the basis of different risk-classes of activities. 433
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136 One of issues concerning the functioning of the system is that it does not deter third parties. Since the workers’ compensation carrier has no recourse against third parties and limited recourse against the employer (only in cases of the non-payment of the contribution due), there is no real deterrence (at least in legal terms) offered by the system. The employer is deterred by other means (such as the law on work health and safety) but that does not apply to third parties. An amendment allowing recourse against responsible third parties would probably be welcome.
C.
Overall costs
137 Currently, the contribution to the workers’ compensation fund is between 0.15 % and 0.85 % of the monthly payroll of the employer. Even though social contributions are generally regarded in Romania as unjustifiably high as compared with the quality of the social services provided, this does not apply to the insurance against workplace injuries fund. The trade unions and the employees’ representatives have not criticised the amount of compensation awarded while the employers’ associations have not criticised the contributions to this fund although they have requested in the public arena the reduction of certain other social contributions.
D.
Interaction between workers’ compensation and private law
138 The employer’s subsidiary liability, based on general tort law principles, is treated as a complementary measure intended to ensure full compensation of the damage suffered by the employee. It goes some way towards the goal of complete compensation. It is also an incentive to implement preventative measures because the employer knows that if he/she does not comply with the regulations in this regard he/she will not be protected from liability by the mere payment of the contribution to the workers’ compensation fund.
E.
Plans for reform
139 The social insurance system against workplace injuries and occupational disease is not in line to be substantially revised in the near future. Currently, the attention of the media, dissidents and the public is almost exclusively directed at reforming the system of social health insurance, together with a parallel concern about easing the burden of the social contributions to a certain degree in order to stimulate economic growth. 434
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F.
Overall quality of each system independently and in combination
The major problem currently affecting the State-operated system of in- 140 surance against workplace injuries is a liquidity problem related to the financial crisis and the specific problems of Romania’s budget deficit. This is a problem that affects all the branches of the social security system. In particular, the insurance against workplace injuries can be said to be one of those parts of the system that are regarded as functioning adequately. In contrast to, for example, unemployment insurance and insurance concerning medical leave, this branch is much less exposed to fraud. There are, however, significant complaints about the manner in which investigations of causes of workplace injuries are reported. This may be partially due to the involvement of criminal prosecutors. It can be said that the system is generally perceived as functioning in a 141 satisfactory manner. The State-operated system of insurance against workplace injuries usually copes satisfactorily with most common types of workplace injuries and their consequences. Recourse to private complementary insurance is largely made only in particular cases, such as sports. The employers’ liability system, based on labour and civil law regulations, is a valuable source of complementary compensation for workers’ loss due to workplace injuries, but primarily in the case of employers of certain dimensions, namely multinational companies and big industrial structures. In the cases of small-sized employers, there is a risk that the compensation triggered on the basis of employer’s liability will never actually be received by the victim due to the lengthy duration of court procedures and the common problem of the insolvency of such employers. In such situations, especially, the public insurance system proves its importance and efficiency.
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Employers’ Liability and Workers’ Compensation: United States Michael D Green and Daniel S Murdock
I.
Introduction
A.
Basic system of compensation and liability
Workers’ compensation is a state administered compensation programme 1 mandatory in nearly every state. All employees, with certain minor exceptions, are covered by workers’ compensation and employers must have insurance, self-insure, or take part in a state-run fund to be in compliance with workers’ compensation statutes. Employees injured at work are compensated for medical expenses, rehabilitation costs, re-training costs, and a portion of lost earnings subject to a cap. Dependents of an employee killed in a workplace accident receive death benefits as well. In return for this guaranteed compensation by the employer, an employee forfeits any tort claims against his employer for the workplace injury. Where an employer has not complied with workers’ compensation statutes, or has intentionally injured the employee, the employee is usually free to sue in tort for his injuries. The impetus for workers’ compensation was the wide concern about the 2 impact of industrial workplace accidents and their effects on employees that began with the Industrial Revolution in the latter half of the 19th century.1 Victims of these injuries were often left with no recourse as tort law at the time was unreceptive to workers’ claims.2 One study found over 252 workplace deaths in New York in 1909 but far fewer tort suits against employers.3 States began to investigate ways to alleviate the plight of injured employ- 3 ees by the early 1900s and the first workers’ compensation schemes were 1 See A Larson/LK Larson, Larson’s Workers’ Compensation, vol 1 (2008) § 2.07. 2 KS Abraham, The Liability Century (2008) 42 f. In New York City only 160 workplace injury suits were filed in 1910, despite the enormity of workplace accidents. 3 Ibid.
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passed during this time. A Uniform Workmen’s Compensation Law was drafted in 1910 in Chicago, providing further pressure to implement a feasible workers’ compensation system.4 4 The first major workers’ compensation statute in the United States was enacted in New York in 1910, but was subsequently found unconstitutional as a violation of employer state and federal due processes rights because it imposed civil liability without a showing of negligence.5 In 1913 the state legislature passed a constitutional amendment allowing such a law and a workers’ compensation scheme was thereafter upheld by the US Supreme Court.6 States gradually introduced workers’ compensation systems over the next few decades, which are now in place in all 50 states.7 5 Each state runs its workers’ compensation system with its own administrative mechanism to adjudicate contested cases. Even so, the differences between each state’s workers’ compensation laws are remarkably small considering the number of states and divergent interests. While the focus of this chapter is on state administered workers’ compensation programmes, the federal government also administers workers’ compensation systems for several specialised occupations, including longshoremen and coal miners suffering from black lung disease.
B.
Interaction with other institutions
6 Workers’ compensation is the fund of first resort for injured employees. Other programmes, including Social Security Disability Insurance, Medicare, Medicaid, and Veterans Affairs, may provide benefits for expenses incurred by injured workers, although they are not exclusive to occupational injury. These secondary sources will either seek reimbursement or reduced payment for benefits workers’ compensation was obligated to or has previously paid for.
C.
Empirical evidence
7 The legal research for this chapter was compiled from statutes, cases, law journals and treatises on the subject of workers’ compensation. The most
4 5 6 7
Ibid. Ives v S Buffalo Ry, 94 North Eastern Reporter (NE) 431 (NY 1911). NY Cent RR Co v White, 243 United States Supreme Court Reports (US) 188 (1917). Larson/Larson (fn 1) § 2.08.
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important sources include Larson’s Workers’ Compensation Law, American Jurisprudence 2nd Workers’ Compensation, American Law Reports, Corpus Juris Secundum, Modern Workers’ Compensation, and Workers’ Compensation Guide. Our main sources of data for comparison of tort and workers’ compensa- 8 tion payments and speed and expense of administering the workers’ compensation system are Workers’ Compensation, Benefits, Coverage, and Costs, 2008 (the most recent edition) published by the National Academy of Social Insurance, the US Department of Justice Bureau of Justice Statistics, the US Department of Labor Bureau of Labor Statistics, the Journal of Risk and Insurance, and the American Journal of Industrial Medicine.
II.
Worker’s Compensation
A.
Scope of cover
Only employees of employers required by law or choosing to participate in 9 the workers’ compensation system can obtain compensation through that system. Independent contractors or employees of non-covered employers cannot obtain workers’ compensation regardless of the accidental nature or circumstances of their injuries. Agency law determines whether an injured worker is an employee or an independent contractor; important factors include whether the injured party was pursuing an independent occupation, had special knowledge or training, was being paid by the job or through hourly wages or a salary, or had the ability to select his own working hours and conditions. Casual employment or arrangements not thought to be full employment by either party can still result in an injured worker being classified as an employee for workers’ compensation purposes. Additionally, the employer must be included in the state workers’ com- 10 pensation statute for the injured employee to recover. Most states mandate coverage for virtually all employers. Common exceptions to this general rule include small employers below a minimum threshold of employees or certain types of employment, such as domestic work or farm labor. As will be more fully discussed in the next section, for an injury to be 11 compensable it must arise out of and in the course of employment. ‘In the course of employment’ is a term of art that requires that an employee suffer an injury in the time, place, and circumstances of his employment. Therefore, to be compensable, an injury must have occurred during an 439
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employee’s working hours or within close proximity thereto, on the employer’s premises or in close proximity to them, and must be in the performance of the employee’s duties. 12 An injury does not occur in the course of employment if it is suffered while an employee is commuting to or from work.8 Workers’ compensation does not protect employees from the everyday perils of driving public roads or commuting. This rule is not applicable, however, if the employee suffers his injury while commuting on the employer’s property,9 or is traveling in furtherance of his employer’s business,10 or if the route which the employee travels is the usual or only route that can be taken and there is a special hazard that must be encountered on this route. Thus, if a single road is the only access to a factory and active train tracks run across this road near the employer’s property, an employee injured by the train commuting to or from work will be found within the course of employment.11 ‘Dual purpose’ travel, in which the employee travels for his own and his employer’s benefit, is within the scope of employment as long as the trip would still have been taken if the employee’s purpose did not exist.12 Additionally, if an employee is injured commuting between two different properties owned by his employer the injury occurs within the course of employment. 13 Workers’ compensation is a no-fault system. Neither employee contributory negligence nor lack of employer wrongdoing is considered in determining an injured worker’s eligibility for compensation. An employee’s misconduct is only relevant as it relates to whether the injury ‘arose out of and in the course of employment.’ Even if an employee disobeys an order from her employer not to do her job in a certain way, the injury is compensable as long as it arose out of and in the course of employment.13 But, employees who intentionally injure themselves are not covered because the injury did not arise out of the employment, unless the act resulted from a work related event, such as stress or depression due to
8 See Custer v Hartford Ins Co, 174 South Western Reporter, Third Series (SW 3d) 602, 611 (Mo Ct App 2005); Barham v Food World, Inc, 266 South Eastern Reporter, Second Series (SE 2d) 676, 678 f (NC 1980); New Jersey Manufacturer Ins Co v Public Service Electric & Gas Co, 560 Atlantic Reporter, Second Series (A 2d) 117, 118 (NJ Super Ct App Div 1989). 9 Eg, Michigan Compiled Law (Mich Comp Laws) § 418.301(3); Wisconsin Statutes (Wis Stat) § 102.03(1)(c)(2). 10 See Medical Associates Clinic, PC v First National Bank of Dubuque, 440 North Western Reporter, Second Series (NW 2d) 374, 376 (Iowa 1989). 11 Judson Manufacturing Co v Industrial Accident Commission, 184 Pacific Reporter (P) 1, 1–2 (Cal 1919). 12 See Brennan v Brennan, 425 NW 2d 837, 839 (Minn 1988). 13 61 American Law Reports Annotated, Fifth Series (ALR 5th) 375.
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physical injury.14 Some states do provide statutory defences for specific kinds of willful misconduct. Intoxication is a statutory defence for employers in most states, although the standard for denying compensation due to intoxication varies.15 This reflects a policy choice and is intended to discourage workplace alcohol and drug use.16 In states where intoxication is not a statutory defence, intoxication may lead to a conclusion that the employee acted outside of the course of employment and thus prevent recovery. But, if the intoxication does not result in the employee acting outside of the course of employment, intoxication will not bar compensation.17
B.
Compensation trigger
1.
The ‘accident’ requirement
To receive workers’ compensation benefits an employee must suffer an 14 ‘injury by accident’ which ‘arose out of and in the course of employment.’ The majority of states require an injury to be by ‘accident’ to be compensable. This element is interpreted liberally, though, and the injury need not be the result of a single event that is readily identifiable, although in most cases it will be. There is no strict rule for delineating between accidents and occupational diseases for workers’ compensation purposes.18 Some states even include occupational disease within their definition of ‘accident’ in their workers’ compensation statute.19 Usually, accidents are unforeseen and will occur at a specific time, either for the accident itself or the onset of symptoms to the injured worker. On the other hand, occupational diseases are often associated with specific types of work and have a more gradual onset. An injury may result from cumulative stresses to the employee or a single instance of over-exertion. An injury may be compensable even if the events causing the accident were psychic rather than physical events.20 Injuries need not be sudden to be compensable, but must manifest in a small enough time period to distinguish them from chronic non-work related injuries.21 Compensable 14 15 16 17 18 19 20 21
See Vredenburg v Sedgwick CMS, 188 P 3d 1084, 1090 (Nev 2008). See Larson/Larson (fn 1) § 36.03, at 1. See, eg, Florida Statutes (Fla Stat) § 440.101(1); Komalestewa v Industrial Commission (Indus Comm’n) of Arizona, 99 P 3d 26, 30 f (Ariz Ct App 2004). See Hall v Desert Aire, Inc, 656 SE 2d 753, 759 (SC Ct App 2007). Occupational diseases are also covered by workers’ compensation but are more difficult to attribute causally to employment. See nos 21–27 below. Eg, California Labor Code (Cal Lab Code) § 3208. See Decker v Oklahoma State University, 766 P 2d 1371 (Okla 1988). Eg, Schlup v Auburn Needleworks, Inc, 479 NW 2d 440, 446 (Neb 1992).
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injuries arise from ‘a specific incident or series of incidents at work.’22 Thus, cumulative events leading to an injury will, in most states, be compensable.
2.
Arising out of and in the course of employment
15 ‘Arising out of and in the course of employment’ is a term of art that constitutes two separate elements. ‘Arising out of’ employment means the injury has its origin or cause in the employment. Solely personal risks, such as medical conditions that are not related to employment, are not compensable. An injury must be causally connected to the employment to be compensable, but the employment need not be the sole cause of the injury. Neutral risks, which are ‘neither of distinctly employment nor distinctly personal character’,23 and how to decide whether to compensate for them is a matter that divides the states. 16 The large majority of states use the long-standing ‘increased risk doctrine,’ which requires that the employment have increased the risk of the injury for the worker to be eligible for compensation. The employment must make the risk of the particular injury greater than that to which the general public is exposed. Thus, an employee suffering from exposure after shoveling snow in the cold for nine hours is covered because the employee would not have otherwise been exposed to the cold for as long a period, but for his employment.24 The employee’s injury is not unique to the employment, but the employment increased the chance of suffering the injury. 17 A growing number of states though, including California, New York and Texas, have adopted the less strict ‘positional risk doctrine,’ which holds ‘[a]n injury arises out of the employment if it would not have occurred but for the fact that the conditions and obligations of the employment placed the claimant in the position where he was injured.’25 Under this doctrine an office secretary who suffers a gunshot wound at her desk from a stray shot fired outside the building would be covered. This would be so even though she was no more likely to be hit by a stray shot at work than elsewhere in the community. This would not be considered ‘arising out of
22 23 24 25
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Case of Zerofski, 433 North Eastern Reporter, Second Series (NE 2d) 869, 872 (Mass 1982). Larson/Larson (fn 1) § 4.03, at 4–2. American Freight Forwarding Corp Yale Transp Div v Indus Comm’n, 201 NE 2d 399, 400 (Ill 1964). Larson/Larson (fn 1) § 3.05, at 3–6.
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employment’ under the ‘increased risk doctrine,’ because the secretary’s employment did not increase her chances of being struck by a stray bullet. Similarly, an employee driving a car during work hours who is struck by lightning would be eligible under the positional risk doctrine but not under the increased risk doctrine. Most states agree that even if the injured employee had a pre-existing 18 condition that made the employee more susceptible to injury the employer must ‘take the employee as he finds him,’ and the injury will be compensable.26 Thus, the ‘egg-shell plaintiff’ rule from tort law applies also to workers’ compensation. The totality of the circumstances will determine whether an injury arose 19 out of employment. This is a highly fact-specific inquiry and whether the employment contributed to the injury is a question of fact that must be determined through medical evidence.27 ‘In the course of employment’ is a broader inquiry and requires that an 20 employee suffer the injury in the time, place, and circumstances that are attendant with her employment. An injury suffered during an employee’s working hours will be compensable, as will injuries suffered within a reasonable time before and after an employee’s time of employment. Thus, an employee who is waiting outside her employer’s gate to start work is within the course of employment.28 The place of employment encompasses the employer’s premises, but can also include other places where the employee is required to work or stay, such as an employee injured while staying in a hotel on a business trip.29 To be compensable, the injury must have been suffered inside the time and spatial boundaries of the employment. However, an injury is compensable if the injury was suffered while completing a task attendant to employment, such as showering while on a business trip.30 This includes actions that are only partly motivated by the employer’s interests. Furthermore, small departures from the employee’s work, such as lunch breaks or smoke breaks, are within the course of employment.31
26
27 28 29 30 31
MA Franklin/RL Rabin/MD Green, Tort Law and Alternatives: Cases and Materials (8th edn 2006) 821. See, eg, Dennis v Department of Labor & Industries, 745 P 2d 1295, 1298 (Wash 1987). See Straube v State ex rel Wyoming Workers’ Safety & Compensation Division, 208 P 3d 41, 47 f (Wyo 2009). Price v Workers’ Compensation Appeals Board, 693 P 2d 254 (Cal 1984). See Capizzi v Southern District Reporters, Inc, 459 NE 2d 847 (NY 1984). Ibid. Larson/Larson (fn 1) §§ 21.02, 21.04.
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3.
Occupational Disease
21 Workers’ compensation coverage for occupational disease lagged behind coverage for accidental injuries for many years.32 Those diseases that were covered were diseases so closely connected with an occupation that they often bore the name of the occupation, ie chimney sweeps’ cancer.33 When disease began to be incorporated into workers’ compensation, states only covered scheduled diseases that the legislature specifically enumerated. This lack of, or restricted, coverage may have been due to limited scientific knowledge of many occupational diseases and policy makers’ attempts to ensure that only truly work-related diseases were cause for compensation.34 In Britain, whose then workers’ compensation model was widely imitated in the United States, occupational disease was determined to be outside the definition of ‘accident by injury’ as there was no specific date on which the disease occurred, and thus notice could not be served to the employer within the specified time period.35 Today these lists are not exclusive, and the majority of states now cover all occupational diseases either by statute or judicial interpretation.36 Many states, such as North Carolina, have judicially-created ‘catch all’ provisions that provide coverage for any occupational disease that is not explicitly listed in legislation.37 Nevertheless, the employee claiming compensation for a disease must prove that it arose out of employment. 22 Occupational disease is now covered by workers’ compensation as comprehensively as injuries are with only a few remaining restrictions.38 To the extent that distinctions remain drawn between the two concepts, this is mainly due to diseases such as silicosis and asbestosis and their ability to overwhelm the workers’ compensation system.39 23 Diseases fall into two categories under most workers’ compensation schemes: accidental diseases, which are diseases that result from acciden-
32 33 34 35
36 37 38 39
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ME Solomons, Workers’ Compensation for Occupational Disease Victims: Federal Standards and Threshold Problems, 41 Albany Law Review (Alb L Rev) 195, 197 f (1977). RJ Chojnacki, Occupational Disease under New York Workmen’s Compensation Law, 42 St John’s L Rev 473, 479 (1968). See ibid. PJ Kelley, Statutes of Limitations in the Era of Compensation Systems: Workmen’s Compensation Limitations Provisions for Accidental Injury Claims, 1974 Washington University Law Quarterly (Wash ULQ) 541, 553 f (1974), citing Steel v Cammell, Laird Co Ltd, [1905] 2 King’s Bench (KB) 232. Larson/Larson (fn 1) § 52.02. Booker v Duke Medical Center, 256 SE 2d 189 (NC 1979). Larson/Larson (fn 1) § 52.02 no 1. Larson/Larson (fn 1) §§ 52.02, 53.01.
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tal injuries, and occupational diseases. Accidental diseases are infectious diseases consequent to an ‘accident’, such as a sudden traumatic injury or drinking contaminated water.40 Thus, an employee who suffers a laceration at work and is subsequently diagnosed with a disease that was a result of that scratch may recover compensation.41 Diseases contracted in this manner are more appropriately seen as accidental injuries and many states treat them as such,42 although many states now treat occupational disease as accidental injuries for compensation purposes as well.43 Like accidental diseases, occupational diseases must still arise out of and in 24 the course of employment or have a recognisable link between the disease and the employment. Additionally, occupational diseases must be characteristic of the employment and have a causal connection to it. So called ‘diseases of life’, while not generally covered by workers’ compensation, are covered if an occupation or characteristics of the employment significantly increase the likelihood of an employee contracting a disease of life.44 Thus, an employee who contracts the flu at work may not obtain compensation, unless some characteristic of the employment, including exposure to co-employees, causes the illness.45 Natural results of an occupational disease will be compensable as well. The important factor is whether the illness, or chance of acquiring the illness, is connected to the employment in some manner. Thus, an employee who develops lung cancer after exposure to asbestos at work can recover compensation, even though lung cancer is a ‘disease of life’, because the asbestos increased the employee’s chance of contracting lung cancer. Part of the causal connection between employment and occupational 25 disease is that the employment must be a significant factor in the employee becoming ill.46 If an employee acquires an occupational illness that is not significantly due to work-related activities, the employee will not be compensated.47 This connection must be proved for compensation
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41 42 43 44 45 46 47
In the instance of drinking contaminated water it is helpful to visualise coming into contact with harmful germs as similar to coming into contact with a beam that strikes an employee. Both caused injury at work due to the employment and are thus compensable. See Larson/Larson (fn 1) § 51.03. Connelly v Hunt Furniture Co, 147 NE 366 (NY 1925). Eg, Code of Georgia Annotated (Ga Code Ann) § 34-9-1(4). Eg, General Statutes of North Carolina (NC Gen Stat) § 97-52; Tennessee Code Annotated (Tenn Code Ann) § 50-6-102(12). See Estate of Doe v Department of Correction, 848 A 2d 378, 381 f (Conn 2004). See Sexton v County of Cumberland/Cumberland Manor, 962 A 2d 1114, 1120 f (NJ Super Ct App Div 2009). See Runft v SAIF Corp, 739 P 2d 12, 15 (Or 1987). Modern Workers’ Compensation § 109:6, available via Westlaw at MWC § 109:6.
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to be awarded and the standard differs from state to state, but if an occupational disease is associated with specific employment it will be relatively easy for a claimant to prove causation, regardless of independent disease-causing factors. Thus, the widow of an employee who dies from lung cancer who was exposed to asbestos, but also had a three-pack-a-day cigarette habit, received compensation.48 26 In accordance with this causal connection requirement, compensation for re-aggravated or exacerbated pre-existing conditions is dependent on the nature of the injury. An employee whose injury permanently worsens her pre-existing condition will be awarded permanent benefits to the extent that she has been disabled by the exacerbation. For injuries which cause a disabling flaring of symptoms of a pre-existing condition, only temporary benefits for the length of the disability are available.49 27 Certain scheduled diseases, most notably asbestosis and silicosis, are often subject to special time and exposure requirements that vary from state to state. These special requirements include the onset of symptoms within a set number of years from last exposure, a certain length of exposure, and a certain length of exposure in the state where compensation is sought. Thus, in West Virginia, an employee is not entitled to compensation for occupational pneumoconiosis unless she has been exposed to the hazards of it for at least two continuous years within the ten years preceding last exposure, or during any five years in the fifteen years before last exposure.50
C.
Scope of protection
28 Compensation for injury to the physical structure of the body is at the heart of all workers’ compensation statutes; this includes not just clear-cut cases where, for example, a construction worker is struck by a falling brick at the work site, but also less obvious cases where a worker suffers an injury from cumulative traumas or even where a worker suffers an injury in the normal performance of his employment duties. Thus, a truck driver who sprains his ankle while unloading a truck, and who did not land particularly hard or strangely on the ankle, is eligible for compensation. 48 49
50
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Manske v Workforce Safety & Insurance, 748 NW 2d 394 (ND 2008). See Workers’ Compensation Guide § 1:42, available via Westlaw at WCGD § 1:42; 82 American Jurisprudence, Second Series (Am Jur 2d) Workers’ Compensation §§ 300, 362; 100 Corpus Juris Secundum (CJS) Workers’ Compensation § 550. See also Fitts v Indus Comm’n, 666 NE 2d 4 (Ill 1996); SAIF Corp v Walker, 996 P 2d 979 (Or 2000). West Virginia Code (W Va Code) § 23-4-1(b).
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This protection also extends to injuries that are the natural result of previous compensable injuries or diseases. As long as an injury meets the ‘in the course of and arising out of employment’ test the employee may receive compensation. Less outwardly visible injuries such as heart attacks, hernias, back injuries, 29 or other ailments are also compensable in most instances as long as they are work related. Thus, a hernia suffered during an unusual exertion during work is covered under workers’ compensation. Indeed, most states will compensate for injuries suffered without any specific unusual event or overexertion. But there are often specific requirements employees must satisfy to show the hernia is work related.51
1.
Sexual Harassment
Sexual harassment is an issue that divides states both as to whether it is or 30 is not compensable but also as to the reasons why. Sexual harassment is different from other workers’ compensation issues because in most instances the victim of sexual harassment is the party seeking to avoid workers’ compensation in lieu of more generous tort remedies, while the employer seeks to reduce its exposure by claiming that injuries suffered through workplace harassment are covered by workers’ compensation, making it the exclusive remedy for such harassment and attendant harm. With median sexual harassment awards being in the hundreds of thousands of dollars there is strong incentive for victims to avoid workers’ compensation.52 How a state treats sexual harassment for workers’ compensation purposes does not affect a victim’s rights under federal legislation, which prohibits discrimination on the basis of sex.53 A significant body of federal law has developed that addresses when an employer can be held liable for sexual harassment that occurs in the workplace.54 Most states hold that workers’ compensation is not the exclusive remedy for 31 workplace sexual harassment.55 Some states reason that sexual harassment 51 52
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See Modern Workers’ Compensation § 108:14, available via Westlaw at MWC § 108:14; 99 CJS, Workers’ Compensation § 345. CM Sharkey, Dissecting Damages: An Empirical Exploration of Sexual Harassment Awards, 3 Journal of Empirical Legal Studies 1, 36 (2006); V Shultz, The Sanitized Workplace, 112 Yale Law Journal 2061, 2083 no 59 (2003). Title VII of the Civil Rights Act of 1964, 42 United States Code (USC) § 2000e-2000e-17 (1964). See 45B Am Jur 2d, Job Discrimination §§ 822–859. See Modern Workers’ Compensation § 102:17, available via Westlaw at MWC § 102:17; 51 ALR 5th 163.
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is not an ‘accident’ as defined by workers’ compensation because it is an intentional act.56 Other states do not consider sexual harassment an ‘injury’. Some states do not compensate for psychological injuries, thus precluding compensation for a significant portion of sexual harassment victims.57 32 Due to the particular offensiveness of sexual harassment, though, the majority of states hold that while sexual harassment may be covered by workers’ compensation, it is not the exclusive remedy for victims of sexual harassment. At least three states hold that as a matter of public policy sexual harassment in the workplace is not covered under workers’ compensation and victims are free to sue in tort because sexual harassment does not fall under the purpose of workers’ compensation legislation.58 Several states have interpreted their workers’ compensation statutes only to preclude common law tort claims and not legislatively created claims.59 Other states hold that sexual harassment is not compensable under workers’ compensation because sexual harassment does not ‘arise out of employment’ and therefore tort is the employee’s only remedy.60 33 There are states where workers’ compensation exclusivity does cover sexual harassment though.61 These states reason that the type of injury is immaterial in determining exclusivity and that as long as the injury arose out of and in the course of employment, workers’ compensation is the exclusive remedy.62 The sexual nature of the injury-causing act is not relevant, even if the harassment rose to the level of sexual assault.63 However, if the sexual harassment arose out of a non-work related relationship and only happened to occur at work a ‘personal dispute exception’ relieves employers of exposure.64 Harassment qua harassment is not compensable, but victims of injury resulting from intentional or negligent infliction of emotional harm are compensable in most states, and may be able to sue in tort in others.65
56 57 58
59 60 61 62 63 64 65
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See Modern Workers’ Compensation § 102:17, available via Westlaw at MWC § 102:17. Ibid. See Gomez v Metro Dade County, Florida, 801 Federal Supplement (F Supp) 674, 683 (SD Fla 1992); King v Consol Freightways Corp, 763 F Supp 1014, 1017 (WD Ark 1991); Meninga v Raley’s, Inc, 264 California Reporter (Cal Rptr) 319 (Cal Ct App 1989). See Meyers v Chapman Printing Co, Inc, 840 SW 2d 814, 819 (Ky 1992); Boscaglia v Michigan Bell Telephone Company, 362 NW 2d 642, 646 (Mich 1984). See Busby v Truswal Systems Corporation, 551 Southern Reporter, Second Series (So 2d) 322, 325 (Ala 1989). See Hibben v Nardone, 137 Federal Reporter (F 3d) 480, 482 f (7th Cir 1998); Roberts v Circuit-Wise, Inc, 142 F Supp 2d 211, 217 (D Conn 2001). See Doe v Purity Supreme, Inc, 664 NE 2d 815 (Mass 1996). See Knox v Combined Insurance Company, 542 A 2d 363 (Me 1988). Eg, Delaware Code Annotated (Del Code Ann) tit 19, § 2301(15)(b). Modern Workers’ Compensation § 102:19, available via Westlaw at MWC § 102:19.
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2.
Dignitary Injuries
Dignitary injuries are similar to sexual harassment in that victims usually 34 seek to forego workers’ compensation in lieu of tort remedies. Claims for discrimination, whether sexual,66 racial,67 or disability,68 are not barred under most states workers’ compensation exclusivity doctrines, and employees are free to pursue those tort claims. Claims based on other dignitary interests, such as reputation and privacy, are similarly not excluded from the tort system by workers’ compensation exclusive remedy provisions in a majority of states. A significant minority does treat workers’ compensation as the exclusive remedy for these injuries, as long as they arose out of and in the course of employment. Thus an employee who is accused of adultery by co-workers must pursue her defamation claim through workers’ compensation.69 Bodily integrity violations, such as battery, may be compensable exclu- 35 sively under workers’ compensation depending on the circumstances that gave rise to the offense. The ‘personal animosity doctrine’ prevents an injured worker’s recovery for assault or battery if he is not assaulted or battered over a work related matter.70 Thus, an accountant who is shot by her co-worker over a dispute about company financial figures is compensated, but would not be if the co-worker shot her in a dispute about a romantic entanglement.71 If the cause of the intentional tort was not related to work then it cannot meet the ‘arose out of and in the course of employment’ test.
3.
Property Damage
Workers’ compensation was created to compensate for occupational in- 36 juries. It pays for medical care, lost wages, and death benefits among other types of compensation. The system was not created to, and generally does not, compensate employees for work-related property damage. If an
66 67 68 69 70 71
See Gardinella v General Electric Company, 833 F Supp 617, 619 (WD Ky 1993). See Buddingh v S Chi Cable, 830 F Supp 437, 442 (ND Ill 1993); Perry v Stitzer Buick GMC, Inc, 637 NE 2d 1282, 1288 f (Ind 1994). See Mangin v Westco Security Systems, 922 F Supp 563, 566 (MD Fla 1996). See Becker v Automatic Garage Door Co, 456 NW 2d 888, 891 f (Wis Ct App 1990). Modern Workers’ Compensation § 114:4, available via Westlaw at MWC § 114:4. See Del Code Ann tit 19, § 2301(18)(b); Prescott v CSPH, Inc, 878 SW 2d 692, 694 (Tex App 1994). See Morris v Soloway, 428 NW 2d 43, 45 (Mich Ct App 1988).
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employee has her arm and wristwatch broken in an accident, she would receive compensation for her fractured arm, but not for her watch. 37 At least one state provides compensation for lost clothing, footwear, or other protective equipment that is damaged in an accident.72 This is an aberration from the normal rule, however. The employee may have other tort remedies to seek compensation for her damaged property, but workers’ compensation is not available. 38 The one type of property for which compensation is universally available is artificial limbs. If a prosthesis is damaged or destroyed in a compensable accident, it will be replaced or repaired.73
4.
Pure Economic Loss
39 We have been unable to locate any law addressing the recovery of pure economic loss under the workers’ compensation system. This absence we take as evidence supporting the proposition that pure economic loss is not compensable under workers’ compensation. Because pure economic loss entails no work-preventing disability, workers’ compensation statutes do not compensate for it. What is more, negligently inflicted pure economic loss is generally not recoverable under US tort law either.74
D.
Heads and levels of benefit
1.
Medical Care
40 Workers’ compensation was created in large part to ensure that injured workers receive medical care for injuries suffered on the job. Injured workers are entitled to have reasonable or medically necessary care paid for by their employers for as long as their injuries persist. This right begins either the day of the accident or the first day of disability.75 In some states, if an injured employee misses no work due to the injury, the employer is not liable for the medical care of the employee. However the
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Revised Code of Washington (Wash Rev Code) § 51.32.260. Modern Workers’ Compensation § 202:12, available via Westlaw at MWC § 202:12. A Bernstein, Keep it Simple: An Explanation of the Rule of No Recovery for Pure Economic Loss, 48 Arizona Law Review 773 (2006). Larson/Larson (fn 1) § 94.01.
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majority of states mandate employer coverage for medical care in this situation as well. The way an employer pays for an employee’s treatment, or even whether it 41 does, is determined by the employee’s injury and the circumstances surrounding it. Payment for medical services is completed directly between employer and medical provider, and this payment is not considered compensation to the injured employee. An employee may pay for his own medical care and seek reimbursement through workers’ compensation, however, if after a reasonable passage of time the employer has yet to provide care.76 Where a fellow employee or another third-party is actually responsible for the worker’s injury, the employer will still be liable for the immediate payment for medical treatment, regardless of the employer’s potential claims against third-parties.77 Employers are not liable for nonwork related conditions that an injured employee may be treated for while receiving treatment for a work related injury, as they did not arise out of the employment.78 But, if the injury causes further complications or exacerbates a pre-existing condition the employer may be required to pay for the pre-existing condition’s treatment as well.79 As has been previously discussed, employees injured on the job have their 42 medical care provided for by their employers. Consequently, employers are sometimes deeply involved in treatment decisions concerning injured employees. Many states allow employers to choose the physician and treatment specialists for an injured employee, at least initially.80 Even in the majority of states that allow the employee to choose his own physician, the employee’s decision is often circumscribed by earlier agreements about care providers or state approved lists of providers.81 Employers may be empowered to require employees to seek permission or at least give notice that they are seeking treatment, but the employer is not entitled to know the specific day or order of treatment.82 Additionally, an employer can reject certain therapies, but will be required to pay for those therapies if they are found reasonable and the employee had undergone 76 77 78 79 80 81 82
Eg, Cal Lab Code § 4600; District of Columbia Code (DC Code) § 32-1507(d); Oklahoma Statutes (Okla Stat) tit 85 § 14(c). Eg, Alaska Statutes § 23.30.050. See Matthews v Department of Corrections, 827 P 2d 693, 695 (Idaho 1992). Workers’ Compensation Guide § 1:42, available via Westlaw at WCGD § 1:42; 82 Am Jur 2d, Workers’ Compensation § 300. Eg, Alabama Code (Ala Code) § 25-5-77; Missouri Revised Statutes (Mo Rev Stat) § 287.140; NC Gen Stat § 97-25. Eg, Minnesota Statutes (Minn Stat) § 176.1351; NY Workers’ Compensation § 13(a); Texas Labor Code Annotated (Tex Lab Code Ann) § 408.022(a). See Lasiter v Industrial Commission of Arizona, 839 P 2d 1101, 1105 (Ariz 1992).
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them despite the employer’s rejection. If an employee does not identify a specific ailment in his claim, his treatment for that ailment may rightly be rejected by the employer.83 43 What is considered reasonable treatment is determined by medical experts, based on national standards. Considerations as to whether treatment is reasonable include cost, effectiveness, and length of treatment. No distinction is made between palliative and curative treatments in most states, and both will be provided as long as is necessary.84 Experimental or non-traditional therapies may be rejected by the employer. Covered treatments include hospital care, surgical procedures, pharmaceuticals, repair of artificial limbs, optometry, dentistry and chiropractic treatment. This coverage includes specialists to which the employee’s primary care physician may refer the employee. Medically necessary equipment, such as a cane, is also provided. A specialised vehicle or modifications to an employee-owned vehicle, for severely injured workers may in some states be covered as a medically necessary piece of equipment.85 Several states, including New York, hold that automobiles are not a covered expense.86 Injured employees may also be entitled to both home alterations87 and inhome care88 if they are severely injured. Several states also provide for spiritual services under workers’ compensation statutes. Psychiatric services may or may not be provided depending on the state. Some hold that psychiatric care is provided regardless of its lack of connection to a physical injury or illness. Others require a connection, while others do not provide at all for such services.89 Preventive medical care, before symptoms appear, is generally not provided, but may be if the employee was exposed to a contagious disease or a disease that may only be curable
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See Reinhardt v Workers’ Compensation Appeals Board (Mt Carmel Nursing Ctr), 789 A 2d 871, 874 (Pa Commw Ct 2002). See Carbajal v Industrial Commission of Arizona, 219 P 3d 211, 214-15 (Ariz 2009); Elmhurst Memorial Hospital v Indus Comm’n, 753 NE 2d 1132, 1138 (Ill App Ct 2001). See Applegate Drywall Co v Patrick, 559 So 2d 736, 736 (Fla Dist Ct App 1990); Manpower Temporary Servs v Sioson, 529 NW 2d 259, 264 (Iowa 1995); Mickey v City Wide Maint, 996 SW 2d 144, 149 (Mo Ct App 1999). Kranis v Trunz, Inc, 91 AD 2d 765 (NY App Div 1982). See Young v Ceramic Tile Contractors, 288 New York Supreme Court Appellate Division Reports, Second Series (AD 2d) 570, 571 f (NY App Div 2001). See Mich Comp Laws § 418.315(1); Wyoming Statutes Annotated (Wyo Stat Ann) § 2714-401(c). Compare Miller v Workers’ Compensation Appeals Board (New Wilmington Family Practice), 724 A 2d 971, 794 f (Pennsylvania Commonwealth Court Reports 1999), with In re Fay, 837 A 2d 329, 333 f (New Hampshire Reports 2003), with Montana Code Annotated (Mont Code Ann) §§ 39-71-116(20)(b), -119(30)(a).
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before symptoms appear, such as rabies.90 Additionally, long distance travel to receive care is covered;91 travel to local care may be covered depending on the state.
2.
Rehabilitation
Rehabilitation assistance can be separated into different categories. Physi- 44 cal rehabilitation attempts to help injured workers physically recover from injuries or illness so that they can return to work.92 This type of rehabilitation is well recognised and more appropriately thought of as a type of medical care. Vocational rehabilitation, on the other hand, helps injured workers retrain for other types of work when it becomes apparent their injuries will prevent them from returning to their earlier type of employment.93 Rehabilitation programmes differ widely from state to state in offerings 45 and programme goals. Broadly, the goal is to return injured workers to productive lives in the workforce. Some states view this as returning an injured worker to ‘suitable’94 or ‘gainful’95 employment. This will vary from employee to employee based on his or her previous work experience and training, age and education, and injury suffered. For other states the goal is merely to return the worker to the work force as quickly and cheaply as possible.96 Iowa offers as little as 13 weeks of rehabilitation, while Minnesota offers a national best of 156 weeks of vocational rehabilitation, although states often allow these benefits to be extended if further training time is warranted.97 Some states require an injured employee to be permanently disabled in order to receive vocational training,98 while other states require only a showing that the injured employee
90 91 92 93
94 95 96 97 98
Eg, Minn Stat § 176.135(1)(c); Frey v Gunston Animal Hosp & Cincinnati Indem Co, 573 SE 2d 307, 311 (Va Ct App 2002). See Code of Laws of South Carolina Annotated (SC Code Ann) § 42-15-60(c). Eg, Alaska Stat § 23.30.395(26); 820 Illinois Compiled Statutes (Ill Comp Stat) 305/8(a); Tex Lab Code Ann § 401.011(19)(b). While employers are required by the Americans with Disabilities Act of 1990, Pub L No 101–336, 104 Stat 327 (codified as amended in scattered sections of 42, 47 USC), to make reasonable accommodation for injured employees in helping them return to work, some workers will never be able to return to their previous employment. Eg, Kentucky Revised Statutes Annotated (Ky Rev Stat Ann) § 342.710(3). Eg, New Mexico Statutes (NM Stat) § 53-3-17(a); Wash Rev Code § 51.32.095(1). Eg, West’s Lousiana Rev Stat Ann § 23:1226. Eg, Iowa Code § 85.70; SC Code Ann § 42-13-90(a). Eg, Arkansas Code Ann § 11-9-505(b); Mont Code Ann § 39-71-1006(1).
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can no longer perform the same type of work he did previously,99 while a third system requires that the employee not be able to earn her pre-injury wages in order to receive vocational training.100 Ultimately, when an injured worker cannot return to her previous employment or some employment of suitable likeness with a similar earning capacity, vocational rehabilitation will be provided. 46 The benefits offered by vocational rehabilitation programmes differ as well, but generally include a living allowance while undergoing training, payment for the training itself, and travel costs associated with the training. The vocational training may consist of an evaluation of the employee’s skills, counseling and training for a new career via on-the-job training, correspondence courses, or other programmes.101 For example, an injured forklift operator retrained to become a jewellery maker.102 This retraining may include additional education, but most states have not gone so far as to pay for a college education.103 The goal of vocational training is to return workers to a similar earning capacity, not a better one; although, in some instances, employees have attended graduate school to retrain as social workers or teachers. Some employees are ineligible for vocational rehabilitation, including those who are too severely injured,104 illiterate,105 or those who already possess a high level of education.106 Additionally, if the employer offers the injured employee work at or near his previous pay level, the injured employee will generally be ineligible for vocational retraining. However, a job that is not normally economically justifiable, which an employer may offer out of loyalty to the injured worker, is not grounds for ineligibility.107 47 A rehabilitation plan is often developed to help the injured employee retrain.108 The state, employer, or employee will select a facility that provides rehabilitation services to develop and administer the plan, but the plan must still be filed with the workers’ compensation commission. Some states require certain factors to be considered in developing a plan. 99 100 101 102 103 104 105 106 107 108
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Eg, Maine Revised Statutes Annotated (Me Rev Stat Ann) tit 39-a, § 217; Vermont Statutes Annotated (Vt Stat Ann) tit 21, § 641(a). Eg, Kansas Stat Ann § 44-510g(a). Eg, Alaska Stat § 23.30.041(i); Oklahoma Stat tit 85, § 16(a). Solo Cup Co v Brown, 660 P 2d 655 (Okla Civ App 1983). Larson/Larson (fn 1) § 95.02. Eg, Mo Rev Stat § 287.143. See Partenheimer v Fontainebleau Hotel, 291 So 2d 1, 2–3 (Fla 1974). See Saunders v State Accident Insurance Fund, 596 P 2d 1316, 1316 f (Or Ct App 1979). See Bostick v Kinston Neuse Corp, 549 SE 2d 558, 561 f (NC Ct App 2001); SAIF Corp v Terry, 869 P 2d 876, 878 (Or Ct App 1994). Eg, Revised Statutes of Nebraska (Neb Rev Stat) § 48-162.01(3).
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Common considerations include the severity of the injury, the worker’s background, age, education, training, previous wages and employment, and post-injury potential. Many states also require the plan to include a goal for the injured worker undergoing vocational rehabilitation.109 While the main goal is to return injured workers to the workforce, cost and duration will be considered when developing a rehabilitation plan. An injured employee may be compelled to undergo vocational training at 48 the insistence of her employer, who will be paying in most cases for the training.110 However, this is not the case in all states. Injured employees may also request vocational training. Failure to agree to undergo retraining, failure to complete it or half-hearted participation in retraining will lead to a revocation of vocational rehabilitation rights, at least during the period when the employee refuses to participate fully. Some states go so far as to withhold from injured workers a percentage, or all, of workers’ compensation benefits if they fail to fulfill their vocational rehabilitation obligations.111 This determination can only be made by the appropriate state authorities and not the employer. Although in theory both employers and injured employees have incen- 49 tives to participate in vocational retraining, it often does not work this way in reality. If employers are required to continue paying full disability benefits to injured employees after they regain some ability to earn a living, employers will be disinclined to also pay for rehabilitation. If employees have their disability benefits reduced as they regain some earning ability, they may also have a disincentive to undergo vocational retraining.112 The correct balance has been difficult for states to strike.113
3.
Lost Earnings
Workers’ compensation is awarded to replace lost earnings of injured 50 workers. Compensation is awarded according to four categories: 1. temporary total disability, 2. permanent total disability, 3. temporary partial disability, and 4. permanent partial disability. Most states have a schedule, which specifies how much compensation is awarded when a worker loses a limb, internal organ, or other scheduled body part. If an employee suffers
109 110 111 112 113
Eg, Alaska Stat § 23.30.041(h). Eg, Alabama Code § 25-5-77(c). Eg, Neb Rev Stat § 48-162.01(6). Larson/Larson (fn 1) § 95.04. Ibid.
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an injury to an identifiable body part, compensation is provided. These different categories of compensation differ in underlying rationales and are a source of contention. 51 Temporary total and permanent total disability are the most straightforward. Total disability is defined differently depending on the state. The most conservative rules require an employee to be totally unable to engage in any employment to receive this compensation.114 Other states require an employee to be unable to perform work suitable to her training and experience,115 while the most liberal test only requires an employee not be able to perform the work she did before the injury.116 Determining temporary total disability is an issue of fact but often will be obvious, such as an employee who breaks his back but is expected to fully recover. The same is true of permanent total disability, except where the state has a schedule that provides that a loss of certain scheduled parts constitutes permanent total disability. Benefits do not begin immediately, but once begun, compensation is paid for this prior waiting period.117 Generally, workers are also compensated for lost earnings at second jobs.118 52 The vast majority of states award an injured worker two-thirds of the worker’s average weekly wages;119 a few states award higher compensation to injured workers, though, as much as 75 %120 or 80 %.121 There is a cap placed on the amount an injured worker can receive, usually around 75 % to 100 % of the state’s average weekly wage.122 These benefits last for the duration of the disability, up until the end of the injured employee’s life, except in some states in which there is a cap on the number of weeks that a totally disabled worker can collect benefits.123
114 See Herring v Yellow Freight System, 914 SW 2d 816, 820 (Mo Ct App 1995); American Airlines v Hervey, 33 P 3d 47, 50–51 (Okla 2001). 115 Eg, Nevada Revised Statutes (Nev Rev Stat) § 616A.340; Wyo Stat Ann § 27-14-102(a) (xviii). 116 Eg, NM Stat § 52-1-25.1(a). 117 Eg, Idaho Code Ann § 72-402(1). 118 Eg, Cal Lab Code § 4453(c)(2); NY Workers’ Compensation Law § 14(6); Oregon Revised Statutes (Or Rev Stat) § 656.210(2)(b). 119 Eg, Cal Lab Code § 4653; Fla Stat § 440.15(1–2); 820 Ill Comp Stat § 305/8(b); NY Workers’ Compensation Law § 15(1–2); South Dakota Codified Laws § 62-4-3. 120 Eg, Connecticut General Statutes (Conn Gen Stat) § 31-307; General Laws of Rhode Island (RI Gen Laws) § 28-36-1. 121 Eg, Mich Comp Laws § 418.351(1). 122 Eg, Mo Rev Stat § 287.200; New Jersey Statutes Annotated (NJ Stat Ann) § 34:15-12(a); North Dakota Century Code (ND Cent Code) § 65-05-09. 123 Eg, Indiana Code § 22-3-3-8; Mississippi Code Ann § 71-3-13(2). See: Modern Workers’ Compensation § 200:41, available via Westlaw at MWC § 200:41.
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Permanent disability turns not only on a worker’s inability to return to 53 work, but also on the permanence of the injury. Most often, the injured worker’s physician will make a preliminary decision on the level of temporary disability. During this initial period after the injury the worker receives temporary disability benefits. The more difficult question is when does this temporary disability period end? At its conclusion, the injured worker should go back to work or qualify for permanent disability benefits. This time is known most often as the date of maximum medical improvement.124 On this date an injured worker can no longer be expected to recover further from his injuries. This may mean that he is totally recovered and can return to work or it can mean that he will have some permanent disability. An injured worker can reach the date of maximum medical improvement regardless of the continued use of drugs or other therapies, as long as the worker’s ailments are not likely to get any better.125 If it is not known how long the condition will last, the worker cannot be placed on permanent disability.126 Partial disability, both permanent and temporary, is more complicated 54 and difficult to adjudicate. Temporary partial disability exists when a worker has a temporary condition that reduces her earning ability. The worker is able to do some type of work but not her previous job with the same earning capacity. A roofer suffering a broken hand could still be of use to her employer in many cases, but not at the same wage rate as prior to her injury and thus will receive compensation for the difference in wages. Most states compensate for partial disability at the rate of twothirds of the difference between the worker’s average weekly wage before the injury and after the injury.127, 128 More states compensate at higher rates for partial disabilities than for total disabilities. States usually impose time limits on partial disability compensation, often between 200 and 400 weeks.129 Permanent partial disability means the employee has a permanent disabil- 55 ity that will prevent her from reaching her previous earning capacity but
124 125 126 127
Workers’ Compensation Guide § 2:4, available via Westlaw at WCGD § 2:4. See Mulligan v FS Electric, 651 A 2d 254, 258 (Conn 1994). Larson/Larson (fn 1) § 80.04. Eg, Hawaii Revised Statutes (Haw Rev Stat) § 386-32(b); Purdon’s Pennsylvania Statutes Annotated (Pa Stat Ann) 77, § 512(1); Vt Stat Ann tit 21 § 646. 128 Additionally, if an employee makes more in post-injury employment he will in most cases be barred from receiving partial disability payments, as there will be no lost earnings upon which to base compensation. See Adkins v R & S Body Co, 58 SW 3d 428, 431 f (Ky 2001). 129 Eg, Ga Code Ann § 34-9-261; Ohio Rev Code Ann § 4123.57.
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does not prevent the worker from engaging in some gainful employment. A permanently partially disabled worker’s condition is not expected to change. Workers so classified are assigned a permanent impairment rating that reflects the extent of future lost earnings for injured workers. Thus, if the roofer’s broken hand was mangled and never again useable, she would receive permanent partial disability benefits. Compensation for permanent partial disabilities differs from state to state with some states using the same system that is used for temporary partial disabilities, basing compensation on lost earning capacity.130 Others use a schedule of compensable injuries that provides exactly how much is paid and for how long. 56 Most states have a schedule of automatically compensable injuries. Schedules specify the amount paid and the length of time an injured worker will receive benefits for the loss or partial loss of use of specified body parts. The rationale for schedules is different from that of the previously described method of compensation and is more controversial. Instead of compensating for loss of earning potential, schedules compensate a worker for an injury, regardless of actual loss in earnings or earning capacity. Although an injury normally leads to a decrease in earning capacity, this is not always the case. A lawyer who breaks a toe will generally not see a reduction in his earning capacity and yet will receive compensation in a schedule state. Several states, including California, Florida and Texas, have done away with the schedules for most injuries, with Florida leading the way in 1979 due to the schedule’s incompatibility with the original intentions of workers’ compensation: to compensate workers for lost wages in workplace accidents, not to compensate for the injury itself.131 57 Schedules list the types of losses, such as an arm or a back, and how many weeks of benefits are provided. Usually this is the exclusive remedy for the injured worker with these injuries, but some states allow an election between scheduled benefits and wage replacement compensation.132 Common inclusions on schedules are arms, legs, hands, feet, toes, fingers, eyes, back, head, neck, torso, and internal organs. Loss of use, loss of the member and disfigurement are the same for purposes of compensation, and partial loss will be compensated as well, but at a reduced number of weeks. Thus, the roofer whose hand was mangled would be awarded the specified number of weeks’ worth of compensation on the schedule.
130 See, eg, Mont Code Ann § 39-71-116(24); Pratt v Fraser Paper, Ltd, 774 A 2d 351, 355 f (Maine Reports 2001). 131 Larson/Larson (fn 1) § 80.06. 132 See Whitley v Columbia Lumber Manufacturing Co, 348 SE 2d 336, 341 (NC 1986).
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4.
Non-Pecuniary Losses
Workers’ compensation does not pay for the pain or other symptoms of 58 injuries.133 For an injured worker to receive compensation he must have his earnings or earning capacity reduced. Thus, a worker who suffers a particularly painful back injury will receive the same compensation as a worker who suffers a comparatively painless back injury, if the reduction in the worker’s earning capacity is the same. But, pain may be so great as to cause loss, such as when it disables a worker, and in such instances compensation for lost earnings is available.134
5.
Dependents’ Benefits
Workers’ compensation systems provide dependents’ benefits for a speci- 59 fied period of time after an employee’s death. Benefits are designed to establish a surviving dependent financially so that he can provide for his own future support. Benefits are based upon claims the former employee would have had if he were alive. If the deceased employee would not have had a claim, no dependent benefits are available.135 The death of the employee must have been a consequence of the injury suffered at work for the dependents to receive benefits in most states. States differ though, as to whether the injury must be the primary cause of the employee’s death or merely a contributing factor for dependents’ benefits to be awarded.136 Thus, if an employee suffers a compensable back injury that aggravates a previous heart condition, leading to death the employee’s dependents will be awarded benefits if the workplace injury need only be a contributing factor, but not if it must be the primary cause. Some states require the employee to have died from the injury within a specified period of time after the injury for dependents’ benefits to be awarded.137 Only dependents as defined by statute receive benefits. States usually 60 define which relationships will qualify survivors for dependents’ benefits, including spouses, children, parents, grandparents, and siblings. A surviving spouse and children are generally presumed dependent, and no
133 Larson/Larson (fn 1) § 1.03, at 4. 134 82 Am Jur 2d, Workers’ Compensation § 377. See Bouldware v Delta Corp, 286 SE 2d 333, 334 (Ga Ct App 1981); Engel v Prostrollo Motors, 656 NW 2d 299, 302 (SD 2003). 135 See, eg, Tackett v Bethenergy Mines, Inc, 841 SW 2d 177, 179 (Ky 1992). 136 Compare Bradford v Workers’ Compensation Commissioner, 408 SE 2d 13, 17 f (W Va 1991), with Rosemann v County of Sarpy, 466 NW 2d 59, 62 f (Neb 1991). 137 Modern Workers’ Compensation § 107:3, available via Westlaw at MWC § 107:3.
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further showing of dependency is required if the dependents were living with the deceased employee.138 Other dependents must prove actual dependency to qualify for benefits. In some states, non-defined dependents must show a minimum specified period of dependency to recover benefits. Total dependency is not necessary to recover benefits, and any amount the dependent relied upon to maintain herself will generally suffice for proof of dependency.139 But, partial dependents are excluded in many states, in whole or part, from benefits if any total dependents exist.140 Furthermore, only dependents as of the date of the injury or accident are eligible for benefits.141 Other states provide that dependents at the time of death, rather than injury, are eligible for benefits.142 61 Benefits awarded to surviving dependents usually consist of payment of a percentage of the deceased employee’s wages. Dependents are not legally responsible for the deceased employee’s medical bills, and the employer will cover this expense. Similarly, burial costs are covered by the employer, up to a certain amount. In at least one state, vocational training for dependents is covered by workers’ compensation.143 62 Benefits to surviving dependents will cease in three instances: when minor dependents reach 18 years of age, when a surviving spouse remarries, and when a dependent dies.144 Surviving dependent children may be able to continue receiving benefits after turning 18, though, if they are students or incapable of supporting themselves. Marriage ends the monthly payment of dependent benefits, not only for a surviving spouse, but for all dependents who marry.145 A remarrying dependent spouse will receive a lump sum upon remarriage, thus ending the benefits in many states, although others provide no such final lump sum payment. A surviving spouse who remarries may continue to receive benefits if he still has dependent children living with him, but these benefits are intended for the surviving children.
138 See, eg, Mo Rev Stat § 287.240(4)(a). 139 See General Electrics v De Cubas, 504 So 2d 1276 (Fla Dist Ct App 1986). 140 Eg, Colorado Revisded Statutes (Colo Rev Stat) § 8-42-119; West’s Lousiana Revised Statutes Annotated (La Rev Stat Ann) § 23:1252; Mo Rev Stat § 287.240(3); NC Gen Stat § 97-38(1). 141 Modern Workers’ Compensation § 107:5, available via Westlaw at MWC § 107:5. See Arkansas Code Annotated (Ark Code Ann) § 11-9-527(h); Iowa Code §§ 85.42–44; Dep’t of Highway Patrol v Workers’ Compensation Appeals Board, 40 Cal Rptr 2d 188, 191 (Cal Ct App 1995). 142 Eg, Indiana Code § 22-3-7-12(c); Wis Stat § 102.51(4). 143 Minn Stat § 176.102 (1)(a). 144 Modern Workers’ Compensation § 107:20, available via Westlaw at MWC § 107:20. 145 See, eg, Kansas Statutes Annotated (Kan Stat Ann) § 44-510b(a)(4); Tenn Code Ann § 506-210(e)(8).
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6.
Comparison with Tort
After extensive research and consultations with workers’ compensation 63 experts, we have been able to obtain very limited direct comparison of tort awards and workers’ compensation benefits. The very pervasiveness of workers’ compensation means there is little information to compare the amount each system provides. Furthermore, it is unknown what percentage of workers’ compensation claimants would have viable tort claims if allowed to pursue those claims. A government study conducted in the mid-1980s compared projected 64 workers’ compensation benefits, under the Connecticut and Indiana systems, to awards received under the Federal Employers’ Liability Act (FELA), a federal law establishing tort liability for railroads that negligently injure employees.146 The report applied the rules and procedures of the Indiana and Connecticut workers’ compensation systems to a random set of cases settled under FELA by AMTRAK, a passenger railroad, in 1984 and compared total benefits under each.147 The study found that while total benefits to injured employees under FELA were higher than under either states’ workers’ compensation system, this was largely negated by considerably higher attorneys’ fees that accompanied FELA litigation.148 As medical costs have grown in proportion to wage replacement and substantial reforms of workers’ compensation have taken place over the last 25 years, it is hard to know if this same relationship still exists today. Although individual benefit comparisons are largely not possible, employer 65 subscription information from Texas, the only state with a large number of non-workers’ compensation subscribing employers, provides an interesting, if inconclusive, view. Although Texas has allowed employers to opt out of the workers’ compensation system for almost 100 years, two-thirds of Texas employers choose to participate.149 This rate of participation has increased almost 20 % in the last 15 years, as workers’ compensation employers report lower insurance cost increases over the last ten years.150
146 US General Accounting Office, GAO/RCED-86-202, US Senate, Comparison of Employee Injury Claims under Federal and State Laws: Report to the Honorable James T Broyhill (Amtrak 1986). 147 Ibid. 148 AI Havens/AA Anderson, The Federal Employers’ Liability Act: A Compensation System in Urgent Need of Reform, 34 Federal Bar News & Journal (Fed B News & J) 310 (1987). 149 Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, Employer Participation in the Texas Workers’ Compensation System: 2008 Estimates (2009). 150 Ibid.
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66 But while small employers have been enrolling in workers’ compensation in greater numbers, large employers have increasingly been opting out, with the majority reporting that cost was the major factor in deciding to drop workers’ compensation coverage.151 The employers were able to manage liability costs by having employees agree to binding arbitration as part their employment.152 67 It is not clear why large employers are shedding workers’ compensation coverage, while small employers are increasingly taking part in the system. Recent workers’ compensation reforms in Texas, aimed at reducing cost, may be a cause for greater small employer enrollment. Large employers’ bargaining power with employees, as seen by the prevalence of arbitration clauses as a condition of employment (thus limiting jury tort awards), may make it more cost efficient to pay for workplace injuries out of pocket. Because of Texas’s unique workers’ compensation system and recent tort and workers’ compensation reforms it is unknown how indicative this information is of the rest of the nation.
7.
Lump Sum Payments
68 Workers’ compensation benefits are made in periodic payments to the injured worker or her dependents. This ensures that the employee will have a continual source of income. Without periodic payment, workers might quickly spend a lump sum award and be left without any source of income while remaining injured.153 69 Lump sum payment of permanent disability benefits is not uncommon though. In many states lump sum payment is available for permanent partial disability, but not permanent total disability,154 because a partially disabled employee will still have additional income, unlike a totally disabled employee. This is not necessarily contrary to the purpose of workers’ compensation if it is for medical, funeral or rehabilitation expenses.155 Lump sum payment for legitimate rehabilitation or job
151 Ibid. 152 A Morantz, Opting Out of Workers’ Compensation in Texas: A Survey of Large, Multistate Nonsubscribers, in: DP Kessler (ed), Regulation versus Litigation (2011) 197, 223. 153 Larson/Larson (fn 1) § 132.07, at 1. 154 Modern Workers’ Compensation § 205:4, available via Westlaw at MWC § 205:4; Workers’ Compensation Guide § 1:6, available via Westlaw at WCGD § 1:6. Eg, Arizona Revised Statutes Annotated (Ariz Rev Stat Ann) § 23.30.190(a); Nevada Rev Stat § 616.607(1)(c); Or Rev Stat § 656.230(2). 155 Larson/Larson (fn 1) § 132.07, at 2. Eg, Minn Stat § 176.021(3).
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training programs is often provided at the discretion of the workers’ compensation commission, but is not awarded for ill-advised plans the employee may have. Once a lump sum payment is made to the employee, the employer and insurer no longer have a financial reason to encourage or monitor the rehabilitation progress of the employee. Sometimes an employee requests a lump sum to help pay bills or to invest, but commissions disfavour these reasons as they might lead to the employee not having a source of income.156 To receive a lump sum payment the employee or employer must petition 70 the workers’ compensation commission and both sides have an opportunity to state the reasons why a lump sum payout should or should not be made.157 Both employers and employees have incentive to procure a lump sum payment though, as it will mean a large sum of money for the employee very quickly and an end to periodic payments for the employer. Lump sum awards are calculated on the life expectancy of the employee, so that lump sum awards not only relieve an employer of the cost of continued oversight, but also provide the employer certainty of its total liability.158
E.
Funding systems
Workers’ compensation coverage is mandatory in almost every state for 71 most employers. Some states exclude employers with small number of employees; certain types of employment are also excluded from mandatory coverage in some states, including domestics, agricultural workers and high-level corporate executives. In some states non-profit and religious institutions are exempt from providing workers’ compensation as well. Certain employers in some states can reject coverage, either affirmatively or by failure to enroll in the system, but in doing so the employer loses the tort defences of contributory negligence, assumption of risk, and negligence of other employees.159 The vast majority of states allow employers to obtain private insurance to 72 cover the costs of workers’ compensation.160 Self-insuring is allowed in all
156 157 158 159 160
Larson/Larson (fn 1) § 132.07, at 2. Ibid, at 1. 82 Am Jur 2d, Workers’ Compensation § 628. 101 CJS, Workers’ Compensation § 1592. Only four states currently maintain a monopoly: North Dakota, Ohio, Washington, and Wyoming.
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but two states, often with a requirement that the employer provide security or another financial instrument to prevent bankruptcy from impeding a claimant’s recovery. Workers’ compensation commissions have wide latitude in approving employers to self-insure. A number of states also maintain a state-run workers’ compensation fund161 for employers who are unable to secure private insurance. The federal government runs several workers’ compensation systems for its own employees, longshoremen, coal miners suffering from pneumoconiosis, and employees who develop cancer from exposure to radioactive elements.162 73 Workers’ compensation funds in each state are funded by employers and their insurers in accordance with the principal that those who cause industrial injuries should pay for them. Fees and taxes for state funds are levied on all employers.163 These funds are entirely separate from general governmental revenues and may not be appropriated for other purposes.164 Because most employers have private insurance, the cost of workers’ compensation coverage to each employer will vary according to the number of employees, type of work, state of operation, and number and cost of past claims. Those taking part in a state-run fund pay a flat premium that is subsidised by insurers.165 74 Private sector workers’ compensation costs have fallen significantly since the early 1990s, when they totalled almost $ 3 per $ 100 of payroll, to a 20year low of $ 2.13 per $ 100 of payroll in 2008.166 Employers’ insurance premiums are generally determined by state classification codes that rate the risk level operative in an industry, with most states subscribing to the National Council on Compensation Insurance standards.167 Employers with poor workers’ compensation records will then pay an additional fee on top of the industry-wide rate.168
161 Larson/Larson (fn 1) § 150.01, at 1. 162 US Social Security Administration, Office of Retirement and Disability Policy, Annual Statistical Supplement, 2009 . 163 See Ky Rev Stat Ann §§ 342.1241–1242. 164 See Ky Rev Stat Ann § 342.1227. But see Methodist Hosp v State Insurance Fund, 476 NE 2d 304, 307 f (NY 1985). 165 22 Compensation and Benefits § 114, available via Westlaw at HRS-CB § 22:114. 166 National Academy of Social Insurance, Workers’ Compensation, Benefits, Coverage, and Costs, 2008 34 f (2010), available at . 167 22 Compensation and Benefits § 115, available via Westlaw at HRS-CB § 22:115. 168 H Shuford, Identifying and Tracking Trends in Workplace Injuries and Illness – Opportunities and Challenges in Using Workers’ Compensation Rating Bureau Data, in: DF Utterback/TM Schnorr (eds), Use of Workers’ Compensation Data for Occupa-
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F.
Administration and adjudication of claims
Workers’ compensation is a statutory creation and is governed by the 75 workers’ compensation laws of each state. Most states have a state commission, board or agency that oversees the procedure of adjudicating and awarding of benefits. The commissions often have power to set policy and adopt procedural rules authorised by statute.169 Commissions are both administrative and judicial in nature, but lack full judicial powers such as judicial review of workers’ compensation statutes.170 In some states commissions have the authority to investigate employers on their own initiative under certain circumstances.171 A decision regarding factual matters by a commission is final and appellate courts may only overrule a commission as to mistakes of law or bias by the commission. Although the statewide commission has the ultimate power over workers’ compensation decisions, deputy commissioners are appointed to hear cases and determine whether benefits will be awarded and how much will be awarded. Though important, data suggest that nearly two-thirds of claims are resolved without a hearing before a deputy commissioner and that the average adjudicated claim has only two hearings.172 Hearings before deputy commissioners are similar to trials but less formal 76 in nature.173 Accordingly, procedural rules are construed liberally and errors in pleading are less serious than in a court. Hearings are adversarial and both the employer and the employee may have attorneys represent them and present evidence. By making the proceedings less formal, employees and employers can more quickly and economically reach a conclusion. After receiving evidence, the commissioner determines the proper out- 77 come of the case and may order further physical examinations or eviden-
169 170
171 172
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tional Injury & Illness Prevention, National Institute for Occupational Safety and Health (2010) 119. Modern Workers’ Compensation § 300:1, available via Westlaw at MWC § 300:1. Larson/Larson (fn 1) § 124.02, at 5. See, eg, Owsley v Idaho Industrial Commission, 106 P 3d 455, 460 (Idaho 2005); Pierce v Lafourche Parish Council, 706 So 2d 178, 179 (La Ct App 1997); Carolinas Medical Center v Employers & Carriers Listed in Exhibit A, 616 SE 2d 588, 591 (NC Ct App 2005). Modern Workers’ Compensation § 300:5, available via Westlaw at MWC § 300:5. See, eg, Ark Code Ann § 11-9-811; Mississippi Code Ann § 7-3-37(8). Joint Report to the Governor from the Superintendent of Insurance and Chair, Workers’ Compensation Board, Summarizing and Benchmarking Workers’ Compensation Data and Examining Progress on Prior Recommendations for Improvements, in: Data Collection 74, available at . Larson/Larson (fn 1) §§ 124.01, 127.01-12. For example, the rules of evidence are not as rigorously applied in workers’ compensation hearings as in a court.
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tiary hearings. On the basis of this evidence, the commissioner rules on the disability level and compensation to be awarded. Commissioners also have power, in some states, to find facts that determine the rights of dependents if the employee dies, such as paternity for the purposes of dependent benefits.174 78 A dissatisfied party may appeal to the full commission which, depending on the state, reviews appealed issues de novo or only reviews conclusions of law.175 Although appeals are informal, similar to the original hearing, failure to preserve an issue at the initial hearing precludes appeal on that issue.176 Further judicial review by state courts is available, but courts only overturn a full commission’s holdings as to matters of law and not questions of fact. In some states this appeal is to a trial court,177 while in others it is directly to an appellate court.178 Only final orders of the commission are generally reviewable.179 79 The main reason that workers’ compensation hearings and procedures are less formal is to facilitate prompt and inexpensive resolution of claims. Commonly, there is a short period of a few weeks or months to notify an employer of an injury and then a year or two to file a claim with the workers’ compensation commission. How long the process takes is determined by the promptness of the employee’s claim and the docket demands confronting the commission.180 80 Overall, workers’ compensation cost US employers almost $ 79 billion in 2008.181 There is considerable overhead in administering workers’ compensation too, and only about 65 cents of every insurance premium dollar goes to benefits.182 Included in overhead costs are defence of claims, taxes, licenses, fees and cost control.183 Overhead cost to employers has also shrunk in recent years though, especially through the use of high deductible policies by employers.184
174 See, eg, Brown v Ryder Truck Rental, 389 SE 2d 161 (SC Ct App 1990). 175 Modern Workers’ Compensation § 310:9, available via Westlaw at MWC § 310:9. Compare NC Gen Stat § 97-85, with Me Rev Stat Ann tit 39A, § 320. 176 Larson/Larson (fn 1) § 124.08, at 3. 177 Eg, Ga Code Ann § 34-9-105(b); ND Cent Code § 65-10-01. 178 Eg, Conn Gen Stat § 31-301b; NY Workers’ Compensation Law § 23. 179 Larson/Larson (fn 1) § 130.02. 180 Both challenged and non-employer challenged claims can take over 200 days to establish by hearing in New York. Joint Report (fn 172) at 73. 181 National Academy of Social Insurance (fn 166) at 31–34. 182 Ibid. 183 Ibid. 184 Ibid.
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G.
Rights of recourse of workers’ compensation institutions
Employers, private insurance companies, and state insurance funds that 81 have paid workers’ compensation benefits have a right of recourse against third-party tortfeasors, including negligent co-employees and product manufacturers, among others.185 If one of these individuals or entities commits a tort that causes the employee’s injuries in the course of employment, employers and insurers have a right to recover the costs of providing workers’ compensation to the injured employee, including medical costs that the employer has not yet paid (but is required to pay).186 This right of recovery may either take the form of subrogation of the employee’s judgment against the third-party or, as explained below, an indemnity action by the employer for its workers’ compensation costs. Subrogation of an injured employee’s workers’ compensation benefits is consistent with the policy of preventing double recovery among workers’ compensation recipients. There is no consensus among states in how subrogation rights are 82 handled.187 Most states give the employee priority to file a suit against the third-party, but others give the employer priority.188 Some states force employees to elect between workers’ compensation and a tort suit against a third-party tortfeasor (thus giving the employer the right to file a suit against a third-party if the employee chooses workers’ compensation).189 Yet other states allow the employer and employee to file suit against a third-party simultaneously, with consolidation requirements differing by state.190 Regardless of the state’s procedural handling of subrogation, if an injured employee sues a third-party, the employer has a subrogation right against any judgment the employee receives, up to the total cost of workers’ compensation benefits provided to the employee. If the employee chooses not to sue the third-party, the employer may sue in its own right and recover the costs of workers’ compensation directly from the thirdparty tortfeasor. Any judgment that an injured employee recovers that does not compensate for workers’ compensation covered injuries is not subrogated to the employer, as this judgment does not constitute double
185 186 187 188
82 Am Jur 2d, Workers’ Compensation § 460. Ibid. Larson/Larson (fn 1) § 116.01, at 1. Compare Ala Code § 25-5-11, with Annotated Code of Maryland (Md Code Ann), Labor & Employment Institute § 9-902. 189 See Minn Stat § 176.061. 190 See, eg, Cal Lab Code § 3852; Wis Stat § 102.29. Joinder is not universally permitted though, depending on the specific statute. Larson/Larson (fn 1) § 116.05.
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recovery for the employee.191 Thus, a recovery for property damage suffered during the accident is not subrogated because it is not compensable under workers’ compensation.
H.
Interaction with general social welfare provision and private insurance
83 Worker’s compensation overlaps with several other more general social welfare programmes, including Social Security Disability Insurance (SSDI), Medicare, long- and short-term state disability benefits, and the worker’s own private insurance. The general rule is that double recovery is not allowed, and therefore benefits awarded by one agency or program will in most cases be offset by the amount provided by workers’ compensation. 84 Workers’ compensation is the primary fund for injured employees, while other federal and state programs are secondary. An employee is eligible for workers’ compensation benefits from the first day of disability preventing employment. Employers are obligated to provide medical benefits in a timely manner. SSDI is only available for totally disabled workers who have a substantial work history, after a waiting period of five months.192 Medicare benefits for injured employees do not begin until 29 months after the injury, and do not cover all medical services an injured worker may require.193 By statute, Medicare does not pay for medical expenses for which ‘payment has been made or can reasonably be expected to be made under a workmen’s compensation law.’194 Private health insurance ordinarily should not be a first resort for an employee because the amount recoverable from the employer may be reduced if the employee did not allow the employer to provide timely medical care. Often private health insurance contracts contain clauses limiting the insurer’s liability if a worker is eligible for workers’ compensation benefits.195 85 Wage replacement programs for non-occupationally related disabilities are available in a few states,196 but benefits are only due to injured 191 See Colorado Compensation Insurance Authority v Jorgensen, 992 P 2d 1156, 1162 (Colo 2000). 192 US Social Security Administration, Office of Policy, Workers’ Compensation, Social Security Disability Insurance, and the Offset: A Fact Sheet by V Reno/C Thompson Williams/I Sengupta, available at . 193 National Academy of Social Insurance (fn 166) at 41 f. 194 42 USC 1395y(b)(2)(A)(ii). 195 See 40 ALR 3d 1012. 196 Larson/Larson (fn 1) § 156.04. California, Hawaii, New Jersey, New York, and Rhode Island.
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employees who have worked a certain amount of time and are often only funded through employee contributions and generally only cover lost wages.197 Except where an employer agrees or is obligated to contribute to a short-term disability fund, benefits are financed entirely by employees’ contributions and employees must have contributed a certain amount and worked for a certain length of time to receive short-term benefits.198 Additionally, about a third of private-sector employees are covered under long-term disability benefits, but these are normally coordinated with Social Security and workers’ compensation, and thus reduce the amount an injured worker receives from workers’ compensation and Social Security, changing the sources of the injured employee’s benefits, and not the amount. Thirty-five states pay workers’ compensation without regard to SSDI, 86 which reduces Social Security payments to the injured worker by the amount received from workers’ compensation.199 Other states, including New York, New Jersey, and Florida, offset workers’ compensation benefits by the amount employees receive in SSDI benefits, thus allowing insurers and employers to save money at the expense of the federal government.200 Unemployment benefits are usually unavailable to workers’ compensation recipients in most states.201 Private health or unemployment insurance are generally not a basis for offsetting workers’ compensation benefits, but many insurance policies specifically deny coverage for work-related injuries if the employee is covered by workers’ compensation.202 Health care providers, insurers and government agencies that provide 87 services or support to an injured employee have a right to reimbursement from the employee’s workers’ compensation benefits. Medicare,203 Medicaid,204 and Veteran’s Administration205 are empowered by federal law to seek reimbursement for services provided that workers’ compensation
197 B Gifford et al, Comparing Lost Work Days under Workers’ Compensation and Shortterm Disability, Evidence from IBI’s Disability Data, in: Utterback/Schnorr (fn 168) 141. 198 Ibid. See National Academy of Social Insurance (fn 166) 40 f. 199 Larson/Larson (fn 1) § 157.03. 200 This anomaly is the result of ambiguous federal statutory language that was amended in 1981, but after being corrected, a provision was included that grandfathered those states that had already taken advantage of the drafting error. See US Social Security Administration (fn 192). 201 Larson/Larson (fn 1) § 157.02. 202 See 40 ALR 3d 1012. 203 Modern Workers’ Compensation § 206:4, available via Westlaw at MWC § 206:4. 204 Ibid, § 206:5. 205 Ibid, § 206:3.
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would otherwise cover. Agencies and organisations seeking reimbursement must file a lien against a worker’s benefits with the workers’ compensation commission, which determines the legitimacy and amount of the lien.206 The commission will also give priority to certain liens over others and may have the right to reduce the amount of a lien.207
I.
Interaction with employers’ liability
88 The purpose of workers’ compensation is to replace and not supplement tort remedies an injured employee may have against his employer. Thus, as discussed above, in limited circumstances when an employer fails to comply with the workers’ compensation statute, or intentionally injures employees, an employee may be able to sue in tort, but will not recover both workers’ compensation and tort benefits. In some states, such as Texas (where workers’ compensation is voluntary for employers), an election of remedies between tort and workers’ compensation by the injured employee is permitted by law.208 Other tort remedies such as the so-called ‘dual capacity doctrine’, which allows injured employees to sue employers when the employer occupies a distinct second legal persona to the employee, apart from employer, have become obsolete and are no longer recognised.209
III. Employers’ Liability A.
Classification
89 In the limited circumstances when an employee may sue his employer for an injury, the action will lay in tort. An employer, like anyone, has a duty of care in how it conducts its activities and must act reasonably. Its employees are one group to whom the employer owes a duty of care. An injured employee, when he can sue his employer, sues the employer in tort for breach of the employer’s duty of care. To the extent that an employee is due other protections by virtue of a contract with the employer, he may sue in contract.
206 Ibid, § 206:2. 207 Ibid, § 206:1. 208 82 Am Jur 2d, Workers’ Compensation § 95. See Coca-Cola Bottling Co v Super Ct, 286 Cal Rptr 855 (Cal Ct App 1991). Further, an unsuccessful tort suit does not necessarily bar a future workers’ compensation claim or vice versa. 209 82 Am Jur 2d, Workers’ Compensation § 55.
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B.
Elements of liability
An employer may be liable in tort for an injury suffered by an employee 90 normally covered under workers’ compensation if the employer has failed to maintain workers’ compensation coverage as mandated by law.210 In such a case the employer is usually denied the defences of contributory negligence or assumption of the risk. Employers may also be subject to other civil or criminal sanctions for failure to maintain coverage. What is more, in some states the employer will be presumed negligent if it failed to carry proper workers’ compensation coverage and may bear the burden of proof to show it was not negligent.211 Even in this circumstance, the employer is not subject to strict liability for employee injuries though the employer may still present evidence to show that something other than employer negligence caused the employee’s injuries. Thus, an employer may present evidence to show that an injured employee was intoxicated and thus outside the scope of his employment at the time of the injury, preventing recovery by the employee.212 As previously discussed, certain injuries that might normally be covered 91 under workers’ compensation, but for the employer’s intentional tort, allow employees to sue in tort. Most states allow employees to sue in cases of sexual harassment,213 but differ as to what other employment-related injuries may be litigated outside of workers’ compensation. As a matter of public policy, it would be unfair to allow employers to intentionally injure their employees and for the employees to have no tort remedy.214 Usually injuries that are not exclusively covered by worker’ compensation are said to not be ‘accidents’ within the meaning of the applicable workers’ compensation statute. The employer must have personally engaged in the tortious conduct for the claim to stand.215 The vast majority of states recognise this exception but are split as to whether the exception is created via statute or case law. 210 Ibid, § 54. See Hernandez v Chavez Roofing, Inc, 286 Cal Rptr 919, 920 (Cal Ct App 1991). 211 See, eg, Alaska Stat § 23.30.080(b); Cal Lab Code § 3708; Iowa Code § 87.21; Modern Workers’ Compensation § 102:6, available via Westlaw at MWC § 102:6. 212 Modern Workers’ Compensation § 102:6, available via Westlaw at MWC § 102:6. 213 See 51 ALR 5th 163. 214 As one court stated, ‘It would be anomalous to permit a defendant which, as in this case, acting through its officer assaulted the plaintiff herein, to say, “I can assault you with impunity and the only remedy you have is to take Workmen’s Compensation which I have provided for you.”’ Garcia v Gusmack Restaurant Corp, 150 New York Supplement, Second Series (NYS 2d) 232, 233 (NY City Ct 1954). 215 Eg, Fretland v County of Humbolt, 82 Cal Rptr 2d 359 (Cal Ct App 1999); Kandt v Evans, 645 P 2d 1300 (Colo 1982); Brown v Winn-Dixie Montgomery, Inc, 469 So 2d 155 (Fla Dist Ct App 1985). See Larson/Larson (fn 1) § 103.01.
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92 Thus, employers are generally not held vicariously liable for the acts of employees who intentionally injure fellow employees. For example, if one employee strikes a second employee at work because of a work-related matter, the employer must provide workers’ compensation to the injured employee, but will not be liable in tort. This is because, as far as the employer is concerned, one employee intentionally injuring another is akin to a risk of business and thus is accidental.216 Even when it is a supervisor who intentionally injures the employee, as long as the supervisor cannot be considered the alter ego of the employer, which would mean the employer itself had intentionally injured the employee, the employer will not be liable in tort.217 Additionally, employers are not usually liable for attacks by non-employees on employees, as this also is considered to be an accident by workers’ compensation legislation.218 93 Even the intentional non-compliance with health and safety workplace regulations will in most instances not overcome the exclusivity of workers’ compensation.219 Failure of an employer to comply with statutory requirements does not constitute intent to injure an employee, and thus any injury suffered due to non-compliance is still an accident.220 An injured employee may be due extra compensation in such a circumstance, however,221 as incentive for the employer to comply with safety regulations. Similarly, neither the Occupational Safety Health Administration (OSHA), the most far-reaching federal workplace regulator, nor its enacting legislation222 create a private right to sue employers for violation of OSHA regulations.223 94 Where an injury is outside the scope of workers’ compensation, the normal principles of fault will determine the employer’s liability. The common law defences of contributory negligence and assumption of the risk are available to employers. 95 Workers’ compensation statutes are interpreted liberally so that injured employees are not unjustly denied benefits. The necessary corollary to this maxim is that whenever an employee is injured from an accident or
216 217 218 219 220
Ibid, § 103.06. See, eg, Daulo v Commonwealth Edison, 938 F Supp 1388, 1405-06 (ND Ill 1996). 82 Am Jur 2d, Workers’ Compensation § 66. Ibid, § 64. See Garibaldi v Anixter, Inc, 492 F Supp 2d 290, 292 f (WDNY 2007); Modern Workers’ Compensation § 102:21, available via Westlaw at MWC § 102:21. 221 Eg, Cal Lab Code § 4554; Connecticut General Statutes (Conn Gen Stat) § 31-307(b). 222 Occupational Safety and Health Act of 1970, 29 USC §§ 651–678. 223 61 Am Jur 2d, Plant and Job Safety § 18.
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disease arising out and in the course of employment the employee loses the ability to sue the employer in tort.
C.
Scope of protection
If an injury does not fall within workers’ compensation coverage an 96 employee is not barred from suing his employer in tort, but the employee must establish a recognised claim in order to sue. Because workers’ compensation statues are read liberally, it will be rare for an employee to suffer a bodily injury but not fall under workers’ compensation. As previously discussed in nos 30–33, sexual harassment victims are eligible 97 for workers’ compensation benefits in most states, but employees retain rights to sue in tort as well. An employee wishing to file discrimination or harassment claims against her employer can only do so if the discrimination is on the basis of race, colour, religion, sex (including sexual harassment), national origin, age, disability, or genetic information,224 categories in which discrimination is prohibited by federal and state statutes. An employee suffering from sexual harassment or other prohibited discrimination has a limited time frame to file a complaint with the Equal Employment Opportunity Commission (EEOC), usually 180 days from the date of the discrimination. A ‘right to sue’ letter, which is given as a matter of course, is needed in order to file a suit, if the EEOC does not file its own suit.225 Dignitary injuries are not considered ‘accidents’ by many workers’ com- 98 pensation statutes and thus employees who suffer these injuries will in most instances be able to sue employers in tort. Finally, as discussed above, an employee whose property is damaged in the 99 course of employment is not barred from suing her employer in tort for that damage. Unless the property is an artificial limb, which falls exclusively under workers’ compensation or a pre-existing contract exists prohibiting such a suit, an employee may sue to recover for property tortiously damaged. Pure economic loss is generally not recoverable under American tort law.
224 Eg, Title VII of the Civil Rights Act of 1964, 42 USC 2000e; Civil Rights Act of 1991, Public Law No 102–166 (codified as amended in scattered sections of 42 USC); Title II of the Genetic Information Nondiscrimination Act of 2008, Pub L No 110–233, 122 Stat 881 (codified as amended in scattered sections of 29, 42 USC). 225 US Equal Employment Opportunity Commission, Federal Laws Prohibiting Job Discrimination Questions and Answers (2009), .
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D.
Heads and levels of damages
100 An injured employee’s tort suit against her employer is treated the same as any other tort suit. A successful plaintiff may recover damages for past and future wage losses, healthcare and rehabilitation costs, and pain and suffering. In addition, punitive damages may be recovered in rare cases when the tortfeasor has acted with reckless disregard, wantonly, or willfully. Unlike workers’ compensation, however, tort suits are intended to compensate fully workers for any damage they have suffered.226 Tort damages are awarded in a lump sum and are not subject to continuing oversight by any authority. 101 Compensatory damages include a number of specific elements to which a successful plaintiff is entitled. Past pecuniary losses include medical and rehabilitation costs as well as lost earnings.227 Successful plaintiffs will also recover future lost earnings if lost earning capacity extends beyond the trial. Plaintiffs may also recover for pain and suffering. Courts make individualised determinations in each case as to the appropriate amount for each head and in most cases discount the award for future losses to reflect the time-value of money.228 102 In the case where an employee dies, his estate has the right to sue the employer in a survival action for the same damages as the employee would have been entitled to had he lived. In some states pain and suffering may not be recoverable in a survival action.229 Dependents may also bring an action for wrongful death for pecuniary loss they have suffered as a result of losing financial support from the decedent, as well as non-pecuniary losses stemming from the loss of relationship.
E.
Administration of claims
103 Suits against employers are handled in civil courts. The rules of civil procedure are applicable and all appeals are handled in accordance with the rules of appellate procedure. As with all tort cases, the time and cost of resolution will depend on the court’s backlog of cases, the complexity of the issues at bar, and the willingness of the parties to go to trial as opposed
226 MA Franklin/RL Rabin/MD Green, Tort Law and Alternatives: Cases and Materials (8th edn 2006) 698 f. 227 Ibid, at 706. 228 Ibid, at 708 f. 229 Ibid, at 728 f. See Williamson v Plant Insulation Co, 28 Cal Rptr 2d 751 (Cal Ct App 1994).
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to reaching settlement. As of 2009, the median time from filing to disposition for civil suits in federal court was almost nine months.230 For cases that went to trial the wait time was over two years.231 Additionally, almost 12 % of cases were still pending three years after being filed.232
F.
Rights of recourse
An employee may sue both fellow employees and third parties, such as 104 equipment manufacturers, who cause the employee’s injury. As previously discussed, even under most workers’ compensation statutes, an injured employee has the right to sue third parties responsible for the employee’s injury.
G.
Interaction with social welfare systems and private insurance
Unlike workers’ compensation, where double recovery is strictly prohib- 105 ited, the collateral source rule in tort law allows what might be called double recovery. Under the collateral source rule a plaintiff may recover full damages even if another ‘collateral’ source has already paid for the damage.233 This is most applicable in cases in which an injured employee’s personal health insurance has already paid for the employee’s medical bills. In providing full damages, the rule denies tortfeasors a windfall because the plaintiff obtained insurance ahead of time. In reality, because the injured plaintiff paid for the insurance, the plaintiff paid for her own medical bills. To not allow her to recover would be unjust. Although at least one court has said that social legislation benefits that the plaintiff did not directly pay into,234 such as Medicaid, should not be subject to the rule, others have held that all social legislation benefits should be included under the rule.235 Of course, virtually all first-party insurance contracts have subrogation clauses that permit the insurer to recover its costs from whatever the plaintiff recovers from the defendant.
230 United States Courts, Federal Court Management Statistics 2009, District Courts, . 231 Ibid. 232 Ibid. 233 Arambula v Wells, 85 Cal Rptr 2d 584, 586 (Cal Ct App 1999). 234 Bozeman v State, 879 So 2d 692 (La 2004). 235 77 ALR 3d 366 § 2.
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106 We have found no cases suggesting that social welfare agencies, including SSDI, Veteran’s Affairs benefits, or Medicare have a right of recourse against employers for injuries to employees. Medicaid may have a right of recourse against third-party tortfeasors depending on the state.236 In at least one state an injured employee’s first-party insurer has the right to sue in contract the employer or its insurer for the recovery of benefits provided to the employee by the employee’s insurer.237
H.
Insurance
107 Employers’ liability insurance is usually written in conjunction with workers’ compensation coverage.238 These policies cover employers in the limited circumstances when employees are injured on the job, but are not covered under workers’ compensation.239 Depending on the state and individual policy, employers’ liability insurance excludes coverage for discrimination and intentional torts.240 Employers’ liability policies cover a small field because workers’ compensation has occupied nearly the entire field of employee occupational injury.
IV. Evaluation and Conclusions 108 Workers’ compensation is only available to individuals who work for employers required to provide workers’ compensation (the vast majority of employers) and whose injuries arise out of employment. Employment, although not required to be formal, is a vital and necessary requirement for compensation. Workers’ compensation’s original intent was to ensure that employers pay for the injuries caused by their operation. The programme is of limited purpose. If a person is not employed or injured on the job, the harm is not the result of commercial enterprise and thus not compensated. Although the United States does offer limited social welfare programmes in the form of Medicare, Medicaid, Social Security and other state and federal programmes, workers’ compensation is an insurance programme not social welfare. To the extent that some may wish to extend compensation to all injured persons, this is not an argument about 236 See, eg, Fla Stat § 409.910. 237 NY Insurance Law § 3420(b)(1). See Lang v Hanover Insurance Company 3 NY 3d 350 (NY 2004). 238 43 Am Jur 2d, Insurance § 696. 239 Ibid. 240 Ibid, § 698.
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workers’ compensation and its basis but about the welfare state more generally.
A.
Compensation
Wage replacement rates through workers’ compensation are of adequate 109 breadth, at least as a statutory matter, as workers compensation covers the vast majority of employees in the United States. Data suggest though, that less than 60 % of employees who lose work days due to occupational injury file for workers’ compensation benefits.241 While 16 % of non-filers feared some type of employer retribution if they filed for benefits, most employees gave the reason for not filing as the fact that they did not view their injury as serious enough for medical attention.242 Some studies suggest that the process of dealing with workers’ compensation and the hostility that this sometimes entails drives some employees to not file claims as well.243 Considering the energy required to navigate the workers’ compensation system and the potential tension with one’s employer, this may be a rational response for many workers with minor injuries. Whether workers’ compensation compensates injured workers at ade- 110 quate levels is a more contentious issue. The Social Security Administration published a report in 2004 criticising wage replacement rates as inadequate and leaving many injured workers struggling to get by.244 While generally rising over the last 30 years,245 by most measures workers’ compensation benefits were not seen as sufficient to sustain many workers and their families.246 According to the report, 11 states’ workers’ compensation rates left injured workers below the statutory poverty line.247 Other studies found that only one state provided benefits equal to those prescribed by the Model Workers’ Compensation Act adopted in 1974 by the Council of State Governments.248 In the end, however, evidence does not
241 J Biddle/K Roberts, Claiming Behavior in Workers’ Compensation, 70 Journal of Risk and Insurance (J Risk & Ins) 759, 764 f (2003). 242 Ibid. 243 L Strunin/LI Boden, The Workers’ Compensation System: Worker Friend or Foe? 45 American Journal of Industrial Medicine (Am J Indus Med) 338, 343 (2004). 244 US Social Security Administration, Office of Policy, Benefit Adequacy in State Workers’ Compensation Programs (2004), available at . 245 Abraham (fn 2) at 64. 246 US Social Security Administration (fn 244). 247 Ibid. 248 Ibid (Pennsylvania).
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exist to determine whether the workers’ compensation system, at its current benefit levels, does better at keeping occupational injuries at a socially optimal level than would the tort system. 111 Whether these compensation rates are too low to fulfill the purpose of workers’ compensation is of course a matter of one’s point of view. While employee advocates argue that compensation rates are too low, employers claim certain compensation practices, such as replacing two-thirds of a permanently partially disabled workers’ salary, are too generous.249
B.
Prevention
112 The incentives for large employers to prevent employee injuries are mostly those of self-interest. More accidents mean fewer productive workers and less output in an employer’s business. More accidents also mean higher workers’ compensation insurance premiums.250 Employers may also seek to maintain a good reputation among community members and potential employees, which provides additional motivation to reduce employee accidents. Even though compliance or non-compliance with state or federal health and safety regulations is not relevant with regard to workers’ compensation, large employers face a serious threat of regulatory oversight and sanctions for violations of safety codes. 113 For small employers, enforcement of health and safety regulations is more problematic. Regulators often do not have the resources to supervise small employers and employers operating on small margins may be tempted to cut corners in order to reduce costs. Union leaders are especially vocal about the inability of regulators to cite more employers for dangerous working conditions.251 114 Whether more generous workers’ compensation benefits lead to greater safety and injury prevention, due to fear of higher insurance premiums, is a question that has proved difficult for scholars to answer. While some studies show a positively correlated relationship between the two factors, it is a weak one and it is not known whether fewer claims in high benefit
249 Ibid. See LI Boden/M Galizzi, Economic Consequences of Workplace Injuries and Illnesses: Lost Earnings and Benefit Adequacy, 36 Am J Indus Med 487, 502 (1999). 250 See 2 Compensation and Benefits § 22:117, available via Westlaw at HRS-CB § 22:117; ALI Reporters’ Study, Enterprise Responsibility for Personal Injury, vol I: The Institutional Framework 284 (1991). 251 See: Are OSHA Penalties Adequate to Deter Health and Safety Violations? Hearing on HR 2067 Before the H Comm on Education and Labor, 111th Cong 1 (2009) (statement of Peg Seminario, Director Safety and Health, AFL-CIO).
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states is due to fewer accidents or just more rigorous management of claims by insurers.252
C.
Overall costs
Workers’ compensation costs, while not inconsequential, are not exorbi- 115 tant for most employers. Data show that for every $ 100 in wages, private employers incur only $ 2.13 in workers’ compensation costs.253 These costs are considerably higher for high risk employers such as roofers and miners. Cost to employers has shrunk since the early 1990s as a result of cost containment measures enacted at the state level, even as the overall costs of the system have continued to grow.254 These reforms often revolved around standardising medical costs which had begun to grow at high rates. Overhead costs for workers’ compensation are relatively high, with only 116 about 65 cents of each dollar paid by employers going to employee benefits. By comparison, however, several reports have shown that attorneys’ fees and administrative costs take up to 60 % of plaintiffs’ awards.255 First-party insurance carriers have lower overhead costs, often between 10 % and 20 %, but do not have to litigate who receives benefits.256 Estimates of SSDI’s administrative costs were considerably lower, coming to 2.3 % of total expenditures.257
252 JF Burton, Jr, A Brief History of Economists’ Research on the Effect of Workers’ Compensation on Safety and Health, in: Utterback/Schnorr (fn 168). 253 National Academy of Social Insurance (fn 166) 35. 254 Total benefits paid by workers’ compensation were under $ 40 billion in 1990, compared to almost $ 58 billion in 2008. National Academy of Social Insurance (fn 166) 14. 255 RH Heidt, When Plaintiffs are Premium Planners For Their Injuries: A Fresh Look at the Fireman’s Rule, 82 Indiana Law Journal (Ind LJ) 745, 748 no 11 (2007); Towers Perrin, 2008 Update on US Tort Cost Trends 8 (2008), available at ; TA Brennan/MM Mello, Patient Safety and Medical Malpractice: A Case Study, 139 Annals of Internal Medicine 267, 268 f (2003). 256 DB Sherlock, Sherlock Co, Blue Cross Blue Shield Administrative Costs: A Review of 2008 Results 8 (2009), available at ; Merrill Matthews, The Council for Affordable Health Insurance, Medicare’s Hidden Administrative Costs: A Comparison of Medicare and the Private Sector 9 (2006), available at . 257 A Summary of the 2010 Annual Social Security and Medicare Trust Fund Reports 4 (2010), .
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D.
Interaction between workers’ compensation and private law
117 There is little interaction between workers’ compensation and employers’ liability in the United States. Workers’ compensation occupies nearly the entire field of liability of an employer for the injuries of its employees. Furthermore, in the rare instance when an injured employee may choose between workers’ compensation and tort law, employees must elect and cannot pursue both options. 118 Excluding an employee from suing his employer even when the employer tortiously, although not intentionally, caused the injuries to the employee is part of the essential compromise in workers’ compensation. The idea behind workers’ compensation is that it reduces uncertainty for both the employer and employee and reduces tensions that might otherwise arise through a tort suit. 119 Even so, as was discussed in nos 30–33, many states have decided against exclusivity for injuries resulting from sexual harassment, among other claims, as a matter of public policy.258 120 Employees would generally gain from non-exclusivity though. While transactional costs would almost certainly go up,259 employees with strong claims would be able to capture higher tort damages, while those with weaker claims could still pursue workers’ compensation claims. But, under binding non-exclusivity, where employees must irrevocably choose one route to the exclusion of the other, some employees would be left without benefits if they decided to forgo workers’ compensation and lost in court. 121 And, where a slow or inefficient workers’ compensation system may take as long as a month or two to deliver benefits, the tort system often takes years to resolve even relatively simple matters. What is more, by some estimates, over half of the amount won in tort suits goes to administrative costs and attorneys’ fees.260 Even with these disadvantages, employees are better off and employers worse off with a non-exclusive compensation system, and the essential bargain of workers’ compensation is lost.
258 See generally DA Ballam, The Workers’ Compensation Exclusivity Doctrine: A Threat to Workers’ Rights under State Employment Discrimination Statutes, 27 American Business Law Journal (Am Bus LJ) 95 (1989) (discussing the problems with workers’ compensation exclusivity regarding discrimination caused injuries). 259 TA Eaton, Revisiting The Intersection of Workers’ Compensation and Product Liability: An Assessment of a Proposed Federal Solution to an Old Problem, 64 Tennessee L Rev 881, 897 (1997). 260 See Heidt, 82 Ind LJ 745, 748 no 11 (2007); Towers Perrin, 2008 Update on US Tort Cost Trends 8 (2008) (http see fn 255); Brennan/Mello, 139 Annals of Internal Medicine 267, 268 f (2003).
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E.
Plans for reform
The workers’ compensation model has been remarkably stable over time. 122 No major reforms have been proposed to change the basic structure of what constitutes a compensable injury or the category of benefits received for that injury. What changes have occurred, aside from cost-containment measures discussed below, are more modest issues such as the risk test used to determine a compensable injury or the level of benefits received under workers’ compensation. There has been a drive in most states to contain employer costs. This has 123 been especially true with regard to medical costs. Between 1995 and 2003 California workers’ compensation costs rose from $ 9 billion to $ 29 billion annually, with medical costs per claim rising by 250 % during the same time span.261 In 2004, California, to rein in costs, enacted reform that, among other things, capped temporary total disability benefits, created medical provider networks, and instituted return to work incentives for both employers and employees.262 In 2007, New York similarly passed an expansive workers’ compensation reform bill to limit the time for which benefits are paid to injured workers and to crack down on employer fraud.263 The effort to reduce costs is likely to continue with medical costs continuing to increase faster than inflation.
F.
Overall quality of each system independently and in combination
It is our view that workers’ compensation has generally been a success for 124 both employers and employees. Employers are pleased with the ability to plan for and insure against payment to injured employees. Employees are relieved to know that an injury, even a career-ending one, will not result in them or their families becoming destitute. Both employers and employees benefit from the no-fault basis for awarding compensation and the resulting reduction in adjudicative costs. Although many still view workers’ compensation as a vital and necessary programme, parties on all sides take issue with aspects of the current operation and configuration of workers’ compensation programmes; reforms to reduce costs are continually proposed. 261 Abraham (fn 2) at 65. 262 2004 California Legislative Service Ch 34 (SB 899) (West). 263 Seven Greenhouse/NR Kleinfield, Deal in Albany Overhauls Pay for Worker Aid, New York Times, 28 February 28 2007, at A1.
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125 Ironically, it is injured employees who are more likely to express frustration with the workers’ compensation system today. When workers’ compensation laws first came into force in the early 20th century, the tort system was an unforgiving forum for injured workers. While industrial accidents had increased greatly with the industrialisation and urbanisation of society, courts provided employers with a series of common law defences that left many injured employees with no means of support or protection. Employers were able to defeat many tort claims by invoking the three common law defences of assumption of the risk, contributory negligence, and the ‘fellow servant’ rule. Assumption of the risk holds that employees know the dangers of the work when they begin and hence relieve the employer of any liability from such risks. Contributory negligence, now operative in only four states, bars recovery for plaintiffs if defendants can prove that employees were at least partially responsible for their injuries. The ‘fellow servant’ rule, almost entirely abolished, held that if a co-worker of the injured employee was to blame for the injury to the worker the employer was not liable. By some accounts, as many as 83 % of injured workers received no compensation.264 Workers’ compensation legislation was a direct reaction to modern industry producing a vastly greater toll of occupational injury and yet avoiding most liability. Workers’ compensation was seen as a great advancement in protecting injured employees. 126 Today’s tort system is much more amenable to tort claims against one’s employer. The ‘fellow servant’ rule, a common law defense, has been completely abolished. Assumption of the risk is no longer nearly as robust as it was a century ago and has largely been absorbed by the comparative negligence reform now adopted in nearly every modern state. Combine this more appealing legal environment with the larger tort damages awards, and many employees would prefer to sue their employers in tort than take a guaranteed workers’ compensation award. Thus, it is more likely that injured employees, especially those with more serious injuries and stronger claims of employer negligence, rather than employers, will be the party seeking to avoid worker’s compensation in those instances where that is possible. 127 Fraud is a major cause of concern in modern workers’ compensation. The National Insurance Crime Bureau estimates that workers’ compensation
264 Larson/Larson (fn 1) § 2.03.
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fraud costs insurers $ 7.2 billion a year.265 While employee fraud, in the form of faked or exaggerated injuries or improper delay in returning to work, is certainly a problem, employer fraud is now recognised as a significant problem as well. Employer fraud can take many forms, including failure to purchase insurance coverage, misclassifying employees to avoid providing coverage, providing misleading evidence about the nature of a job to workers’ compensation commissions, or similar misrepresentations. Some evidence suggests that employer fraud may be the larger problem; in 2005, Florida reported only 178 workers’ compensation fraud convictions out of over 54,000 workers’ compensation claims, of which 130 were against employers.266 Whether this is a reflection of the difficulty of detecting and prosecuting workers’ compensation fraud or of the overstated nature of the problem by insurers is not clear. Some scholars and groups have asserted that the workers’ compensation 128 system should be abolished entirely, either by subsuming it into Social Security Disability Insurance267 or by creating a new public health initiative through federal legislation.268 The cost of the system and worker dissatisfaction when interacting with the workers’ compensation system are usually the reasons given for abolishing the system. These proposals have not been adopted by any states, though, as it is not at all clear that another system would provide benefits to injured workers any more effectively or efficiently. Workers’ compensation, while in need of reform in many states, has had 129 great stability and will remain in place for the foreseeable future. With nearly 3.3 million reported workplace injuries in 2009, workers’ compensation plays a significant role in many American workers lives.269 Reforms 265 Travelers Indemnity Company, Risk Control: Managing Workers’ Compensation Fraud (2008), available at . 266 LT Jernigan, Jr, LexisNexis Communities: Workers’ Compensation Law Community Powered by Larson’s, Employer Fraud in Workers’ Compensation – Just How Significant is it? (23 December 2008), . 267 American Public Health Association, Workers’ Compensation Reform 5, available at . 268 J LaDou, Occupational and Environmental Medicine in the United States: A Proposal to Abolish Workers’ Compensation and Reestablish the Public Health Model, 12 International Journal of Occupational and Environmental Health 154 (2006). 269 Bureau of Labor Statistics, US Dept of Labor, USDL-10-1451, Workplace Injury and Illness Summary (2009), available at .
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in the future will focus on providing employers and employees with lower cost, greater enforcement of mandatory coverage laws, and more effective delivery of medical care. Employers’ complaints of overrunning costs and employees’ desire to see more generous benefits have been and will remain the primary causes of contention and reform.270
270 Abraham (fn 2) at 64 f.
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The European Coordination of Employers’ Liability and Workers’ Compensation Thomas Thiede
I.
Introduction
Beyond the migration of workers from structurally weak countries and 1 from occupational fields with connections to foreign countries such as transportation or tourism, entirely new forms of migrant labour are increasingly gaining importance in today’s professional life in Europe and elsewhere: the vast and rapid developments in information technology, the steady increase of cross-border exchange of goods and services and the necessity of a global perspective for companies demand a growing involvement in foreign countries be it a branch office, a project abroad or international co-operation within the framework of a joint venture. Simultaneously, new careers abroad are possible giving new opportunities for companies and employees alike. Such internationalisation of employment of course involves dangers and risks for all parties concerned; risks which materialise mostly in the area of workers’ compensation and employers’ liability. In this context the social safeguarding of the employee must be secured 2 and a number of relevant questions arise. As the European Union does not provide material rules on cross-border employment but rules on the coordination of the Member States’ social security schemes regarding inter alia workers’ compensation, rules on the law applicable must be envisaged. Accordingly, questions to be addressed in this contribution include which state’s system of social security applies under which circumstances and how such questions are adjudicated. Correspondingly the law applicable and the international jurisdiction for questions of employers’ liability and when damages should be awarded to expatriates under these conditions are to be addressed. Ultimately, regard must be taken of the connections between both legal institutes when recourse rights of workers’ compensation institutions are assessed.
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II.
Empirical Evidence
3 Reliable empirical evidence for the fact-patterns addressed by this report was virtually impossible to gather since most data collections refer either to a national picture only and/or do not distinguish between migrating EU nationals, (ie persons insured under a Member State’s scheme other than their place of employment, etc) and people coming from outside the European Union. This difference, which relates to the right to free entry and free movement in the EU Member States, is often omitted and both terms ‘(intra-EU) migrants’ and ‘immigrants’ are used interchangeably.1 4 In any case a clear trend regarding intra-EU migrants is the significant increase in their number in the last decade which is clearly related to the EU integration given the free movement of people for the accessing countries and the establishment of an enlarged unified European labour market. As regards the numbers of migrants, Eurostat (European Commission, Statistical Office of the European Union) data from the first quarter of 2006 indicates that 1.5 % of EU-25 citizens live and work in a different Member State from their country of origin.2 Cross-border commuting between Member States (with no residence change) has been steadily increasing over recent years, but still remains quite low. On average, only 0.2 % of the European working population commutes between Member States.3 As the Eurostat’s statistics on accidents at work with an absence of four days or more reveal a total of 3,906,877 cases for 20064 this would amount to approximately 60,000 cases per year where problems of cross-border workers’ compensation and employers’ liability may arise. 5 These figures from 2006 are obviously not current and are expected to be significantly higher in the present day following new policies allowing
1 However, Eurostat seems to be aware of the problem of measuring intra-EU labour mobility. See A Franco, Using the European Union Labour Force Survey to get Information on Migrants and their Descendants, in: Comité consultatif européen de l’information statistique dans les domaines économique et social, Migration Statistics – Social and Economic Impacts with Respect to the Labour Market (2005) 55 ff. One may also suggest that in face of the struggles related to the EU enlargement such statistics are politically not feasible. 2 See European Agency for Safety and Health at Work, Literature Study on Migrant Workers (2007) 8 . 3 See European Commission, How Mobile is the European Workforce? Facts & Figures (2006), . 4 See: Number of Accidents at Work by Economic Activity, Severity and Sex (hsw_aw_ nnasx) ; see also European Commission, EU Strategy 2007–2012, .
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free movement of the at the time ‘new’ EU-105 nationals to work in the ‘old’ EU-156 countries. Originally only the UK, Ireland and Sweden allowed EU-10 migrants to enter and work after these countries joined the EU whereas Finland, Portugal and Spain allowed free movement only after 1 May 2006, but the remainder of the EU-15 countries still maintained restrictions. Since the beginning of 2011 complete freedom of movement for workers from the Member States which joined in May 2004 is guaranteed, eventually resulting in a significantly higher intraEuropean migration.
III. Workers’ Compensation A.
Limitation to national territory
The industrial development in many nations in the late 19th century was 6 accompanied by the establishment of modern social security systems7 as the decomposition of pre-industrial forms of social security (eg family and agricultural village structures) forced the development of externalised solutions. Since the general trigger for the creation of these systems was to maintain social justice and peace in nation states, it should come as no surprise that the legislative outcome was purely domestic as well: the socalled welfare state correlated with the nation state and the effects (benefits in kind and cash) were limited to the nationals of the latter.8 As social security law was the result of purely national social policies and primarily focused on the national economy as well as the domestic societal circumstances, it was inherently bound to the territory of the nation state. Due to this ‘nationalism’ of the social security systems, difficulties appeared in cases of individuals who were not domiciled in the nation state of their
5 Ie Cyprus, Czech Republic, Hungary, Malta, Poland, Slovakia, Slovenia, Latvia, Lithuania, and Estonia. 6 Ie Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and United Kingdom. 7 For an ample historical discussion see, EFD Engelhard, Shifts of Work-Related Injury Compensation, in: S Klosse/T Hartlief (eds), Shifts in Compensating Work-Related Injuries and Diseases (2007) 13 ff. 8 Admittedly, benefits were not limited to citizens but to persons domiciled in the respective state, hence the common opinion that those benefits depend on citizenship in the respective state is wrong. However, the fundamental rights to create a domicile in a state and to work there was limited to nationals of that state. See eg arts 11, 12 Grundgesetz (German Constitution/Basic Law, GG). Cf E Eichenhofer, Sozialrecht der Europäischen Union (4th edn 2010) 75 ff; id, Unionsbürgerschaft – Sozialbürgerschaft? Zeitschrift für ausländisches und internationales Arbeits- und Sozialrecht (ZIAS) 2003, 404 ff.
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employment, for example, cross-border commuters and frontier workers. In cases of accidents at work or occupational accidents, these individuals were excluded from all benefits in kind or cash, simply because they were not nationals of the state in which they had paid social security contributions and would accordingly not be entitled to receive benefits.9 7 This nation-state related limitation, better known as the ‘territoriality principle’,10 was rendered anachronistic with the establishment of the European Economic Community (EEC) in 1957. This forerunner of the EU explicitly guarded the free movement of goods, capital, services and people as well as the freedom of establishment11 and aimed at liberating the nation states’ mutually closed markets by creating a Common Market. In such a Common Market cross-border commuters and frontier workers were constitutive and, hence, the social security systems of the Member States had to be coordinated.12
B.
European coordination of social security systems
8 In order to accomplish the objective of a common European market, the free movement of goods, capital, services and people within the EU’s Member States was introduced.13 Nowadays, art 48 TFEU (Treaty on the Functioning of the European Union) highlights the inevitable connection between the four freedoms and the coordination of the Member States’
9 Accordingly, unless bilateral international treaties resolved such problems, frontierworkers and cross-border commuters had also to take out insurance in the country of their domicile. 10 Cf F Pennings, European Social Security Law (5th edn 2010) 4 ff. 11 See arts 2 and 3 of the Treaty establishing the European Economic Community (Treaty of Rome). 12 Initially France and Germany even ventured to make social policy an encompassing issue of EC competency. On those topics and the discussions surrounding the Treaty of Rome see Internationales Arbeitsamt/Bureau de Travail International (IAA/BIT), Soziale Aspekte der europäischen wirtschaftlichen Zusammenarbeit, Bericht einer Sachverständigengruppe/Aspects sociaux de la cooperation économique européene, Rapport d’un groupe d’experts, Studien und Berichte no 46 (1956); D Collins, The European Communities. The Social Policy of the First Phase, vol 2: The European Economic Community 1958–72 (1975); J Lodge, Towards a Human Union: EEC Policy and European Integration (1978) British Journal of International Studies 107; B Henningsen, Politische Rahmenbedingungen einer europäischen Sozialpolitik, in: H Braun/M Niehaus (eds), Sozialstaat Bundesrepublik Deutschland auf dem Weg nach Europa (1990) 167 ff; U Weinstock, Auf dem Weg zur Sozialunion, in: U Weinstock (ed), Neun für Europa. Die EWG als Motor europäischer Integration (1973) 163 ff; id, Europäische Sozialunion – historische Erfahrungen und Perspektiven, in: W Däubler (ed), Sozialstaat EG? Die andere Dimension des Binnenmarktes (1989). 13 And subsequently re-emphasised in art 2 Maastricht Treaty 1992.
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social security systems by stating: ‘The European Parliament and the Council shall … adopt such measures in the field of social security as are necessary to provide freedom of movement for workers; to this end, they shall make arrangements to secure for employed and self-employed migrant workers and their dependants: (a) aggregation, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into account under the laws of the several countries; (b) payment of benefits to persons resident in the territories of Member States.’ Accordingly, any system to be created on the basis of art 48 TFEU must 9 ensure that an individual does not suffer losses in his or her social security protection whilst exercising rights of freedom of movement of workers in the Member States.14
C.
Sources of law
In order to coordinate the Member States’ social security systems under 10 this paradigm, Council Regulation (EC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community was adopted in 1971.15 This Regulation was accompanied by implementing Regulation (EEC) No 574/72,16 which covered the practical implementation (eg competent national authorities, administrative formalities, etc).17 Apart from some provisions in the field of non-discrimination,18 Regulation 1408/71 had a tremendous impact on the Member States19 as the
14
15 16 17 18
19
Moreover, such system must overcome the ‘joint decision trap’ of cooperative federalism being responsible for the impasse of much European policy. Such a situation exists where an unclear and multi-levelled ‘policy entanglement’ arises when a number of state actors (local, state, federal, Union) are trapped into a joint decision within one big subsidy scheme without clear rules and clear responsibilities. See F Scharpf, The JointDecision Trap: Lessons from German Federalism and European Integration, Public Administration 66 (1988) 239; id, Die Politikverflechtungsfalle: europäische Integration und deutscher Föderalismus im Vergleich, Politische Vierteljahresschrift 26 (1985) 323 ff; G Falkner, EG-Sozialpolitik nach Verflechtungsfalle und Entscheidungslücke, Politische Vierteljahresschrift 41 (2000) 279 ff; Pennings (fn 10) 13 f. Official Journal (OJ) L 149, 5.7.1971, 2–50 OJ L 28, 30.1.1997, 1–235. See below no 31. Eg Council Directive (EEC) 86/378 of 24 July 1986 on the progressive implementation of the principle of equal treatment for men and women in matters of social security, OJ L 225, 24.7.1986, 40–42. F Pennings, Inclusion and Exclusion of Persons and Benefits in the New Coordination Regulation, in: M Dougan/E Spaventa (eds), Social Welfare and EU Law (2005) 242 ff.
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Community instrument restricted the national legislative and administrative powers to decide exclusively on main elements of the national social security systems. In addition, the Regulation rules were interpreted in the same way and the Court of Justice of the European Union (CJEU) solved a number of interpretation problems.20 11 In the course of time, the Regulation was extended considerably by amending regulations.21 These amending regulations were often accepted only after lengthy negotiations, sometimes taking several years. Members States ‘tried to avoid and/or limit the costs resulting from changes to the Regulation; and for this reason, changes, if found necessary, often [took] the form of very complicated compromises – often resulting in exceptions to the main rules.’22 Effectively, the relative maturity of the rules and the legislative approach towards their amendment23 rendered the Regulation incomprehensible for its beneficiaries and, hence, was on the verge of seriously losing its main objective: the free movement of workers. 12 In 1998 the European Commission eventually issued a proposal for a new coordinating Regulation24 aimed at replacing Regulation 1408/71. This proposal for simplification and modernisation was a radical and comprehensive attempt with a twofold purpose: to introduce a much shorter coordination instrument, and to modernise the existing coordination rules.25 However, Council and European Parliament were notably less
20 21
22 23
24 25
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Cf art 267 TFEU. See Regulations (EEC) No 2864/72, OJ L 306, 31.12.1972, 1; (EEC) No 1392/74, OJ L 152, 8.6.1974, 1; (EEC) No 1209/76, OJ L 138, 26.5.1976, 1; (EEC) No 2595/77, OJ L 302, 26.11.1977, 1; (EEC) No 1390/81, OJ L 143, 29.5.1981, 1–32; (EEC) No 2793/81, OJ L 275, 29.9.1981, 1; (EEC) No 2001/83, OJ L 230, 22.8.1983, 6; (EEC) No 1660/85, OJ L 160, 20.6.1985, 1; (EEC) No 1305/89, OJ L131, 13.5.1989, 1; (EEC) No 2332/89, OJ L 224, 2.8.1989, 1; (EEC) No 3427/89, OJ L 331, 16.11.1989, 1; (EEC) No 2195/91, OJ L 206, 29.7.1991, 2; (EEC) No 1247/92, OJ L 136, 19.5.1992, 1; (EEC) No 1945/93, OJ L 181, 23.7.1993, 1; (EC) No 3095/95, OJ L335, 30.12.1995, 1; (EC) No 1290/97, OJ L 176, 4.7.1997, 1; (EC) No 1223/98, OJ L 168, 13.6.1998, 1; (EC) No 1606/98, OJ L 209, 25.7.1998, 1; (EC) No 307/1999, OJ L 38, 12.12.1999, 1; (EC) No 1399/1999, OJ L 164, 30.6.1999, 1; (EC) No 1386/2001, OJ L 187, 10.7.2001, 1; (EC) No 859/2003, OJ L 124, 20.5.2003, 1; (EC) No 631/2004, OJ L 100, 6.4.2004, 1. Pennings (fn 19) 242 ff. For an insightful criticism of that approach, see H Koziol, Die Vereinheitlichung des Europäischen Schadenersatzrechtes, in: FS anlässlich des 75 Jahr-Jubiläums der Österreichischen Gesellschaft für Versicherungsfachwissen (2004) 51 ff; id, Rechtsvereinheitlichung auf europäischer Ebene aus privatrechtlicher Sicht, in: MG Faure/H Koziol/ S Puntscher-Riekmann (eds), Vereintes Europa – Vereinheitlichtes Recht? (2008) 48 ff. Proposal for a Council Regulation (EC) on coordination of social security systems (1999/ C 38/08) COM(1998) 779 final. For further analysis of the proposal, see E Eichenhofer, How to Simplify the Coordination of Social Security (2000) 2 European Journal of Social Security (EJSS) 231; M Sakslin, Social Security Coordination: Adapting to Change (2000) 2 EJSS 169; F Pennings, The
European Coordination
progressive and a consensus26 was reached on a much more limited version than that originally envisaged by the European Commission, and was eventually adopted in 2004 as Regulation (EC) No 883/2004 on the coordination of social security systems.27 However, the Regulation was only to be applied from the date of entry into force of the implementing Regulation28 and it took another six years to adopt implementing Regulation (EC) No 987/200929 covering most administrative issues.30
D.
Scope of cover
Regulation 883/2004 has a limited approach as regards persons and 13 matters covered. The most elemental31 prerequisite for its application is however a case with a foreign element, that is, the facts of the case or the parties involved must have a relation to several Member States of the European Union.32 The personal scope of coverage of Regulation 883/2004 is specified in art 2 14 Regulation 883/2004: according to this provision, the Regulation shall apply to nationals of a Member State, stateless persons and refugees residing in a Member State who are or have been subject to the legislation
26
27 28 29
30 31 32
European Commission Proposal to Simplify Regulation 1408/71 (2001) 3 EJSS 45; id (fn 19) 243. Art 48 TFEU requires unanimity of the Council in the decision making process. In addition, the Council has to follow the co-decision procedure of art 294 TFEU involving the European Parliament. It proposed 47 amendments to the Proposal, of which the Council agreed to 37. See also fn 14. OJ L 166, 30.4.2004, 1–123. Regulation 1408/71 continues to apply in all cases related to Iceland, Liechtenstein, Norway and Switzerland. See art 91 Regulation 883/2004. Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/ 2004 on the coordination of social security system, OJ L 284, 30.10.2009, 1–42. As a result both regulations were in force from May 2010. For other prerequisites to be met see Pennings (fn 10) 25 ff. See CJEU C-212/06, Government of the French Community and Walloon Government v Flemish Government [2008] European Court Reports (ECR) I-1683; joined cases C-95/99 to C-98/ 99 and C-180/99, Khalil and Others [2001] ECR I-7413; C-59/95, Bastos Moriana and Others [1997] ECR I-1071; C-153/91, Camille Petit v Office national des pensions [1992] ECR I-4973; joined cases C-64/96 and C-65/96, Nordrhein-Westfalen v Uecker and Jacquot [1997] ECR I3171; joined cases C-225/95, C-226/95 and C-227/95, Kapasakalis, Skiathitis and Kougiagkas v Greek State [1998] ECR I-4239; C-18/95, Terhoeve v Inspecteur van de Belastingdienst Particulieren [1999] ECR I-345.
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of one or more Member States.33 Covered are all persons abstractly34 integrated into a Member State’s system of social security regardless of whether or not they are able to work.35 The rule extends to part-time36 and former employees.37 For persons changing between the status of employee and non-employee (for example, students working in the holidays) the last status achieved is decisive.38 15 According to art 3 Regulation 883/2004, the Regulation applies to all legislation (general and special security schemes, whether contributory or non-contributory) covering benefits in respect of accidents at work and occupational diseases.39
E.
General rules for determining the legislation applicable
1.
General application of the law of the country of employment
16 Article 11 Regulation 883/2001 provides for the exclusive effect of the rules determining the legislation applicable. According to these rules, in general the system of social security in the country of employment and not the system of the country of habitual residence is applied.40 Accordingly, a person pursuing an activity as an employed person in a Member State is subject to the legislation of that Member State.41 This extends to all cases 33
34 35
36
37
38
39 40 41
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There has been only one addition to the scope of the Regulation 1408/71, namely persons from third countries. For the former situation see S Devetzi, Die Kollisionsnormen des Europäischen Sozialrechts (2000) 271 f; W Schrammel/G Winkler, Arbeits- und Sozialrecht der Europäischen Gemeinschaft (2002) 1 f; Pennings (fn 19), 242; CJEU joined cases C-95/99 to C-98/99 and C-180/99, Khalil and Others [2001] ECR I-7413. See 39/76, Bestuur der Bedrijfsvereniging voor de Metaalnijverheid v Mouthaan [1976] ECR 1901. See CJEU 182/78, Bestuur van het Algemeen Ziekenfonds Drenthe-Platteland v Pierik II [1979] ECR 1977; C-85/96, María Martínez Sala v Freistaat Bayern [1998] ECR I-2691, para 36; C275/96, Kuusijärvi v Riksförsäkringsverket [1998] ECR I-3419, para 21. See CJEU C-2/89, Bestuur van de Sociale Verzekeringsbank v Kits van Heijningen [1990] ECR I1755; C-413/01, Franca Ninni-Orasche v Bundesminister für Wissenschaft, Verkehr und Kunst ECR [2003] I-13187. See CJEU 143/79, Margaret Walsh v National Insurance Officer [1980] ECR 1649; C-389/99, Sulo Rundgren [2001] ECR I-3731; C-140/88 Noij v Staatssecretaris van Financiën [1991] ECR I-387. See CJEU joined cases 82 and 103/86, Laborero and Sabato v Office de sécurtié sociale d’outremer [1987] ECR 3401; 99/80, Galinsky v Insurance Officer [1981] ECR 941; 17/76, Brack v Insurance Officer [1976] ECR 1429. This includes nota bene all non-contributory systems financed exclusively by taxes: see art 70 Regulation 883/2004. See E Eichenhofer, Neuere Rechtsprechung des EuGH zum Europäischen Sozialrecht, Juristenzeitung (JZ) 95, 1047, 1049. See art 11(3)(a) Regulation 883/2004.
European Coordination
where the employee does not reside in the country where he is employed and to cases where the employer has his seat in another country.42 Although the Regulation does not provide a definition of the ‘place of 17 employment’, some inference might be taken from the rules for temporary employment abroad:43 the place of the actual provision of services has less importance than the place where the social and economic value of the services is eventually created.44
2.
Special provisions for determining the legislation applicable
a) Temporal posting abroad In order ‘to promote freedom to provide services for the benefit of under- 18 takings which avail themselves of it by sending workers to Member States other than that in which they are established and aiming at overcoming obstacles likely to impede freedom of movement of workers and also at encouraging economic interpenetration whilst avoiding administrative complications, in particular for workers and undertakings’,45 Regulation 883/2004 includes a special provision in all cases of the temporary posting of an employee abroad. Article 12 Regulation 883/2004 stipulates that a person pursuing an 19 activity as an employed person in a Member State (A) on behalf of an employer normally carrying out its activities there,46 who is posted by that employer to another Member State (B) to perform work on that employer’s behalf, shall continue to be subject to the legislation of the first Member State (A), provided that the anticipated duration of such work does not exceed 24 months and that the employee is not sent to replace another person. Both temporal and personal prerequisites were introduced to
42
43 44 45
46
The decision for the application of the lex loci laboris to some extent represents the employee-focused approach of the Germanic (Bismarckian) countries and this thereby disregards the approach taken in Common Law and Scandinavian countries, since the latter tend to focus only on the social security of its nationals. On the reform of the Bismarckian countries see the contributions in B Palier/C Martin (eds), Reforming the Bismarckian Welfare Systems (2008). See arts 12, 11(3)(a) Regulation 883/2004 and no 18 ff below. See CJEU 13/73, Angenieux v Hakenberg [1973] ECR 935. CJEU 35/70, SARL Manpower v Caisse primaire d’assurance maladie [1970] ECR 1251, para 10, and C-202/97, Fitzwilliam Executive Search Ltd v Bestuur van het Landelijk instituut sociale verzekeringen [2000] ECR I-883; C-404/98, Josef Plum v Allgemeine Ortskrankenkasse Rheinland, Regionaldirektion Köln [2000] ECR I-9379, para 19. See CJEU 35/70, SARL Manpower [1970] ECR 1251, para 16; C-202/97, Fitzwilliam Executive Search Ltd v Bestuur van het Landelijk instituut sociale verzekeringen [2000] ECR I-883.
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prevent any abuse by posting employees rotationally and thereby (legally) avoiding paying higher social security premiums in the country of actual employment.47 Moreover, the employee must have pursued an activity in the original state before being sent abroad, a contractual agreement (for example, recruitment for posting abroad) not sufficing.48 Finally, a temporary posting within the rule of art 12 Regulation 883/2004 is possible in all cases where the employee does not reside in the Member State of employment and is posted to a third Member State. If the possibility of posting was limited to persons who are domiciled in the Member State from which they were sent to their post abroad, the freedom of workers would be impeded. In this triangle, according to art 12 Regulation 883/ 2004, the law of the Member State in which the person was employed is applied. 20 In order to prove the applicability of the social security system of the Member State from which the employee was posted, the competent institution of the Member State whose legislation is applicable pursuant to art 2 Regulation 883/2004 shall provide an attestation that such legislation is applicable and shall indicate, where appropriate, until what date and under what conditions.49 With this attestation the authorities of the Member State which posts the employee are however not bound by the decision of the competent Member State. Nevertheless this attestation certifies the ongoing protection by social security and due to this authentication the receiving Member State is barred until further notice from applying its own rules to the employee.
3.
Pursuit of activities in two or more Member States
21 The pursuit of several activities as an employed person in several Member States again creates considerable problems when assessing the law applicable to his social security: to tolerate the application of multiple social security systems would undoubtedly violate the rule in art 11 Regulation 883/2004 as multiple laws would be applied to one case.
47
48 49
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No temporary posting but a pursuit of activities in two (or more) Member States exists in all cases in which an employee pursues several, independent activities in several Member States for different employers. See no 21 ff below. See CJEU 19/67, Bestuur der Sociale Verzekeringsbank v J H van der Vecht [1967] ECR 461. CJEU C-202/97, Fitzwilliam Executive Search Ltd [2000] ECR I-883; C-178/97, Barry Banks v Theatre royal de la Monnaie [2000] ECR I-2005; C-2/05, Rijksdienst voor Sociale Zekerheid v Herbosch Kiere [2006] ECR I-1079; C-168/04, Commission v Austria [2006] ECR I-9041.
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Article 13 Regulation 883/2004 deals with this problem by stipulating 22 primarily the law of the Member State of residence if the employee pursues a substantial part of his activity in that Member State or if he is employed by various employers whose registered office or place of business are in different Member States – or alternatively if he does not pursue a substantial part of his activities in his Member State of residence, the law of the Member State in which his employer is situated. In particular the first part of this rule is in accordance with art 11 Regula- 23 tion 883/2004 according to which the law at the place of the substantial activity is applied. In the cases of multiple activities in several countries, the domicile of the employer could be stipulated. However, this is only possible because it is at the same time the place of employment at least for a substantial part of the activities.
4.
Freedom of choice
As set out above, the Regulation enshrines as a general rule the application 24 of the law at the place of substantial activities as an employee and accordingly that the social security system in this Member State is the competent one.50 However, the Regulation provides for certain situations in which it seems reasonable to continue the application of the original social security system.51 Article 16(1) Regulation 883/2004 allows two or more Member States, the 25 competent authorities of these Member States or the bodies designated by these authorities to provide for exceptions in the interests of certain persons or categories of persons. Thereby, the rule allows them to adapt the rigid arts 11–15 Regulation 883/2004 to the circumstances of the individual case – and, moreover, for a certain synchronicity between the law applicable to questions of social security and those of private international law.52 To this end, art 16 Regulation 883/2004 represents a notion common in all European conflict of laws codifications which allow for the choice of the law applicable and thereby indirectly influence Regulation (EC) No 593/2008: since the law applicable to the contract of individual employment could be agreed upon by the parties, the connecting factor of
50 51 52
See no 16 ff above. CJEU 101/83 Raad van Arbeid v PB Brusse [1984] ECR 2223, para 16. See no 41 ff below.
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place of employment could be chosen to some extent as well and thereby extends to the mechanisms of Regulation 883/2004 itself.53 26 The most common case for such a choice of law is a posting abroad for more than 24 months, not least because most employees posted abroad seem to ask for some adoption period as foreign social security systems (being applied in cases of no exception agreements) initially may not meet their expectations.
F.
Special provisions for determining the legislation applicable in cases of accidents at work and occupational diseases
27 Articles 36–41 Regulation 883/2004 contain special rules co-ordinating all benefits in respect of accidents at work and occupational diseases provided by the respective Member States in certain pre-determined fact patterns. According to arts 36(2) and 36(3) in conjunction with art 21(1) Regulation 883/2004, an employee who has had an accident at work or has contracted an occupational disease and who resides or stays in a Member State other than the competent Member State54 shall be entitled to the benefits in kind and cash of the scheme covering accidents at work and occupational diseases, on behalf of the competent institution, by the institution of the place of residence in accordance with the legislation which it applies, as though he were insured under said legislation. 28 Moreover, art 38 Regulation 883/2004 covers benefits for occupational diseases where a person has been exposed to the same risk in several Member States. If such a person pursued an activity which is by its nature likely to cause such diseases, the benefits that he/she or his/her survivors may claim shall be provided exclusively under the legislation of the last of those States whose conditions are satisfied. Hence the competent institution has to decide under its own law whether or not the employee has contracted an occupational disease and has to finance the benefits exclusively although the causes for the disease are spread to several other countries. Although this solution seems barely in line with other principles in insurance law55 and burdens those Member States which attract the greatest degree of labour migration, one has to welcome it for the facilita53
54 55
496
See no 51 f below; F Pennings, The Place of Equal Protection on Grounds of Nationality in EU Law, in: A Numhauser-Henning (ed), Legal Perspectives on Equal Treatment and Non-Discrimination (2001) 347. Ie the Member State of employment, see art 11 ff Regulation 883/2004 (no 16 above). For those see C Lahnstein, Aggregation and Divisibility of Damage: Insurance Aspects, in: K Oliphant (ed), Aggregation and Divisibility of Damage (2010) 465, 468 ff.
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tion of the work of the authorities and the positive integration of the employee in the social security system. Whether the disease is defined as an occupational disease depends on the 29 decision of the authorities of the Member State competent under the above rules. However following the Recommendation 90/326/EEC56 there exists a non-binding rule aiming to further the approximation of Member States’ laws. Finally in order to secure the effectiveness of national social security schemes, arts 40 (2) and (3) Regulation 883/2004 enshrine several rules regarding the equivalence of foreign and domestic preconditions in order to receive benefits. As a result, a diagnosis that a person is suffering from an occupational disease must be recognised by the Member State which, by virtue of art 38 Regulation 883/2004, is under the duty to pay benefits, even if that diagnosis was made in another Member State and in accordance with its legislation.57 In cases of an aggravation of a pre-existing occupational disease and an 30 associated reduction in earning capacity, the respective increase in benefits will be borne by the competent authorities under art 38 Regulation 883/ 200458 if the worker has not pursued an activity as an employed person in another Member State. If the person concerned, while in receipt of benefits, has nevertheless pursued an activity under the legislation of another Member State, the competent institution of the original, first Member State shall continue to bear the cost, however, taking the aggravation into account. The competent institution of the second Member State (ie the Member State where the aggravation took place) shall grant a supplement to the worker, the amount of which shall be equal to the difference between the amount of benefits due after the aggravation and the amount which would have been due prior to the aggravation.
G.
Administration and adjudication of claims
The coordination of the Member States’ social security systems falls to the 31 Social Security Administration Offices in the respective Member States and the national rules. A separate implementing Regulation (no 12 above) lays down coordination rules for the national authorities for implementing Regulation 883/2004. For the international administrative procedures
56 57 58
OJ L 160, 26.6.1990, 39–48. See CJEU 28/85, Alexandre Deghillage v Caisse primaire d’assurance maladie de Maubeuge [1986] ECR 991. See no 28 above.
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(ie the coordination of the procedures between the separate national branches) two separate bodies were set up with Regulation 883/2004. In order to clarify all potential questions of coordination of the respective benefits and procedures, an Administrative Commission59 and an Advisory Commission60 were set up. 32 The Administrative Commission, whose general aim is to facilitate the uniform application of Regulation 883/2004 (eg by promoting exchange of experience and best administrative procedures), is not allowed to set any norms but answers all administrative questions and questions of interpretation arising from the provisions of Regulation 883/2004 and the implementing regulation and from any agreement concluded or arrangement made thereunder, without any prejudice to the rights of the authorities, institutions and persons concerned and tribunals provided for by the legislation of the Member States. 33 In contrast, the Advisory Committee could be empowered at the request of the Commission of the European Union, the Administrative Commission or on its own initiative to examine general questions or questions of principle and problems arising from the implementation of the Union provisions on the coordination of the national social security systems. The committee should formulate opinions on such matters for the Administrative Commission and proposals for any revisions. 34 Regarding the adjudication of claims, the question whether or not a court is competent to hear a case does not depend on the domicile or nationality of the claimant but on the law applicable to his claim. If the claim is to be assessed under German law, German courts are competent to hear the case; hence, the competent courts and applicable law are to a large extent synchronised.
H.
Rights of recourse of workers’ compensation institutions and interaction with employers’ liability
35 Whenever benefits are provided by the institution of a Member State on behalf of the institution of another Member State (eg in cases where an employee resides or stays in a Member State other than the competent Member State: see no 27 ff above) the authority providing for benefits is entitled to reimbursement from the competent authority under art 41 in
59 60
498
See art 71 Regulation 883/2004. See art 75 Regulation 883/2004.
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conjunction with art 35 Regulation 883/2004.61 In the special case of occupational diseases, the reimbursement between the (potentially several) institutions where the employee has contracted the disease is distributed between the several institutions depending on the time the employee spent in the various countries of exposure to the causes of the disease. Regarding the rights of institutions to reimbursement against liable third 36 parties, the peculiarities and differences in the organisation of Member States’ social security systems tend to pose problems some of which were addressed by the European legislator and the CJEU. As a starter, in some Member States’ social security systems a branch dedicated to workers’ compensation might be simply unknown.62 According to art 40 Regulation 883/2004, in all Member States’ systems where there is no insurance against accidents at work or occupational diseases, benefits shall be provided by the institution responsible for providing benefits in the event of sickness. Of certainly more interest are cases in which one Member State’s institu- 37 tion provides benefits in respect of an injury resulting from adverse events occurring in another Member State (see eg no 27 ff above). In a purely domestic dispute the institution providing benefits regularly obtains a claim of subrogation63 or a direct claim against the liable third party (tortfeasor). Of course, such a right will also exist in all cases with a foreign element: according to art 85 Regulation 883/2004, any institution’s claim for subrogation to the rights which the beneficiary has against the third party or direct rights against the third party shall be recognised by any other Member State. The inherent problem with this rule becomes apparent when assessing the 38 other applicable law to the case. Regarding some claims64 by the employee against the tortfeasor65 in tort law, art 4(1) of Regulation (EC) No 864/2007 states that ‘the law of the country in which the damage occurs’66 applies: the rights of the victim against the person who caused the injury, to which any social security institution may be subrogated, are to be determined in 61
62 63 64 65 66
Such reimbursement shall be made on the basis of the actual costs, although two or more Member States’ competent authorities may provide for other methods of reimbursement or waive all reimbursement between the institutions. Eg in the Netherlands: see S Linderbergh, Employers’ Liability and Workers’ Compensation: The Netherlands (in this volume) no 9. See eg Germany § 116 Sozialgesetzbuch (Code of Social Law, SGB) X. See no 48 below. Not necessarily the employer. See no 60 below.
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accordance with the law of the State where the injury was sustained.67 In contrast, according to art 85 Regulation 883/2004, the subrogation of a social security institution and the extent of the rights to which that institution is subrogated are to be determined in accordance with the law of the Member State to which the institution belongs. 39 Unsurprisingly, no problems occur when there are comparable rules in both Member States regarding the claim of subrogation or the direct claim. The divergence becomes decisive, however, where, as for example in Denmark, the law at the place of injury provides for a ban on recoupment by any social security institution, including benefits under the Law on Industrial Injury Insurance.68 In general, the CJEU rejected any application of these rules to foreign social security institutions as long as the ban’s sole aim was to hinder double payments domestically (ie by the social security institution and by the tortfeasor and his other insurance). The consequently still existing claim is subrogated in accordance with the law of the Member State’s social security institution, and the latter would recoup this institution’s expenses from the tortfeasor.69 40 In cases of employers’ liability this picture is however quite different since some Member States’ laws provide for exclusions of liability for employers and fellow employees.70 This exclusion goes to the core of the potential claim and prevents a claim from later being subrogated to any social security institution. Accordingly, art 85(2) Regulation 883/2004 states that for all persons receiving benefits under the legislation of one Member State in respect of an injury resulting from events occurring in another Member State, the provisions of said legislation which determine the cases in which the civil liability of employers or of the employees is to be excluded shall apply with regard to the said person or the competent institution. In other words, if an employee is socially insured in a Member State stipulating such exclusion, this exclusion will still exist if he is subsequently injured in a country where such exclusion does not exist. As a result, no claims against a liable third party come into existence and no claim could be subrogated to the social insurance institution. Turning the situation around, if the exclusion is not provided in the legislation of the country where he/she has social insurance, the insured employee
67 68 69 70
500
See no 58 ff below. See V Ulfbeck, Employers’ Liability and Workers’ Compensation: Denmark (in this volume) nos 35, 84. See CJEU C-428/92, Deutsche Angestellten-Krankenkasse (DAK) v Lærerstandens Brandforsikring [1994] ECR I-2259. See K Oliphant, The Changing Landscape of Work Injury Claims, below, no 11 ff.
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might claim from and the social insurer be subrogated to the claim against the employer or fellow employees as liable third parties even though an exclusion is provided in the law at the place where harm occurred.71
IV. Employers’ Liability A.
Classification
The classification of actions falling under the title of employers’ liability is 41 crucial as – depending on whether those actions are tortious or contractual – different European regulations and accordingly different substantive laws may be ultimately applied to the case. If such actions are ‘contractual’, Regulation 593/2008 (Rome I Regulation) applies, whereas in the case of non-contractual liability, Regulation 864/2007 (Rome II Regulation) would stipulate the applicable law. Both Regulations differ tremendously as regards connecting factors and may result in the application of different substantive laws. Excessive amounts of ink have been spilled on the problem of diverse classification of otherwise factually identical actions, more precisely on the questions of how classification in conflict of laws should be conducted and, moreover, how a uniform result could be achieved, so that regardless, of in which national court a claim is litigated, the same substantive law would ultimately be applied.72 71
72
See § 85(2)(2) Regulation 883/2004: ‘Paragraph 1 shall also apply to any rights of the institution responsible for providing benefits against employers or their employees in cases where their liability is not excluded.’ Related to this problem are those cases where a social insurer is subrogated under its own law to the claims of the employee against the tortfeasor but such claim is unknown to the social insurer liable for reimbursement. The question is essentially which law is applicable to determine the conditions and extent of the right of subrogation of a social security institution within the meaning of the regulation against the party causing an injury, where the injury has occurred in another Member State and has entailed the payment of social security benefits. Obviously, the acceptance of the national ban would treat national and foreign social insurers alike and would hence result in equality of treatment within the respective Member States. Nevertheless, the CJEU emphasised that this question is to be solved under art 65 Regulation 883/2004 and accordingly the law applicable to the social insurer prevails rendering a potential ban in the other Member State’s law obsolete. See CJEU C-428/92, DAK v Lærerstandens Brandforsikring [1994] ECR I-2259 and 313/82, Nv Tiel-Utrecht Schadeverzekering v Gemeenschappelijk Motorwaarborgfonds [1984] ECR 1389; 27/69, Caise de maladie des CFL, Luxembourg and Societé Nationale, Luxembourg v Compagnie belge d’assurances générales sur la vie et contre les accidents [1969] ECR 405; 33/64, Betriebskrankenkasse der Heseper Torfwerk GmbH v Egbertina van Dijk [1965] ECR 134; C-397/96, Caisse de pension des employés privés v Kordel [1999] ECR I-5959. Some scholars and indeed most courts in Europe until the recent unification of European conflict of laws favoured the law at the court seised, arguing that the process of characterisation should be performed in accordance with the domestic law of the
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42 Insofar as the Rome I and Rome II Regulations are concerned, the question of classification is addressed by a recital in a preamble to each Regulation: Recital 7 Rome I Regulation provides that ‘the substantive scope … of this regulation should be consistent with Council regulation (EC) no 44/2001 … (Brussels I) and Regulation (EC) no 864/2007 (Rome II)’ whereas the more applicable recital 11 of the preamble to the Rome II Regulation reads as follows: ‘The concept of a non-contractual obligation varies from one Member State to another. Therefore for the purposes of this Regulation, noncontractual obligations should be understood as an autonomous concept’. 43 The latter preamble particularly mirrors the works of the Austrian scholar Rabel, who was the first to draw attention to the deficiencies of methods of classification at the time,73 suggesting instead a comparative law method of qualification, promoting research of the core issues, solutions and principles of the signatory states to international conventions. In his view ‘the factual situation, which is the true premise of any conflicts rule, must be referable indifferently to foreign as well as to domestic substantive law. Hence, if legal terms are used to describe this factual situation, they must be susceptible to interpretation with reference to foreign institutions, even those unknown to the lex fori. … The process required for such interpretations is necessarily of a comparative nature and has always
73
502
forum: if the forum has to characterise a rule or institution of foreign origin, it should inquire how the corresponding or most closely analogous rule or institution is characterised in domestic material law, and apply that characterisation to the foreign instruction or rule. Accordingly, if a claim is classified as tortious in the domestic law of the forum (lex fori), its classification as non-contractual would trigger the application of Rome II providing rules as to which law must be applied. Cf F Kahn, Gesetzeskollisionen: ein Beitrag zur Lehre des internationalen Privatrechts (1891) 1, 92 ff; see also id, Über Inhalt, Natur und Methode des internationalen Privatrechts (1899) 255; E Bartin, De l’impossibilité d’arriver à la suppression définitive des conflits de lois, Clunet 1897, 225, 446, 720, reprinted in: Études de droit international privé (1899); id, Principes de Droit International Privé, vol I (1930) 221; id, La doctrine des qualifications et ses rapports avec le caractère national des règles du conflit des lois (1930) 31 Recueil des Cours de l’Academie de Droit International (RCADI) 565; cf L Collins et al (eds), Dicey, Morris & Collins on the Conflict of Laws (2006) no 2-009 ff with extensive further references and examples. A second approach argues that the process of characterisation should be performed in accordance with the lex causae, ie the foreign internal law referred to by the conflict rule itself. Accordingly, if a claim was labelled as ‘tortious’ in domestic but ‘contractual’ in foreign law, the latter classification would prevail. Cf F Despanet, Des conflits de lois relatifs à la qualification des rapports juridiques, Clunet 1898, 253; M Wolff, Internationales Privatrecht (1954) 54; G Pacchioni, Elementi di diritto internazionale privato (1939) 167, all with extensive further references. Neither approach, however, is sufficient for the question of classification of supranational rules like those in the regulations Rome I and Rome II. If every Member State interpreted the concepts independently – whether by its lex fori or the foreign lex causae – the unified rules would be interpreted separately and, therefore, applied incoherently. E Rabel, Das Problem der Qualifikation, Rabels Zeitschrift für ausländisches und internationales Privatrecht (RabelsZ) 5 (1931) 241 and references in fn 72.
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been so recognized by thoughtful scholars.’74 Taking Rabel’s approach, the rules in the Rome I as well the Rome II Regulation (and, of course, in all other unified conflict rules) must ideally be regarded as independent concepts to be interpreted by reference to the objectives of the unified rules themselves and to the general principles stemming from the corpus of the national legal systems. Accordingly, it is necessary to identify the criteria by reference to which 44 contractual obligations may be distinguished from tortious or other noncontractual obligations. Firstly, various judgments of the CJEU have delivered an interpretation of art 5(1) and art 5(3) of the Brussels Convention and Regulation 44/2001 (Brussels I)75 and must be taken into account. Secondly, although neither Regulation contains a definition of ‘contractual obligations’ or ‘non-contractual obligations’, various provisions of each Regulation nevertheless give some indications as to the scope of each concept. Thirdly and finally, various studies on the comparative law of contract and tort over the years have shed some light on this question.76 In fact, the CJEU does not follow any specific national systematisation or 45 approach, but has stated that concepts in conflict of laws ‘must be given an autonomous meaning, derived from the objectives and schemes of the instrument and the general principles underlying the national systems as a whole.’77 And although considerations relevant to determining this characterisation for the purposes of allocating jurisdiction may not necessarily be identical to those relevant to determine the choice of law issues, the massive impact of the earlier CJEU decisions must be taken into account following the explicit order of the European legislator in Recital 7 demanding consistency between the documents.78 Alongside these observations regard should be taken of two main judg- 46 ments when analysing the CJEU’s notion of the borderline between the two institutions. In Kalfelis79 the court held that the expression ‘matters
74 75 76 77 78
79
E Rabel, Conflict of Laws (2nd edn 1958) 55. [2001] OJ L 12, 16.1.2001, 1–23. See K Oliphant (fn 70) no 11 ff. CJEU 29/76, LTU Lufttransportunternehmen v Eurocontrol [1976] ECR 1541. See no 44 above and A-K Bitter, Auslegungszusammenhang zwischen der Brüssel IVerordnung und der künftigen Rom I-Verordnung, Praxis des Internationalen Privat-, Wirtschafts- und Verfahrensrechts (IPRax) 2008, 96; F Garcimartin Alférez, The Rome I Regulation: Much Ado about Nothing? (2008) The European Legal Forum (EuLF) 61, 62; S Leible/M Lehmann, Die Verordnung über das auf vertragliche Schuldverhältnisse anwendbare Recht, Recht der Internationalen Wirtschaft (RIW) 2008, 528, 529. CJEU 189/87, Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co [1988] ECR 5565.
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relating to a tort, delict or quasi-delict’ covered all actions seeking to establish the liability of a defendant and which are not related to a contract and thereby established it as residual.80 In Handte v TMCS81 the CJEU held that ‘matters relating to a contract’ covered only situations in which one party assumes an obligation towards another and stressed the importance of a direct contractual nexus between the parties. 47 As indicated, various provisions of each Regulation also give some indications as to the scope of the concept of contract and tort. A virtually perfect illustration of the above-mentioned methodology of Rabel focusing on the objectives of the rules and the general principles beyond them is the logistic system around dealings prior to the conclusion of a contract (culpa in contrahendo). Such liability raises difficult problems of classification both under substantive domestic law as well as under private international law as some Member States regard the pre-contractual obligation on which the cause of action is based as contractual, others as tortious, yet others as a claim sui generis.82 Both Rome Regulations have adopted a comparative approach to classification. Instead of focusing on the national domestic systematisation and the underlying dogmas, the legislator focused on the violated duties upon which the cause of action is based. Indeed some European jurisdictions feature actions under the title culpa in contrahendo protecting the interests of potential negotiating partners (for example, the duty to protect against personal injury), thus being akin to tort law, whereas other actions labelled as culpa in contrahendo are related to the (future) contract itself (for example, a violation of the duty of disclosure) and are thus protecting against economic losses. The Rome II Regulation took up this differentiation and constructed a system to distinguish the actions based on the respective duties. Recital 30 Rome II Regulation states accordingly that ‘culpa in contrahendo for the purposes of this Regulation is an autonomous concept and should not necessarily be interpreted within the meaning of national law. It should include the violation of the duty of disclosure and the breakdown of contractual negotiations. Art 12 (Rome II Regulation) covers only non-contractual obligations presenting a direct link with the dealings prior to the conclusion of a contract. This means that if, while a contract is being negotiated,
80 81 82
504
Cf R Plender/M Wilderspin, The European Private International Law of Obligations (3rd edn 2009) no 2-024. CJEU C-26/91, Jakob Handte v Traitements Mécano-chimiques des Surfaces (TMCS) [1992] ECR I-3967. See Explanatory Memorandum accompanying the EC Commission Proposal of 22nd July 2003, COM(2003) 427 final, 8; J Fawcett/JM Carruthers, Cheshire, North & Fawcett, Private International Law (14th edn 2008) 832 ff.
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a person suffers personal injury, art 4 (Rome II Regulation83) or other relevant provisions of this Regulation should apply.’ In broad terms and only for questions of conflict of laws, one may infer 48 that a ‘contractual obligation’ within the meaning of the Rome I Regulation denotes an obligation resulting from a voluntary agreement between the parties and is set out to protect their economic interests whereas a tort in the sense of the Rome II Regulation lacks such agreement. Nevertheless one party assumes a generally owed obligation towards the other mainly due to violations of residual extra-contractual duties.
B.
The Law applicable to contractual duties
1.
Source of law
In litigation relating to contractual duties, the applicable law is deter- 49 mined by the EC Regulation 593/2008 on the Law Applicable to Contractual Obligations (Rome I Regulation). In general the law applicable is determined in accordance with the rules laid down by arts 3 and 4 Rome I Regulation. These refer, primarily, to any law expressly agreed on by the parties to the contract; secondarily, to a choice of law implicitly, but clearly agreed on by the parties, and finally, in default of any such choice, to the law of the residence of the characteristic performer. For certain particular types of contracts such as employment contracts, special rules, often designed to protect the socio-economic weaker party, are laid down by arts 5–8 Rome I Regulation.
2.
Scope of protection
Article 1(1) Rome I Regulation specifies that the Regulation applies, in 50 situations involving a foreign element, to contractual obligations in civil and commercial matters; it does not apply to revenue, customs or administrative matters. According to art 12 Rome I Regulation, the law applicable to a contract shall govern in particular the interpretation, performance, the consequences of a total or partial breach of obligations, including the assessment of damages insofar as it is governed by rules of law, the various ways of extinguishing obligations, prescription and limitation of actions and, finally, the consequences of nullity of the contract.
83
See no 58 below.
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3.
General rules for determining the legislation applicable
51 Of the uniform rules established by the Rome I Regulation, foremost and dominant is the rule expressed in the first sentence of art 3(1) stating that a ‘contract shall be governed by the law chosen by the parties.’84 Accordingly under the Rome I Regulation, the applicable law to a contract is determined primarily by reference to any express agreement on the point concluded by the parties to the contract and is commonly referred to by the term of ‘party autonomy’. Only in the absence of any express choice is reference made, secondarily, to an implied choice of the parties. Regarding the question which law could be chosen, it seems clear that under the Rome I Regulation the ‘law’ must be the law of any country, in the sense of a territory having its own legal rules on contracts. Thus it cannot be the general principles of law recognised by civilised nations or the Unidroit Principles or the (Draft) Common Frame of Reference.85
84
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For an in-depth analysis of these rules see inter alia H Heiss, Party Autonomy, in: F Ferrari/S Leible (eds), Rome I Regulation (2009) 1 ff; P Lagarde/A Tennenbaum, De la Convention de Rome au règlement Rome I, Revue critique de droit international privé (Rev crit DIP) 97 (2008) 727 ff; Plender/Wilderspin (fn 80) no 6-001; P Stone, EU Private International Law (2nd edn 2010) 299 ff; K Siehr, Die Parteiautonomie im Internationalen Privatrecht, in: FS Keller (1989) 485, 509 ff; T Thiede, Die Rechtswahl in den Römischen Verordnungen, 51 ff, G Kodek, Praktische und theoretische Anforderungen an die Rechtswahl, 85 ff both in: B Verschraegen (ed), Rechtswahl – Grenzen und Chancen (2010); R Wagner, Der Grundsatz der Rechtswahl und das mangels Rechtswahl anwendbare Recht (Rom I Verordnung), IPRax 2008, 377 all with extensive further reference. Originally, in the EC Commision’s Proposal of 15 December 2005 (COM(2005) 650 final) art 3(2) would have enabled the parties to choose as the applicable law the principles and rules of the of the substantive law of contract recognised internationally or in the Community. However, this provision was deleted from the Regulation as adopted. Instead Recital 12 allows for an incorporation by reference which merely introduces into the contract terms which would (still) be governed by a country’s law. Nevertheless, recital 13 allows, if the Community were to adopt, in an appropriate legal instrument, rules of substantive contract law, a provision of the instrument could enable the parties to choose to apply these rules. See Thiede (fn 84) 55; Stone (fn 84) 301; K Boele-Woelki, Die Anwendung der UNIDROIT-Principles auf internationale Handelsverträge, IPRax 1997, 161, 166; E-M Kieninger, Wettbewerb der Rechtsordnungen im Europäischen Binnenmarkt (2002) 286; O Lando, Some Issues Relating to the Law Applicable to Contractual Obligations (1996) 7 Kings College LJ 55, 63; S Leible, Außenhandel und Rechtssicherheit, Zeitschrift für vergleichende Rechtswissenschaft (ZVglRWiss) 97 (1998) 286, 317; B Jud, Neue Dimensionen privatautonomer Rechtswahl – Die Wahl nichtstaatlichen Rechts im Entwurf einer Rom I-Verordnung, Juristische Blätter (JBl) 2006, 695, 698; P Mankowski, CFR und Rechtswahl, in: M Schmidt-Kessel, Der Gemeinsame Referenzrahmen (2009) 389, 401; J Kondrig, Nichtstaatliches Recht als Vertragsstatut vor staatlichen Gerichten – oder: Privatkodifikationen in der Abseitsfalle?, IPRax 2007, 241, 244; U Magnus, Die Rom I-Verordnung, IPRax 2010, 27, 33.
European Coordination
In addition, the parties must consider three further restrictions on a choice 52 of law. Firstly any subsequent86 choice by the parties cannot prejudice the formal validity of the contract or adversely affect the rights of third parties.87 Secondly, the choice is restricted where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen. In these cases the choice of the parties shall not prejudice the application of the provisions of the law of that other country which cannot be derogated from by agreement. Thirdly and finally, where all other elements relevant to the situation at the time of the choice are located in one or more Member States, the parties’ choice of law other than the law of a Member State shall not prejudice the application of provisions of EU law, where appropriate as implemented in the Member State of the forum, which cannot be derogated from by agreement.88 Where the parties have not chosen an applicable law in accordance with 53 art 3 Rome I Regulation, it is clearly necessary to provide for default rules designating the applicable law. Accordingly, in the absence of any valid choice by the parties, the applicable law to a contract is determined in line with art 4 Rome I Regulation providing a list of strict rules.89 The main effect of these rules is to provide a list of rebuttable presumptions in favour of the law of the characteristic performer’s residence, which may be displaced by clearly establishing a closer connection with another country.90
86 87 88
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Such subsequent choice may be indicated after the two years where it is possible to ‘remain’ in the ‘original social security system’ system, see no 24 above. Such as guarantors or beneficiaries. Cf Stone (fn 84) 299. For an evaluation see Thiede (fn 84) 57; J Basedow, Materielle Rechtsangleichung und Kollisionsrecht, in: A Schnyder/H Heiss/B Rudisch (eds), Internationales Verbraucherschutzrecht (1995) 11, 34. ‘(1)… a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; (b) a contract for the provision … where the service provider has his habitual residence; (c) a contract relating to a right in rem in immovable property or to a tenancy of immovable property … law of the country where the property is situated; a distribution contract … law of the country where the distributor has his habitual residence; (g) … sale of goods by auction … law of the country where the auction takes place… (2) 2. Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points … of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. (3) Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. (4) Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected.’ Thus, the rule refers to the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence, and the function of the list within the provision is to indicate the party who counts as the characteristic performer in the case of certain types of contract.
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4.
Special provisions for individual employment contracts
54 The operation of arts 3 and 4 Rome I Regulation is nevertheless without prejudice to several other articles of the Regulation establishing special rules for selecting the applicable law for special categories of contracts. The rules applicable to such special categories of contracts derogate both arts 3 and 4 Rome I Regulation by restricting party autonomy and establishing a specified method for selecting the applicable law in the absence of any choice of the parties. 55 In this context, art 8 Rome I Regulation makes special provision for individual contracts of employment. By art 8(1) Rome I Regulation the possibility of an express or implied choice of law by the parties is explicitly granted when determining the applicable law of an employment contract, but – as envisaged by recital 23 Rome I Regulation91 – such choice operates subject to the rules for the protection of the employee as a socio-economic weaker party. As a result, a choice of law may not have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable.92 56 In view of the protective purpose of art 8(1) Rome I Regulation, ‘provisions that cannot be derogated from by agreement’ include but are not limited to claims for unfair dismissal,93 in respect of unlawful discrimination in relation to employment,94 special rules granting bonuses, maternity leave, compulsory subsidies to pregnant employees to be granted by the employer95, continuing wages during periods of employee’s illness,96 parttime employment97 and finally provisions such as those concerning industrial safety and hygiene which are regarded in certain Member States as
91
92 93 94 95 96 97
508
Recital 23 Rome I regulation reads as follows: ‘As regards contracts concluded with parties regarded as being weaker, those parties should be protected by conflict-of-law rules that are more favourable to their interests than the general rules.’ See Stone (fn 84) 358 with further reference. See eg Lawson v Serco [2006] 1 All England Law Reports (All ER) 823 (HL); Bleuse v MBT Transport [2008] Industrial Relations Law Reports (IRLR) 264. See eg Williams v University of Nottingham [2007] IRLR 660. See eg Bundesarbeitsgericht (German Federal Labour Court, BAG) 12 December 2001, BAGE (Decicions of the BAG) 100, 130. See eg BAG 12 December 2001, BAGE 100, 130. See A Junker, Der Teilzeitanspruch des deutschen Arbeitsrechts – keine Eningriffsnorm nach europäischem IPR, Europäische Zeitschrift für Arbeitsrecht (EuZA) 2009, 88 with further references.
European Coordination
being provisions of public law.98 The result of the application of these rules is not however a complete dismissal of the violating contract, but the application of the distinct rule which may result in the employee ‘cherrypicking’.99 Para 2 of the provision determines (almost in passing) the place of the 57 characteristic performance in individual employment contracts and thus derogates art 4 Rome I Regulation: according to art 8(2) Rome I Regulation, the applicable law is that of the country in or from which the employee habitually carries out his work in performance of the contract, and this country of habitual work remains unchanged even if the employee is temporarily employed in another country.100 If there is no ascertainable country of habitual residence, art 8(3) Rome I Regulation refers instead to the law of the country in which the place of business through which the employee was engaged is situated.101 Ultimately both these rules are reduced to rebuttable presumptions by art 8(4) Rome I 98
See Report on the Convention on the law applicable to contractual obligations by M Giuliano and P Lagarde (Giuliano/Lagarde Report), OJ C 282, 31.10.1980, 1–50 (at 27). 99 Facing a distinct tendency of employment tribunals to stick with their national rules (see P Mankowski, Employment Contracts under Article 8 Rome I Regulation, in: F Ferrari/ S Leible (eds), Rome I Regulation (2009) 171, 202) objections against an overly wide interpretation regarding these provisions may not be unwarranted: it may be necessary to exactly determine the spatial extent of the national rules, their interpretation and overriding character. Cf Plender/Wilderspin (fn 80) no 11-029; Lagarde/Tennenbaum, Rev crit DIP 97 (2008) 727, 748. Nevertheless, with a view to mandatory rules in art 9 Rome I Regulation and the Public policy of the forum in art 26 Rome I Regulation such prerequisites ought not to be interpreted in an excessively restrictive manner as can be deduced from Recital 37 Rome I Regulation and (subtle) implicit references of the European legislator (see Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (‘Rome I’), COM (2005) 650 final, 8) to the judgments of the CJEU (joined cases C-369/96 and C-376/96, Criminal proceedings against Jean-Claude Arblade, Arblade & fils SARL, Bernard and Serge Leloup and Sofrage SARL [1999] ECR I-8453, para 31 and C-165/98, Criminal proceedings against André Mazzoleni and Inter Surveillance Assistance SARL [2001] ECR I-2189, paras 22–36). 100 Recital 36 adds that work carried out in another country should be regarded as temporary if the employee is expected to resume working in the country of origin after carrying out his tasks abroad. 101 The reference ‘in which or, failing that, from which’ the employee habitually carries out his work in performance of the contract is evidently designed to adopt the approach followed by the CJEU under the Brussels Convention and the Brussels I Regulation: In C-125/92, Mulox IBC Ltd v Hendrick Geels [1993] ECR I-4075 and C-383/ 95, Petrus Wilhelmus Rutten v Cross Medical [1997] ECR I-57 the CJEU held that in cases where the employee carries out his work in more than one country, reference must be made to the place where the employee has established the effective centre of his working activities, at or from which he performs the essential part of his duties towards the employer. If there is no such centre (see eg C-37/00, Herbert Weber v Universal Ogden Services [2002] ECR I-2013) the whole of the duration of the employment relationship must be taken into account and the relevant place will normally be the place where the employee has worked longest, however, by way of exception, weight could be given to the most recent period of work where the employee, after
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Regulation which operates where it appears from the circumstances that the contract is more closely connected with a country other than that indicated in art 8(2) or (3), and subjects the contract to the law of that other country.
C.
The Law applicable to extra-contractual duties
1.
Source of law
58 In litigation relating to extra-contractual duties, the applicable law is determined by the EC Regulation 864/2007 on the Law Applicable to NonContractual Obligations, commonly referred to as the Rome II Regulation. The Rome II Regulation covers all non-contractual obligations in civil and commercial matters which implicate the laws of more than one state.
2.
Scope of protection
59 The application of the Rome II Regulation is restricted by a list of specific exclusions102 such as obligations arising out of family relationships and matrimonial property regimes, obligations arising under negotiable instruments, non-contractual obligations arising out of the law of bodies corporate or unincorporated regarding matters such as the creation, legal capacity, internal organisation or winding-up of companies, obligations arising out of the relations between the settlors, trustees and beneficiaries of a trust, obligations arising out of nuclear damage and finally obligations arising out of violations of privacy and rights relating to personality, including defamation.
3.
General rule
60 The general rule of the Regulation stipulates in art 4(1) Rome II Regulation the law of the place of the injury.103 Correspondingly the applicable
having worked at one place, then takes up his activities on a permanent basis in a different place. Cf Stone (fn 84) 357; J Schacherreiter, Leading Decisions (2008) no 183. 102 See art 1(2) Rome II Regulation. 103 An in-depth analysis to this rule is provided in vol 26 of the Tort and Insurance Law series by T Thiede, Aggregation and Divisibility of Damage From the European Conflicts of Law Perspective, in: K Oliphant (ed), Aggregation and Divisibility of Damage (2009) 427, 436.
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law will be the law of country in which the damage occurs, ‘irrespective of the country in which the event giving rise to the damage occurred’104 and ‘regardless of the country or the countries of personal injury or damage to property, the country in which the damage occurs should be the country where the injury was sustained or the property was damaged respectively.’105
4.
Escape clause
This general rule is subject to particular exceptions operating on the 61 existence of common habitual residence or otherwise closer relationship of the parties to the case. Firstly, if both parties were habitually resident in the same country, the tort is governed by the law of that country. Secondly – and of most relevance to this topic – art 4(3) Rome II Regulation provides an exception, described in Recital 18 of the Regulation as an escape clause, in favour of the law of another country which has a manifestly closer relationship with the tort. The second sentence of art 4(3) Rome II Regulation sets out that such a 62 manifestly closer connection may be based in particular on a pre-existing relationship between the parties, such as a contract. The Explanatory Memorandum106 states implicitly107 that such a pre-existing relationship could consist of an employment contract when considering that due to the escape clause in art 4(3), the Rome II Regulation cannot have the effect, in relation to torts, of depriving the weaker party of the protection of the law which protects him, as regards contracts, under art 6 Rome I Regulation. It is submitted that this can only mean that in case of a tort related to an existing employment contract, the conflicts rule concerning the latter would prevail and the rules expanded on above could apply which would normally result in the application of the law of the underlying contractual obligation.108 In
104 See art 4 Rome II Regulation. 105 See Recital 17 Rome II Regulation. 106 Explanatory Memorandum accompanying the EC Commission Proposal of 22nd July 2003, COM(2003) 427 final (69 2003/0168 (COD), 12–13. 107 The full wording of the paragraph – contemplating a choice of law as described in no 51 – is as follows: ‘But where the pre-existing relationship consists of a consumer or employment contract and the contract contains a choice-of-law clause in favor of a law other than the law of the consumer’s habitual place of residence, the place where the employment contract is habitually performed or, exceptionally, the place where the employee was hired, the secondary connection mechanism cannot have the effect of depriving the weaker party of the protection of the law otherwise applicable.’ 108 See no 49 above.
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any case, the Explanatory Memorandum expressly states that the application of the escape clause must remain exceptional, must provide a manifestly close relationship to the tort and finally that the sole aim of the provision is to ensure that one and the same relationship may be covered by the law of contract in one Member State and the law of tort/delict in another can be mitigated, until such time as the CJEU comes up with its own autonomous response to the situation.
D.
Adjudication of claims
1.
Source of law
63 The adjudication of claims of inter alia contractual and non-contractual actions109 with a foreign element depends on the procedural law of the competent court. Whether or not a court is competent to adjudicate a case under its law was addressed by the European legislator as early as in 1968 by the Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters.110 Subsequently this Convention was amended by four accession conventions eventually replaced by Regulation 44/2001 on Jurisdiction and Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Regulation).111 The Regulation, like the Convention before it,112 lays down rules on direct jurisdiction, applicable by the court seized of the original action in determining its own jurisdiction, and the recognition and enforcement of judgments given in other Member States of the European Union in which the Regulation applies.
2.
Scope
64 Again, the scope of the Brussels I Regulation is restricted by a list of specific exclusions such as the status or legal capacity of natural persons,
109 The material scope of the Brussels I Regulation to be applicable, the subject matter of the dispute must be of civil or commercial nature; for an evaluation of those terms: see CJEU 29-76, LTU v Eurocontrol [1976] ECR 1541; 814/79, Netherlands v Reinhold Rüffer [1980] ECR 3807; C-172/91, Sonntag v Waidmann [1993] ECR I-1963; C-167/00, Verein für Konsumenteninformation v Henkel [2002] ECR I-8111; C-266/01, Tiard v the Netherlands [2003] ECR I-4867. 110 OJ L 299, 31.12.1972, 32–42. 111 OJ L 12, 16.1.2001, 1–23. 112 In contrast to the prior Convention, the Regulation is directly applicable in the Member States under art 288 Treaty of the Functioning of the European Union (TFEU).
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rights in property arising out of a matrimonial relationship, wills and succession, bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings and finally social security and arbitration.113
3.
Rules for international jurisdiction in relation to contracts of employment
As the original version of the 1968 Brussels I Convention did not provide 65 any tailored rules for individual employment contracts, the CJEU discerned the purpose of protecting employees on account of their weaker socio-economic position and accordingly adopted special rules for international jurisdiction in relation to contracts of employment setting aside the original general regime.114 Building on these rulings, the 1989 version of the Brussels Convention made specific provisions for individual contracts of employment and the present-day Brussels I Regulation extracted the respective judgments in arts 18–21 of the Regulation. According to art 18(1) Brussels I Regulation, the rules on jurisdiction over 66 individual contracts of employment operate without prejudice to art 4 Brussels I Regulation,115 on defendants not domiciled in a Member State, and to art 5(5) Brussels I Regulation116, on secondary establishment of the defendants. Article 18(2) Brussels I Regulation combines both models, for example an employer who is not domiciled in any Member State but has a branch in a Member State; such employer is – with regard to disputes arising out of the operations of the branch – deemed to be domiciled in the Member State of secondary establishment.
113 See art 1(2) Brussels I Regulation. 114 See CJEU C-383/95, Rutten v Cross Medical Ltd [1997] ECR I-57; 133/81, Roger Ivenel v Helmut Schwab [1982] ECR 1891; 266/85, Shenavai v Kreischer [1987] ECR 239; 32/88, Six Contructions v Humbert [1989] ECR 341; Stone (fn 84) 138. 115 Art 4 Brussels I Regulation reads as follows: ‘(1) If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall … be determined by the law of that Member State. (2) As against such a defendant, any person domiciled in a Member State may, whatever his nationality, avail himself in that State of the rules of jurisdiction there in force … in the same way as the nationals of that State.’ 116 Art 5 Brussels I Regulation reads as follows: ‘A person domiciled in a Member State may, in another Member State, be sued: … (5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated’.
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67 As regards actions against an employer who is domiciled in a Member State, art 19(1) Brussels I Regulation mirrors the general rule in art 2 Brussels I Regulation117 and confers jurisdiction on the courts of the State in which the defendant employer is domiciled. Article 19(2)(1) Brussels I Regulation confers jurisdiction also on the courts of another Member State for the place where the employee habitually carries out his work or the last place where he did so. If the employee does not or did not habitually carry out his work in any one country, art 19(2)(b) instead vests jurisdiction to the courts of another Member State for the place where the business which engaged the employee is or was situated. 68 Conversely if an employer brings proceedings against his employee, the policy of protecting the socio-economic weaker party is clearly reflected in art 20(1) Brussels I providing that the employer may only sue the employee in the courts of the Member State where the employee is domiciled and thus bars the possibility of bringing proceedings at his workplace.118 Moreover, art 20 Brussels I Regulation does not provide any alternative jurisdiction for the employer to sue, but, however, permits by way of exception in art 20(2) Brussels I Regulation an employer to submit a counterclaim in the court in which a claim by the employee is pending. 69 Finally, art 21 Brussels I Regulation admits freedom of choice with respect to the determination of competent courts in matters of individual employment contracts. Such choice may prevail also over the aforementioned rules in arts 18–20 Brussels I Regulation but – to ensure the effectiveness of the protective policy – is subject to two exceptions. Firstly an agreement is allowed when it is entered into after the dispute has arisen and permitted only insofar as it allows the employee to bring proceedings in additional courts. 117 The basic rule of the Brussels I Regulation concerning direct jurisdiction is enshrined in art 2 Brussels I Regulation providing that ‘persons domiciled in a Member State shall … be sued in the courts of that Member State.’ The rationale behind this longstanding rule in favour of the defendant’s domicile was analysed excellently by the CJEU in 17 June 1992, C-26/91, Handte [1992] ECR I-3967 noting that the rule reflects the purpose of strengthening the legal protection of persons established within a particular ‘national’ jurisdiction, and rests on the assumption that a defendant can normally most easily conduct his defence in the courts of his domicile. See also CJEU C-440/97, Groupe Concorde v ‘Suhadiwarno Panjan’ [1999] ECR I-6307. Moreover, the defendant presumably keeps most of his assets at his domicile and enforcement against his property can most easily be effected there. Thus, the rule tends to concentrate both adjudication of the merits and enforcement of judgment in the same country, thereby avoiding unnecessary procedural complications. 118 Such action would be possible without this exception under art 5(1) Brussels I Regulation according to which a person could be sued in the courts for the place of performance of the obligation in question. See also CJEU 32/88, Six Constructions v Humbert [1989] ECR 341.
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E.
Rights of recourse and interaction between employers’ liability and workers’ compensation
Given the potentially applicable Regulations to claims based on employ- 70 ers’ liability, one of the essential questions in this report was which law governs recourse between the liable employer and the social security institution (which has already provided benefits). Given the different Regulations and the potentially divergent laws applicable, the likelihood was high that the redress between employers liable in one country and social security institutions handing out benefits in another was not entirely coordinated. Reality being the antithesis of expectation, none of the initial fears 71 transpired. As set out previously119 art 85 Regulation 883/2004 stipulates that the subrogation of a social security institution and the extent of the rights to which that institution is subrogated are to be determined in accordance with the law of the Member State to which the institution belongs and thereby postulates a specific conflict rule for the law applicable to the recourse of a social security institution. According to art 23 Rome I Regulation and art 27 Rome II Regulation, neither Regulation shall prejudice the application of provisions of EU law which, in relation to particular matters, lay down conflict of law rules relating to contractual or non-contractual obligations. As art 85 Regulation 883/2004 is most obviously a provision of EU law and lays down a rather specific rule for the law applicable to the recourse of a social security institution, it prevails accordingly.
V.
Alternatives, Evaluation and Conclusions
The interaction between workers’ compensation and employers’ liability 72 revealed itself as a fine machinery which – against initial doubts – works incredibly well. However the approach chosen by the European legislator remains open to criticism. The current coordination of European social security involves two Regulations each consisting of more than 100 articles, a multitude of decisions rendered on the topic by the CJEU and, given the rejection of a more simplistic approach in the latest, revised version of the more recent Regulation,120 is bound to become more labyrinthine with its maturation. Moreover, the current distributive
119 See no 35 ff above. 120 See fn 21 above.
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model, that is, the handling of claims by separate institutions in all Member States, results in excessive bureaucracy and correspondingly exorbitant costs. 73 A radical alternative121 to the existing conflicts based model – merely stipulating a Member State’s material law – could be an ‘Intra-Community Model’ for social security consisting as an original European Social Security System. Such a ‘post-coordinative’ model was developed and promoted by Pieters in the 1990s at a time when the Union consisted of 12 Member States; accordingly Pieters subsequently named his idea as ‘The thirteenth state’.122 He envisaged an autonomous, comprehensive, contribution based, ‘unitary’ European Social Security System (ESSS) which would address migrant workers only. Although membership of the ESSS could be optional, Pieters envisaged opening the system after a period of initial implementation thus allowing the ESSS to be in direct competition with the social security system in the Member States. Such a new start would also have the advantage that the implicit social security debt of earlier generations would not have to be borne by the current contributors. Since the maturation of the ESSS would be in a rather distant future one could upgrade benefits to create an attractive scheme. It is questionable whether such a system would be in the range of competences of the European legislator. As art 48 TFEU provides, the European Parliament and the Council shall make arrangements to secure aggregation and payment of benefits to persons resident in the territories of Member States.123 Such undertaking undoubtedly presupposes Member States’ social security systems independent of European legislation.124 Moreover, the proposal’s definition of a migrant worker remains rather unclear. Are migrant workers only those who work more than two weeks, two months or two years in a country other than his original workplace? If such a strict limitation is envisaged, the proposal could be rendered practicable but would in any case exclude a smaller or greater group of potential applicants resulting in some remainder of the current coordination system. This would essentially result in doubling the current bureaucracy as contacts between the ESSS and the Member States would have to be coordinated as well. If this is to be avoided, an opt-in of virtually 121 Inspired by the history of legal integration: see K Zweigert, Grundsatzfragen der europäischen Rechtsangleichung, ihrer Schöpfung und Sicherung, in: FS Dölle (1963) 401 ff; S Leibfried, Social Europe, Zentrum für Sozialpolitik (ZeS) Arbeitspapier No 10/ 91 (1991) 33. 122 See D Pieters/S Vansteenkiste, The Thirteenth State (1993) 14 ff. 123 See no 8 above. 124 Eichenhofer (fn 8) 486.
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everyone ever paying a work-related visit to a Member State must be permitted to join which would clearly violate the competence set out above. Finally, due to the distant maturity of the ESSS, benefits could indeed be upgraded and thereby elevate the attractiveness of the system. This however would result in a currently carefully-avoided intra-firm inequality. Two sorts of social protection would co-exist in one work setting.125 The current state of coordination of workers’ compensation and employ- 74 ers’ liability constitutes a whole area of law which is extremely well developed and apparently operates well enough for all parties concerned as for several decades migrant workers, their employers and social insurers have been protected and have become familiar with a system which, despite its at times complicated character reveals upon close inspection its ability to function sufficiently well.
125 Cf Leibfried, ZeS-Arbeitspapier No 10/91 (1991) 34.
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The Changing Landscape of Work Injury Claims: Challenges for Employers’ Liability and Workers’ Compensation Ken Oliphant*
I.
Introduction
A.
The Changing Landscape of Work Injury Claims
The landscape of work injury claims has changed from the time of 1 Friedrich Engels’ famous account of the English industrial poor in 1844, which describes the ‘multitude of accidents’ that left their victims, if they survived, to wander the streets like ‘an army just returned from a campaign’.1 In this period, work-related injury was mostly2 the result of a single sudden trauma – an accident rather than a disease or a process: the severing or crushing of body parts in moving machinery; burns in fires and explosions; bone fractures and dislocations; cuts; maiming from being hit by ‘flying parts’; and the like. These ‘old’ injuries were associated with labour-intensive heavy industry, which in Western Europe, North America, Japan and other modern economies has been on the decline for many decades. The nature of work in the modern world has changed, with a shift from industry to office work and the service sector. In the UK, for example, two-thirds of jobs in 1948 were in heavy industry, whereas today 70 % of employees work in office and service industries.3 The accident rate has therefore fallen significantly.4
* 1 2 3 4
The author is grateful to his colleague Thomas Thiede for his assistance in the preparation of this paper. F Engels, The Condition of the Working Class in England in 1844 (English edn 1892) 164. But not exclusively: Engels, for one, was also alive to the risk posed by industrial disease: ibid, 163 f. See England & Wales no 45. For evidence of decreasing accident and fatality rates in recent years, see Australia no 111; England & Wales no 69 and 131; Germany no 27; Italy no 8 f (and accompanying table); Japan no 8.
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2 With increasing scientific recognition of the adverse impacts of work on health, diseases and process-related conditions consequently assumed greater relative importance.5 Technological development – including the use of new materials (eg asbestos) or processes (eg radiation) – played a significant role, as it often entailed increased risks for the worker, which were only slowly discovered because of the invisible and sometimes uncertain biological or chemical processes involved and the long latency periods of the resulting conditions. The epitome of the new risks facing employees as a result of technological change has been asbestos. Though the adverse health effects of asbestos (asbestosis, mesothelioma, and cancers of other kinds) have now been known for some time,6 the incidence of asbestos-related disease is still on the rise, with a projected peak for mesothelioma in around 2018.7 3 As a result of these and other changes, new types of work injury claims have emerged. Where the previous paradigm was of physical harm caused by sudden impact, these new types of claim involved biological processes or chemical reactions, purely mental conditions or repetitive physical movements. They also reflected new sensibilities, including an intolerance of discrimination and harassment, which were, in the past, viewed as the lot of the working woman and workers from racial or ethnic minorities: sexual innuendo and racial insults were normal workplace fun or banter, low pay for women the normal preference of men with families to support over housewives earning pin money on the side. Only comparatively recently were such stereotyped attitudes and behaviours challenged and identified as injurious, and only then was the law willing to impose liability for the injury to dignity and feelings that such conduct might cause. 4 The new work injury claims that have emerged, even if there is an element of imprecision in their definition, have had a dramatic effect on the compensation and liability landscape. Disease and process-injury claims often result from systematic exposure of workers to noxious conditions, and the numbers affected can be very large – much larger than may be injured in even a catastrophic single accident.8 In the UK, following successful High Court test cases brought by former coal 5 See further England & Wales no 45. 6 See P Bartrip, History of asbestos related disease (2004) 80 Postgraduate Medical Journal 72. 7 J Peto et al, The European mesothelioma epidemic (1999) 79 British Journal of Cancer 666. The projection relates only to Western Europe. 8 Cf the Courrières mine disaster in 1906 in France, in which over 1,200 miners were killed: see (1907) 1 Coal Mining LJ 236.
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miners in the late 1990s, special procedures were introduced to resolve some 760,000 claims in respect of respiratory disease and injury from the use of vibrating tools. Though the medical conditions of which the claimants complained were relatively minor, the sheer volume of claims resulted in very large financial liabilities: £2,300 million for respiratory disease, and a further £1,700 million for vibration-induced injury.9 It should not be thought, however, that disease and process injuries are typically less serious than accidental injuries. In fact, the opposite is true: on average, the effects of disease are more severe than those of accidental injury, and are more likely to result in serious medical needs and residual incapacity.10
B.
The social construction of injury claims
Injuries and the claims to which they give rise are not mere medical or 5 legal facts but also social constructs. Admittedly, work injury claims reflect the risks to which workers are actually exposed in their employment, and the recognition of the conditions to which they give rise by medical science,11 but they also reflect subjective perceptions and attitudes, and the meaning attached by individuals to their experiences, and are mediated by a whole set of socio-cultural phenomena (social position, ideology, institutions, etc). This is the premise underlying a classic analysis of ‘naming, blaming and 6 claiming’ by Felstiner, Abel and Sara, dating from 1981.12 Their basic idea is that legal disputes emerge from a four-stage transformative process as what is experienced by an individual is first named as an injury, then blamed on someone else, before (in the third transformation) it is made the subject of a claim. A dispute emerges when – in a final transformation – the claim is rejected, and the injured worker resorts to the legal process. Felstiner and his co-authors explain the point with reference to asbestosis: ‘asbestosis only became an acknowledged “disease” and the basis of a claim for compensation when shipyard workers stopped taking for granted that they would have trouble breathing after ten years of installing insulation
9 England & Wales no 116. 10 England & Wales no 45. 11 For a provocative analysis, emphasising the pressures exerted on this process by legal institutions, including tort and workers’ compensation, see L Noah, Pigeonholing Illness: Medical Diagnosis as a Legal Construct, 50 Hastings LJ 241 (1999). 12 W Felstiner/R Abel/A Sarat, The Emergence and Transformation of Disputes: Naming, Blaming and Claiming, 15 L & Soc Rev 631 (1981).
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and came to view their condition as a problem.’13 More specifically, it came to be viewed as a problem for which blame could be attributed: ‘our diseased shipyard worker makes this transformation when he holds his employer or the manufacturer of asbestos insulation responsible for his asbestosis.’14 7 The insights in the Felstiner paper suggest a promising analytical framework for addressing the changing landscape of work injury claims, and the resulting challenges for workers’ compensation (WC) and employers’ liability (EL). For present purposes, it is enough to focus on two stages of the analysis:15 the perception of the initial injurious experience as injurious by the person affected, rather than (say) a normal episode of life (naming); and the latter’s attribution of responsibility for the injury to someone or something else (blaming). The ‘someone’ here refers especially to the defendant employer (where employers’ liability is at issue) and the ‘something’ to the employment (where workers’ compensation is in question). 8 These two transformative steps provide a bipartite framework for the analysis below, which first addresses the recognition of new injurious conditions (naming) and then the attribution of recognised conditions to an employer or the employment (blaming). The thesis advanced here is that new work injury claims typically possess characteristics which have obstructed the naming and blaming process in the past, and continue to pose difficulty for compensation and liability systems in the present. On the one hand, naming may be obstructed in the case of less ‘obvious’ injuries, for example, diseases as opposed to accidental injuries, conditions whose onset is gradual rather than resulting from a single sudden trauma, or which are internal rather than external, especially if the effects are mental rather than physical, and injury to dignity or emotional wellbeing rather than productive capacity. On the other hand, blaming may be obstructed in the case of an injury of a progressive or cumulative nature, precisely because it is not attributable to a single incident, or where causation is uncertain (eg where there are alternative possible causes, or where the aetiology is simply unknown). Such diffi-
13 14 15
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W Felstiner/R Abel/A Sarat, 15 L & Soc Rev 631, 635 (1981). Ibid. Whether or not a claim is made, and whether, if it is initially rejected, the claimant then turns to law, are also undoubtedly important questions, but there is already a substantial literature addressing ‘propensity to claim’, and it is not the focus of the present contribution. For an illuninating discussion, see HM Kritzer, Propensity to Sue in England and the United States of America: Blaming and Claiming in Tort Cases (1991) 18 J Law & Soc 400.
The Changing Landscape of Work Injury Claims
culties are magnified by the long latency periods that are also a characteristic of new work injury claims.
C.
The compensation and liability framework
A further aspect of the thesis is that the recognition and attribution issues 9 highlighted above impact differently on EL and WC regimes. In general, employers’ liability experiences greater difficulty with issues of attribution (blaming), and workers’ compensation with issues of recognition (naming). To pave the way for what follows, it is necessary to make some preliminary remarks about each of the two types of system.
1.
Workers’ compensation16
Following its introduction in Germany under Bismarck’s social insurance 10 legislation of 1884,17 workers’ compensation was rapidly embraced by other legal systems around the world. Each of the twelve countries represented in this study (Australia, Austria, Denmark, England and Wales, France, Germany, Italy, Japan, the Netherlands, Poland, Romania and the United States of America) introduced workers’ compensation in some form or other. But in the years following World War II, there was a significant retreat from workers’ compensation in two of those countries, namely, England and the Netherlands. The Netherlands abolished its previous system of workers’ compensation in 1967, seeking to integrate compensation for occupational injuries wholly within general social welfare provision.18 The analysis of workers’ compensation below therefore makes no reference to Dutch law. By contrast, compensation for occupational injuries in England is addressed below, even though the system has been radically transformed and severely restricted.19 The British Industrial Injuries Scheme (IIS) is very much a watered-down form of workers’ compensation, with benefits paid at fixed rates rather than related to actual pre-accident earnings. IIS replaced what was previously known as workers’ compensation on the latter’s abolition in 1948, and by 1990 (when the link with pre-accident earnings was broken20) had been sub16 17 18 19 20
The term is used here to embrace work accident insurance and other equivalent institutions. Germany no 1. Netherlands no 3. England & Wales no 10 f. England & Wales no 68.
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stantially integrated into the ordinary social security system. Because the benefits paid are distinct from those paid in respect of non-work-related ill-health, however, the system may still be considered a form of workers’ compensation and thus merits attention here.
2.
Employers’ liability
11 Employers’ liability survives in all systems addressed in this study, albeit in different forms. In broad terms, four types of approach can be identified: (1) Full employers’ liability, as found in England and the Netherlands, following the move away from workers’ compensation described above.21 General principles of civil law apply, and there is no restriction on the claims the injured worker can bring. The employer is liable not just to compensate the injured worker but also to reimburse any benefits paid under the social welfare system. (2) Employers’ liability only as a top-up for workers’ compensation, as found in Denmark, Italy, Japan, Poland and Romania, and some Australian jurisdictions. Compensation is available both for heads of loss not compensated by workers’ compensation (eg pain and suffering) and for heads of loss that workers’ compensation covers only partially (eg loss of earning capacity).22 Following the helpful terminology applied in Italy, the former may conveniently be termed ‘complementary damage’ and the latter ‘differential damage’.23 (3) Restricted employers’ liability, arising only in respect of intentional injury, as in Austria, France, Germany and some US jurisdictions.24 EL is displaced by WC for merely negligent injuries. The French approach, though rather complex, is particularly interesting because, in addition to the claim in the civil courts for wilful misconduct, it is also possible for the injured worker to bring a claim in the social security courts in respect of the employer’s ‘inexcusable negligence’ and thereby to recover an additional sum from the employer over and above that paid as workers’ compensation.25 21
22 23 24 25
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England & Wales no 94; Netherlands no 13 ff. For discussion of the EL ‘revival’ in these two jurisdictions, see G Wagner, New Pespectives on Employers’ Liability – Basic Policy Issues, below, no 23 ff. Australia no 74; Denmark no 44 ff; Italy no 77 f; Japan no 44; Poland no 86 ff; Romania no 89. Italy no 85. Austria no 112; France no 101 ff; Germany no 42; USA nos 1 and 91 (some states). France no 83 ff.
The Changing Landscape of Work Injury Claims
(4) Complete abolition of employers’ liability for injuries to which workers’ compensation applies. Of the jurisdictions included in this study, only two Australian state jurisdictions – Northern Territory and South Australia – seem to have adopted this solution.26 In categories (3) and (4), an ‘employer privilege’ may be said to apply because the employer benefits from an immunity (or partial immunity) from liability in return for contributing to the workers’ compensation fund.27 After some hesitation, German law extended an equivalent protection to the benefit of the victim’s fellow employees – at least in part because allowing claims against the latter would undermine the employer’s immunity where the employee has a right to an indemnity from the employer in respect of liabilities incurred in the course of employment (other than in cases of intentional or grossly negligent injury).28 Elsewhere, direct claims against a co-worker remain a possibility.29 A number of intermediate approaches, falling in-between the four cate- 12 gories outlined above, are also found in particular jurisdictions. The continued application of ordinary principles of civil liability alongside workers’ compensation, but with restrictions on the heads of damage recoverable (such as the exclusion of damages for non-pecuniary loss),30 may be mentioned by way of example. It should also be noted that all systems allow EL at least for harms that lie 13 outside the scope of workers’ compensation, such as harassment and discrimination, and damage to property.31 In some systems, EL may also arise where the employer has failed to secure appropriate WC cover32 or in respect of injuries sustained in a traffic accident.33 Mirroring to some extent these different approaches to ‘direct’ EL (em- 14 ployer-employee) are the approaches taken by different systems to ‘indi26 27 28 29 30 31
32
33
Australia no 73. Austria no 8 ff, 108, 110 ff and 155 ff. Cf England & Wales nos 1 and 94 (no employer privilege in modern English law). Germany no 43 ff. See also Australia no 101. Austria no 109; USA no 104. Australia no 73 (some states). Australia no 86 f; Austria no 110 ff; Denmark no 58 ff; England & Wales no 119 ff; France no 143; Germany nos 46 and 55 ff; Italy nos 85 and 100 ff; Japan no 57 f; Poland no 98 ff; Romania nos 91 and 110 ff; USA no 96 ff. USA no 90. In most countries, the worker is compensated in the normal way, and the workers’ compensation institution can then seek reimbursement from the employer: see Australia no 64 (payment from separate fund); Denmark no 36; Romania no 82 f. Austria nos 8 and 118; France nos 96 and 101 ff; Germany no 42. In the UK and USA, workers’ compensation does not extend to commuting accidents: England & Wales no 37 f; USA no 12.
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rect’ EL by way of recourse actions brought against employers by the workers’ compensation institutions. In most countries, such recourse claims are excluded altogether,34 but they are allowed in cases of intentional or grossly negligent injury in Austria, France and Germany,35 and in Italy where the employer has been convicted in criminal proceedings.36 In the UK, there are no recourse actions as such, but the same outcome is attained by the automatic deduction of industrial injuries benefits from the damages paid and the reimbursement of their value to the relevant state agency.37 This demonstrates another respect in which compensation for industrial injuries has been assimilated with social security in the UK, as the benefit recovery scheme applies to a wide range of welfare benefits and not just those relating to occupational injury.
D.
Plan
15 The following two sections of this paper (Sections II and III) address respectively the ‘recognition’ and ‘attribution’ issues that were outlined above (Section I.B). In them, employers’ liability and workers’ compensation are treated separately. The particular challenges facing each independently, and those arising from their mutual coordination, are then considered in Section IV. The author’s recommendations are outlined in Section V.
II.
Recognition issues (‘naming problems’)
A.
Issues for Workers’ Compensation
1.
An accident preference
16 A majority of workers’ compensation systems in this study maintain a fundamental distinction between work accidents and work-related illnesses,38 and, in one way or another, accord preferential treatment to victims of the former. In many systems, accidental injury in the workplace
34 35 36 37 38
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Denmark no 47; Japan no 33; Poland no 83; Romania no 83. It appears that the same approach is also taken in Australia and the United States: cf Australia no 64; USA no 81 f. Austria no 94 ff; France no 83 ff; Germany no 36 ff. Italy no 69. England & Wales no 87. Austria no 29; Denmark no 11; England & Wales no 45; France no 26; Germany no 9 ff; Italy no 23 f; Japan no 13; Poland nos 21 and 45; Romania no 20; USA nos 14 and 21.
The Changing Landscape of Work Injury Claims
presumptively attracts compensation, while illnesses and other conditions arising by a gradual process are prima facie excluded, and must either fit within a list of compensable diseases or satisfy more rigorous evidential requirements.39 Even in the USA, whose workers’ compensation systems are said to cover diseases ‘as comprehensively as injuries’,40 compensation for illness is often subject to limitations or restrictions that do not apply in respect of accidental injury.41 There is broad consensus that the principal distinguishing characteristic 17 of accidental injury is that is caused by a single event, or series of events, rather than a gradual process continuing over time.42 An element of ‘suddenness’ is often explicitly required.43 In other systems, though injuries need not be sudden to be compensable, they must manifest within a limited period of time.44 In Denmark, this is a fixed period of five days stipulated by statute.45 In Poland, though ‘suddenness’ is formally required, it is understood to mean only that the injury must arise within the course of a single working day.46 Elsewhere, there is no fixed maximum period, and the length of time over which the worker’s condition is contracted is simply one relevant factor in a global evaluation of a basket of considerations.47 Of the countries covered by this study, it is only Australia that has moved 18 away from an express reliance on the concept of ‘accident’. In most Australian jurisdictions, there is no formal category of accidental injury, and the definition of compensable disability expressly includes a disease or other form of progressive or cumulative condition that results in impairment of the worker.48 The idea of an ‘accident’ may, however, still be invoked in distinguishing disease from other forms of personal injury, as is still required in various circumstances.49
39 40 41 42 43 44 45 46 47 48 49
See further Section III.A.2 below. USA no 22. See further no 25 below. Austria no 30; Denmark no 11 (sudden or within a period of five days); England & Wales no 49; France no 27 ff; France no 27 ff.; Germany no 13; Italy no 24 (‘violent’); Poland no 22 (but ‘sudden’ means ‘not longer than a working day’: no 22); Romania no 24 (‘immediate’). Austria no 10; Denmark no 11; England & Wales no 49; USA no 14. Denmark no 11. Poland no 22. See especially England & Wales no 49, highlighting as relevant factors continuity, length of time and whether or not a particular event causing injury can be identified. Australia no 17. It may also be noted that, in some US jurisdictions, occupational disease is included in the definition of ‘accident’: USA no 14. Australia nos 18 and 21.
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19 The harsh outcomes that may result from a rigid accident/process distinction are reduced in practice by a number of devices employed in different systems. In the first place, conditions that do not result from a single triggering event may nevertheless be considered to arise by accident on the basis that their onset is attributable to a series of incidents: this is expressly provided for in Austria, England and most US states.50 An alternative means of expanding the range of compensable conditions is employed in Denmark: as already noted, personal injury is considered to be an accident if it is caused by an incident or influence that occurs within a period of five days.51 A further technique used to allow compensation of a processrelated condition as an accidental injury is by pinpointing a final rupture resulting from a cumulative process as itself an accident,52 for example, where pressure on a nerve from a buckle on a knee over a period of ten weeks culminated in paralysis of the leg,53 or where prolonged overexertion over several days resulted in a heart attack.54 Use of these mechanisms demonstrates that what is an ‘accident’ is not immutably fixed, but has developed over time in response to perceived needs. 20 Despite all such efforts to limit the traditional accident preference, and extend compensation to process-related conditions, the majority of the latter continue to be excluded from cover unless they are classified as an occupational disease. Such classification may involve an element of fiction insofar as the cause is physical rather than chemical or biological. Examples of this fictive extension of meaning include such conditions as chronic deterioration of the vocal chords caused by excessive vocal strain,55 occupational deafness,56 hand cramps,57 and back pain.58 As will also be seen in respect of ‘true’ disease claims (considered below), there has been a reluctance to recognise conditions which are common in the population at large – for example, upper limb disorders.59 The minimum time-exposure thresholds stipulated for many process-related conditions are just one concrete manifestation of this attitude.60
50 51 52 53 54 55 56 57 58 59 60
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Austria no 30; England & Wales no 50; USA no 14. Denmark no 11. England & Wales no 50. England & Wales no 50. Poland no 25. Poland no 49. England & Wales no 51. England & Wales no 51. Denmark no 12. England & Wales no 54. By way of example, in Poland compensation for chronic deterioration of the vocal chords is limited to cases where the excessive vocal strain from which the deterioration
The Changing Landscape of Work Injury Claims
2.
Disease
a) Preliminary remarks Historically, cases of disease have played a lesser role than cases of accidental 21 injury in workers’ compensation – as indeed they have in employers’ liability (see no 42 below). But disease claims can no longer be regarded as secondary. Over time, the lists of prescribed diseases for which compensation is paid have been extended as medical science has progressed, and the risks entailed by technological developments have been identified. There has also been a partial move away from closed lists to open lists, or simply to the coverage of disease on (at least superficially) the same basis as accidental injury, even if some residual restrictions and limitations still apply.
b) Approaches to the compensation of disease Coverage of disease under workers’ compensation has traditionally lagged 22 behind coverage of accidental injury.61 Disease claims were excluded from workers’ compensation (statutory accident insurance) as originally introduced in Germany in 1885, and were first brought within the scope of the scheme in 1925, and then only in prescribed circumstances.62 A similar history unfolded in other countries.63 Even now, workers’ compensation schemes in four of the countries addressed in this study (Austria, England, Germany and Poland) limit coverage by reference to a ‘closed list’ of prescribed diseases, excluding occupational diseases that are not on the list.64 Though the lists are updated from time to time to reflect develop-
61 62
63 64
results lasted for a period of at least 15 years: Poland no 49. See also England & Wales no 55. USA no 21. See also England & Wales no 56 (‘the process of adding new diseases and occupations has been very slow’). Germany no 11. For further historical background, see EFD Engelhard, Shifts of WorkRelated Injury Compensation. Background Analysis: The Concurrence of Compensation Schemes, in: S Klosse/T Hartlief (eds), Shifts in Compensating Work-Related Injuries (2007) nos 7 ff and 63 ff; RIR Hoop, Shifts in Work-Related Injuries: An Explanatory Analysis, in: ibid, no 14 ff; Deutsche Gesetzliche Unfallversicherung Spitzenverband/Deutsches Historisches Museum, Sicher arbeiten – 125 Jahre Gesetzliche Unfallversicherung in Deutschland, 1885–2010 (2010) 6 and 8 f. USA no 21. See also England & Wales no 45 (‘traditional preference for traumatically caused disability’). Austria no 31, England & Wales nos 47 and 51 ff; Germany no 11; Poland no 48. In Austria, it may be said the list is only partially closed because there is a broad residual provision applying to illnesses that are not specifically listed but are exclusively or predominantly caused by the use of dangerous substances or radiation if work-related: Austria no 31.
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ments in medical science,65 the listing of new diseases has tended to be very slow, as illustrated in England by a delay of 30 years between first investigation of vibration white finger (hand-arm vibration syndrome) and recognition of the entitlement to compensation.66 23 Nowadays an open-list approach has wider currency, enabling a worker suffering a disease that is not on the list to recover compensation if the condition can be shown in the individual case to be sufficiently workrelated. Among the countries included in the present study, this is the approach adopted in Australia (in several jurisdictions), Denmark, France, Italy, Japan and a majority of states in the US.67 For the victim, this is the most desirable approach. It has the dual advantage that, for conditions on the list, causation and the requisite link with the employment may be presumed unless the contrary is proven,68 while, for conditions not on the list, it remains possible to establish entitlement, albeit with the burden of proof lying on the claimant.69 24 In Romania and some Australian jurisdictions, there are no lists,70 so the victim must discharge this burden of proof in every case, though (other than in respect of mental illnesses: see no 31 ff below) there is no restriction on the type of disease for which compensation may be paid. This is an advantage relative to those systems in which a closed-list approach continues to apply, where no compensation is paid for diseases not on the list even if their origin and nature is occupational. 25 It cannot safely be assumed, however, that compensation for disease is a straightforward matter in countries that have moved away from, or never adopted, the closed-list approach, because disease claims may still be subject to limiting conditions that do not apply to accidental injuries.71 Compensation may be restricted to particular occupations, a minimum
65 66 67
68
69 70
71
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See eg England & Wales no 56. England & Wales no 56. Australia no 20; Denmark no 12 f; France no 33 f (subject to a 25 % disability threshold for non-prescribed diseases); Italy no 25; Japan no 13; and the USA no 21 (in some states, consequent on the judicial recognition of a ‘catch-all’ residuary category of occupational diseases). Australia no 19; France no 33. Amongst closed-list systems, see England & Wales nos 47 and 52 ff; Poland no 48. At least informally, a comparable presumption also applies to accidental injuries, as – provided they occur on work premises during work hours – it is routinely assumed that they are work-related: see eg France no 9 ff. France no 33. Romania no 23. Some Australian jurisdictions do not provide a list of prescribed conditions either, but have nevertheless introduced a legislative presumption of causation in certain broadly-defined categories of case: Australia no 20. Australia no 18; England & Wales no 53 ff; Poland no 47; USA no 25.
The Changing Landscape of Work Injury Claims
period of exposure to risk and a maximum period of onset following exposure may be imposed, and a minimum level of severity may be stipulated.72 It may also have to be shown that the occupation was ‘a significant factor’ in the worker’s contraction of the disease, and not merely a contributory cause.73 This restrictive approach reflects a reluctance to cover conditions which 26 are common in the population at large (so-called ‘diseases of life),74 and a fear of overwhelming the system with a very large number of cases.75 Its consequence is that diseases covered by workers’ compensation ‘represent only the tip of the iceberg of occupational ill-health generally’.76
c) Empirical evidence Testimony to the increasing importance of disease claims is provided by 27 statistical evidence about workers compensation from several countries, from which it is immediately apparent that developments have been somewhat uneven. In England, the number of new claims relating to disease is now the same as the corresponding figure for accidental injury – over one thousand of each per month – though the historical preference for accidents is reflected in the total numbers of those in receipt of benefit (including ongoing entitlements in claims accepted in previous years): some 200,000 relating to accidental injury and only 58,000 relating to disease.77 In the US, subject to a few remaining restrictions, workers’ compensation is said now to cover diseases ‘as comprehensively as injuries’.78 In Australia, focusing on ‘serious’ WC claims (ie those arising from death, permanent incapacity or temporary incapacity requiring an absence from work of one working week or more), almost three-quarters (74 %) were for injury and only one-quarter (26 %) for disease.79 It seems a plausible hypothesis that disease cases have a greater representation amongst more serious incapacities.
72 73 74 75 76 77 78
79
England & Wales no 53 ff; France no 33 (25 % disability threshold for non-listed conditions). USA no 25. See also Australia no 18 (most jurisdictions require a significant or substantial contribution). England & Wales no 45; USA nos 21 and 24. USA no 22 (referring especially to silicosis and asbestosis). England & Wales no 54. England & Wales no 58. USA no 22. However, it is admitted that distinctions remain because of the capacity of diseases like silicosis and asbestosis to overwhelm the workers’ compensation system (ibid). SafeWork Australia, Compendium of Workers’ Compensation Statistics Australia 2008– 2009, table 6.
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28 In other systems, the proportion of disease claims is much lower. In France, 658,847 new work accident claims were accepted in 2010, as opposed to 50,688 claims of occupational illness.80 In Austria, there were 174,036 work-related accidents in 2009, but only 1,687 claims of workrelated illness.81 In the same year, the respective figures for Italy (accepted claims only) were 468,568 and 7,233.82 29 Interestingly, there is not as much identity as one might suspect in the diseases that are most commonly compensated in the different systems. In England, deafness, vibration white finger, pneumoconiosis and asbestoslinked disease each account for around 15 % of new claims.83 In Australia, the most common disease claims involve disorders of muscle, tendons and other soft tissues (6 % of all serious claims), disorders of spinal vertebrae (6 %) and mental disorders (5 %).84 In France, two-thirds of occupational disease belong to the category of muscular and bone-related conditions, but almost half of the benefits paid relate to afflictions caused by the inhalation of asbestos.85 In Austria, the most common claims for occupational illness, out of the total of 1,687, were for noise-related hearing loss (883) and skin problems (246).86 It remains open to question whether these differences result from different employment patterns or from different social perceptions or legal prescriptions of what is a compensable injury, and how they are affected by the extent to which civil actions for damages – including claims against alternative defendants87 – are allowed in the respective jurisdictions.
d) A new EU-wide approach? 30 Existing divergences between national approaches, in particular as regards non-listed conditions, have prompted the European Commission to recommend a Europe-wide schedule of occupational diseases.88 The 80
81 82 83 84 85 86 87 88
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Caisse nationale de l’assurance maladie des travailleurs salariés, Rapport de Gestion 2010: Bilan financier et sinistralité, Tables 31 and 41, available online via www.risquesprofessionnels.ameli.fr. Austria no 16. Italy no 10 f. England & Wales no 58. SafeWork Australia (fn 79) vii and figure 7. By contrast, sprains and strains of joints and adjacent muscles alone accounted for 43 % of all serious claims. France no 34. Austria no 16. Cf products liability claims in the US in respect of dangerous work materials or equipment: USA no 104; Wagner (fn 21) no 74 ff. Commission Recommendation of 22 May 1990 to the Members States concerning the adoption of a European schedule of occupational diseases, 90/326/EEC, Official Journal
The Changing Landscape of Work Injury Claims
Commission proposes in particular that Member States introduce into their national laws the right of a worker to compensation in respect of occupational diseases if the worker is suffering from an ailment which is not a listed disease but can be proved to be occupational in origin and nature.89 As noted above, this diverges from the approach in Austria, England, Germany and Poland (where a ‘closed list’ approach is taken), and in the Netherlands (which has no workers’ compensation at all). Nevertheless, despite the strong political opposition such a reform would likely attract, there is a strong case for giving the Commission recommendation renewed consideration (see no 72 below).
3.
Mental illness
a) In general Mental illness90 constitutes, in compensation law, a particularly trouble- 31 some category of ill-health. It may arise either from a single sudden trauma or merely from the cumulative build-up of psychological pressures over time. In the modern world, the severe impact of such conditions is increasingly recognised, and both the European Commission and the Parliament have drawn attention to the link between psychological hazards at the workplace, such as stress, harassment and mobbing, and the disorders they may cause.91 Most workers’ compensation schemes accept that mental conditions are in 32 principle compensable injuries,92 though they are expressly excluded in some jurisdictions in Australia and the United States.93 Compensation extends also to physical harm that the psychiatric condition triggers – for
89 90
91
92 93
(OJ) L 160, 26.6.1990, 39–48; Commission Recommendation of 19 September 2003 concerning the European schedule of occupational diseases, OJ L 238, 25.9.2003, 28–34. See also England & Wales no 56. Recommendation of 22 May 1990, § 2; Recommendation of 19 September 2003, art 1(2). The focus here is on freestanding mental illness rather than mental illness consequent on a physical injury, which seems to be compensable in all systems. See specifically Austria no 53 and England & Wales no 62. Commission Recommendation of 19 September 2003 (fn 88), Art 1(7); European Parliament resolution of 15 January 2008 on the Community strategy 2007–2012 on health and safety at work (2007/2146(INI)) §§ 18 and 48. Australia nos 17 and 23; Austria no 34; Denmark nos 12 and 16; England & Wales no 62; France no 30; Italy nos 23 and 34; Poland no 32; USA no 14. Australia no 37; USA no 31.
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example, the worker’s suicide.94 In most existing workers’ compensation schemes, however, there is only limited recognition of work-related mental illness. As Lewis notes as regards England: ‘In spite of the very widespread nature of mental illness and stress and the recognition that much of it is associated with work, there is little acknowledgement of this in the industrial scheme.’95
b) Approaches to compensation for mental illness 33 Entitlement to workers’ compensation in respect of mental illness is limited, in particular, by the requirement that there be a relevant compensation ‘trigger’: the condition must either result from an accident or satisfy the requirements for compensation as a disease, which may not be an easy matter.
i) Mental illness caused by accident. 34 Mental illness caused by an accident is apparently covered in all systems except those which reject claims in respect of psychiatric harm altogether. Examples mentioned in the preceding reports include post-traumatic stress from an attack in the workplace96 or from witnessing a work accident,97 and anxiety or depression triggered by an interview with a supervisor,98 compulsory early retirement,99 or specific incidents of bullying or harassment.100 However, the line between mental illness resulting from an accident and mental illness resulting from the general stresses of the job may be hard to draw. In England, for example, it was doubted whether a fire officer could recover benefit when he suffered post-traumatic stress disorder as a result of attending a series of horrific fatal crashes unless he could identify the precise incidents which had specifically caused his mental state.101 And in France it must be shown that the psychological state appeared suddenly after a specific incident.102 Evidently, many in-
94
Austria no 28; France nos 14, 24 and 122 (suggesting that there may be additional compensation from the employer in such a case on the basis of the latter’s inexcusable fault); Japan no 16. As to self-inflicted harm in general, see USA no 13. 95 England & Wales no 62. 96 France no 44. 97 Cf England & Wales no 62. 98 France nos 29 and 44. 99 Japan no 16. 100 See no 38 below. 101 England & Wales no 62. 102 France no 44.
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stances of psychiatric harm cannot be attributed to a specific event or events, but rather to an ongoing state of affairs entailing the victim’s exposure to psychological stressors over time,103 and so can only attract compensation – if at all – if they satisfy the requirements applying in respect of occupational disease.
ii) Mental illness amounting to an occupational disease. Under the closed-list approach taken in Austria, England, Germany and 35 Poland, mental and dignitary injuries are generally excluded. It is specifically noted in respect of England that there has been considerable reluctance to include mental illnesses in the applicable schedules, and stressrelated illnesses are not included at all.104 As regards the latter, it is therefore ‘almost impossible to claim’.105 This also seems to be true in other closed-list systems. In Germany, for example, no psychiatric conditions at all are listed in the relevant Order.106 And even where compensation for psychiatric conditions is accepted in principle, it may be limited in other respects, for example, through the imposition of a threshold of minimum disability.107 It is therefore evident that compensation of a psychiatric condition as a 36 disease may only be possible where an open-list approach is taken (as in Denmark, France, Italy, Japan and certain jurisdictions in Australia and the USA),108 than where the relevant schedules exhaustively define the conditions in respect of which compensation can be paid. Under an openlist approach, the widespread reluctance to list forms of mental illness for compensation purposes does not preclude compensation on the basis of a proven occupational link in the individual case.109 A notably expansive approach is taken in Japan, where a mental disorder is considered to be occupational when the victim’s work involved a risk of mental illness, and when no other cause for the illness suffered can be identified in the six months prior to its onset. Compensation may thus be payable in respect of mental disorder attributable to the employee being burdened with a quota
103 104 105 106
Austria no 34 (referring specifically to harassment). England & Wales nos 54 and 62. England & Wales no 62. Occupational Disease Order (Berufskrankheiten-Verordnung) of 31 October 1997 (BGBl I S 2623), Annex 1. 107 Australia no 37 note (New South Wales and Victoria). In France, it appears that the normal 25 % disability threshold applicable to non-listed conditions applies: see France no 33. 108 See no 23 above. 109 Denmark no 17; Japan no 16.
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that is difficult to meet, continually ordered to work overtime for long periods of time, or subjected to bullying, harassment or unjust discrimination.110 The European Commission also apparently envisages that – as with any condition falling outside its proposed uniform schedule – all psychosocial disorders should in principle be compensable on proof of their occupational origin and nature.111 37 In no-list jurisdictions, the victim of occupational mental illness has broadly the same opportunity to claim workers’ compensation. In Romania compensation may be payable under the provisions applicable to occupational disease.112 In Australia, individuated proof of the requisite link with the employment is generally possible, and mental disorders are in fact one of the three most commonly compensated categories of disease nationwide,113 but in some states specific exclusions from or limitations of liability apply.114
4.
Harassment and discrimination
38 Workers’ compensation may be paid in some systems in respect of injury caused by harassment or discrimination, but it appears that no workers’ compensation system makes awards in respect of simple offence and humiliation from harassment and other forms of discrimination, or the effect of such conduct on earnings.115 Workers compensation does not cover mere dignitary injury116 or pure loss of income.117 Even where the victim suffers a mental illness, the focus of most systems on sudden accidental harm, and the restrictive approach to harm whose onset is gradual, are obstacles to a successful claim – not least because it is usually
110 111 112 113 114 115
Japan no 16. Commission Recommendation of 19 September 2003 (fn 88), Art 1(2). Romania no 23 f. See no 29 above. Australia no 37. Australia no 24; Austria no 34 (‘there must be a physical injury’); Denmark no 17 (highlighting that pain and suffering and loss of earnings not resulting from injury, are not compensated by workers’ compensation); England & Wales no 63; France no 53; Germany no 17; Italy no 27; Poland no 51; Romania no 29; USA no 33 (‘Harassment qua harassment is not compensable’). Though not expressly stated in the report above, the same seems also to be true for Japan: cf Japan no 16. 116 Austria no 36; England & Wales no 63; France no 53; Germany no 17; Italy no 27; Poland no 51; Romania no 29. 117 Australia no 26; Austria no 37; Denmark no 17 and 19; England & Wales no 63; Germany no 18; Italy nos 28 and 47; Japan no 17; Poland no 53; Romania no 35; USA no 39.
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only continued harassment that results in the development of a psychiatric condition.118 (A further obstacle – relating to ‘attribution’ rather than ‘recognition’ – is the requirement that the injury be work-related rather than something falling in the personal sphere, which may be difficult to establish in this context.119) However, there seems generally to be no objection to allowing claims for mental harm resulting from a single episode of harassment (eg bullying or non-consensual touching),120 while even mental harm resulting from continued harassment is considered to be compensable in systems where entitlement is not limited to a closed list of recognised illnesses.121
B.
Issues for employers’ liability
Recognition of new conditions is generally less troublesome for employ- 39 ers’ liability than for workers’ compensation. In theory, EL is more open to the recognition of new types of injury, and has the potential to forge the path ahead for WC – acting as a pathfinder. In practice, however, the converse is often the case. Attribution issues (eg proof of causation in the individual case) have impeded the acceptance of new types of claim by employers’ liability systems, and it is often WC that leads the way for EL. For example, asbestos litigation in the UK only really got under way in the early 1960s, but workers’ compensation had been extended to asbestosis as early as 1931.122 In fact, EL retains a pronounced accident preference, and its main role in practice (to the extent that it is allowed) has been as a top-up for workers’ compensation, and in respect of harm falling below WC severity thresholds, rather than as a means of accessing compensation for conditions not covered by WC at all. But EL is increasingly taking on the latter function, especially in respect of psychiatric harm, and the consequences of harassment and discrimination.
1.
An accident preference
Under employers’ liability, there is generally no formal significance at- 40 tached to the occurrence of the injury by accident, and thus no de iure
118 119 120 121 122
Austria no 34. Austria no 35; USA no 33 (personal dispute exception). Austria no 34 (according to some writers); France no 53; USA no 33. Australia no 24; Denmark no 17; Italy no 27; Japan no 16; USA no 32 f (most states). NJ Wikeley, Compensation for Industrial Disease (1993) 37 f.
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restriction on the recovery of damages for personal injury resulting from a process. Pure ‘recognition issues’ are therefore encountered rarely – mainly in connection with conditions which are not self-evidently harmful (eg pleural plaques: see below). It is true that established liability rules operate in practice to exclude a greater proportion of ‘new’ injury claims rather than ‘old’, and to that extent an accident preference comparable to that pertaining under workers’ compensation can be perceived,123 but this results mainly from the attribution issues discussed below, for example, difficulty in establishing a violation of the required standard of conduct, or the necessary causal nexus (see no 50 ff below). Additionally, some particular types of harm – especially purely mental injury,124 dignitary harms, and mere injury to feelings – are often treated more cautiously than injuries from physical trauma – for example, by the application of restrictions which are inapplicable to physical trauma cases.125 41 One general requirement that deserves to be mentioned, however, is that harm may have to reach a reasonable level of seriousness if it is to qualify for compensation as actionable damage. In recent years, one focus of attention has been whether the development of asymptomatic pleural plaques is damage for which liability may be imposed. Pleural plaques indicate the penetration of the lungs by asbestos fibres, and are therefore an indicator of the risk of the onset of asbestos-related disease in the future, but they do not themselves develop into such disease, and in most cases are perfectly harmless. The UK House of Lords ruled in 2007 that pleural plaques do not therefore constitute actionable damage.126 The Law Lords justified their ruling alternatively as the exclusion of merely trivial injury, or as inherent in the meaning of the concepts of ‘damage’ and ‘injury’ themselves. It was emphasised that a physical change does not become an injury simply because it indicates an increased risk of the onset of a serious condition in the future, at least where there is no cause-andeffect relationship.
123 See J Stapleton, Disease and the Compensation Debate (1986) 3. 124 Sometimes called ‘mental-mental’ in distinction from ‘physical-mental’ and ‘mentalphysical’ injuries. See further no 43 f below. 125 See eg no 43 below. 126 See England & Wales no 117, citing Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] 1 AC 281. As to workers’ compensation for pleural plaques, see France no 38.
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2.
Disease
In the civil justice system as a whole, the proportion of victims of disease 42 who receive damages is much lower than in respect of accidental injuries, as Terence Ison noted in his classic 1967 study of ‘the forensic lottery’.127 Having regard to the substantially greater incidence of disabilities and premature deaths resulting from disease as opposed to external violence, this was to him ‘[t]he most severe limitation’ of the law of civil liability for personal injury.128 Although liability laws draw no formal distinction between accidental injury and disease, the hurdles facing the victim of the latter may still be significantly more difficult to overcome. In a more recent study, ‘Disease and the Compensation Debate’, Jane Stapleton pointed out that even those who suffer from ‘man-made disease’, and who to that extent can be regarded as potential plaintiffs in actions for damages, have tended to find insurmountable obstacles in the way of their claim.129 As pointed out above, the problems arising are to a large extent problems of attribution (proof of fault, causation, etc), rather than the blunt non-recognition of certain conditions as compensable injury. The effect of such considerations on the number of disease claims brought in practice is nevertheless significant. One English study suggests, for example, that there are five times as many damages claims for accidental injury in the workplace than for occupational disease.130
3.
Mental illness
One category of ill-health where civil liability regimes in several countries 43 have trodden very carefully is mental illness.131 Such harm is compensable in principle,132 whether it results from a sudden trauma or the build-up of psychological pressure over time,133 but it is a general requirement across legal systems that there should be a recognised illness or injury, excluding
127 TG Ison, The Forensic Lottery: A Critique on Tort Liability as a System of Personal Injury Compensation (1967) 213. 128 Ibid 26. 129 Stapleton (fn 123). 130 England & Wales no 45. Cf Netherlands no 7 f. 131 See further WVH Rogers, Comparative Report on a Project Carried Out by the European Centre of Tort and Insurance Law, in: WVH Rogers (ed), Damages for Non-Pecuniary Loss in a Comparative Perspective (2001) 245, no 31 ff. 132 See generally Netherlands no 31. 133 As regards liability for stress-related illness, see England & Wales no 118.
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liability in respect of mere distress.134 Additionally, liability to compensate is often subject to rather arbitrary limits – especially where the claimant is the secondary victim of an accident involving another person. For example, in English law it is necessary for secondary victims to prove proximity to the accident in time and space and a close relationship with the victim,135 while in Italy no damages are awarded to relatives for bereavement in cases of instantaneous death, but only where its occurrence ensues after a period of at least a few days.136 An exception from liability under the general law may also be recognised where employment law grants a specific remedy – lest EL claims disrupt the delicate balance thereby sought between employer and employee.137 However, mere emotional harm is sufficient in some systems for a claim based on harassment or discrimination,138 or (at least in English employment tribunals) unfair dismissal.139 44 Notwithstanding these drawbacks, EL is preferable from the employee’s perspective to WC, under which the prospects of compensation are even more limited.140
4.
Harassment and discrimination
45 An area that in some systems has seen a striking growth in the number of claims is harassment and discrimination. In some jurisdictions remedies are granted under general civil law;141 alternatively or additionally, new liabilities have also been introduced by specific legislation.142 These claims are significant not just because of their growing number, but also because of the size of awards that can be made – especially for loss of income in an employment from which the claimant has been dismissed or feels im-
134 Australia no 86 f; England & Wales no 118; Denmark no 58; Italy nos 34 and 86 (injury to ‘psycho-physical integrity’). 135 England & Wales no 118. 136 Italy no 115. 137 See eg Johnson v Unisys Ltd [2003] 1 AC 518: jurisdiction of UK employment tribunals in matters related to dismissal intended to be exclusive. But damages may still be sought under general tort law for mental illness resulting from disciplinary action short of dismissal: Gogay v Hertfordshire County Council [2000] IRLR 703; Eastwood v Magnox Electric plc [2005] 1 AC 503. 138 Australia no 87; England & Wales no 122 f; France no 143. See also Poland no 102 (injury to dignity). In Denmark (no 58) and Italy (no 104), however, the harassment or discrimination must cause injury. 139 England & Wales no 121. 140 England & Wales no 118. 141 See eg Netherlands no 31 (serious infringements of personality rights). 142 England & Wales no 122 (Protection from Harassment Act 1997).
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pelled to resign. In the USA, for example, it is said that median sexual harassment awards are in the hundreds of thousands of US dollars.143 In one British case, £800,000 was awarded in damages.144 This is an area where EU law has already made a substantial contribu- 46 tion.145 It now provides a general remedy for harassment and discrimination based on a variety of prohibited grounds. Protection against workplace discrimination on grounds of sex dates back to 1976.146 This was extended to race discrimination in 2000,147 and later in the same year to discrimination on other specified grounds (religion or belief, disability, age or sexual orientation).148 Each of the Directives prohibits discrimination, direct or indirect, on grounds of the relevant characteristic,149 and provides expressly that harassment should be deemed to be a form of discrimination where it concerns unwanted conduct which has the purpose or effect of violating dignity and of creating an intimidating, hostile, degrading, humiliating or offensive environment.150 To facilitate claims, all three Directives provide for a reversal of the normal burden of proof where the claimant succeeds in establishing facts from which it may be presumed that there has been direct or indirect discrimination.151 A significant difference between the Directives is that only the sex dis- 47 crimination directive requires Member States to introduce measures to ensure real and effective compensation for the loss and damage sustained by a person injured as a result of discrimination, in a way which is 143 USA no 30. 144 England & Wales no 122 (citing Green v Deutsche Bank [2006] IRLR 764). 145 For consideration of the implementation of the various Directives in national law, see Germany no 58; Poland no 99 ff. 146 Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions. See now Directive 2006/ 54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast), OJ L 204, 26 July 2006, 23. 147 Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin, OJ L 180, 19 July 2000, 22. In fact, the directive’s scope is wider than the sex discrimination and framework directives because it is not limited to employment and occupation. 148 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation, OJ L 303, 2 December 2000, 16. A proposal to extend legal protection beyond employment and occupation to discrimination in other contexts has not yet been adopted: Proposal for a Council Directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation, COM(2008) 426 final. 149 See eg Art 2(1) (framework directive). 150 See eg Art 2(3) (framework directive). 151 See eg Art 10 (framework directive).
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dissuasive and proportionate to the damage suffered.152 The same Article further provides that the compensation may not be restricted by the fixing of a prior upper limit on its amount. The race and framework directives, by contrast, specify only that Member States must lay down rules on sanctions, and observe that these ‘may comprise the payment of compensation to the victim’, but they do not require that a compensatory remedy be introduced.153
III. Attribution issues (‘blaming problems’) 48 Even if the injured worker suffers a recognised condition, it is not guaranteed that a right to compensation will accrue. The injury must be attributable either to the employer (for EL) or the employment (for WC). The new types of claim that are the focus of this analysis have certain typical characteristics that may make such attribution problematic, especially for employers’ liability. These include the following: long-term exposure to risk, gradual onset, uncertain aetiology, uncertain causation in the specific case as a result of multiple risk factors, including non-employment-related environmental or biological risks, or multiple exposures to the same risk, chronological uncertainty (when did the risk materialise) and long latency.154 49 Because the issues arising are more serious for employers’ liability than for workers’ compensation, that is treated here first.
A.
Issues for employers’ liability
50 In general, to establish employers’ liability155 it must generally be shown that the injury suffered by the worker was caused by a violation of the required standard of conduct – either by the employer or the victim’s fellow employee acting in the scope of employment.156 In systems where a partial employer privilege is recognised, the violation of the required
152 153 154 155
Art 18. Art 15 (race directive); Art 17 (framework directive). Emphasis added. Cf Stapleton (fn 123) 17 (highlighting gradual contraction and latency in particular). As regards the liability of manufacturers of work equipment and other third parties, see Wagner (fn 21) no 74 ff. 156 As to the requirements for holding the employer liable for harm caused by another employee, see Australia no 79 f; Austria no 122 ff; Denmark nos 51 and 53; England & Wales no 99 ff; France no 126 ff; Germany no 54; Italy no 89; Japan nos 49 and 53; Netherlands no 17 ff; Poland no 93; Romania no 97; USA no 92.
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standard must be intentional.157 Complexity arises because the characteristic of long-term exposure may make it problematic to establish a violation of the required standard of care or the requisite causal link, while the characteristic of long latency leads to problems relating to the application of time limits. Long latency may also give rise to difficulties of proof as memories fail, and records go missing or are destroyed. Additional practical problems include the determination of which insurer (if any) was ‘on risk’, and how to deal with the insolvency of the employer who is liable or, as may happen, the latter’s liability insurer.
1.
A violation of the required standard of care
a) In general A finding that the defendant employer has breached the required standard 51 of conduct establishes the necessary element of fault or (as the case may be) unlawfulness.158 The standard may be formulated as an obligation to exercise reasonable care, or some stricter obligation.159 Violation of standards of the latter variety are nonetheless treated here as involving fault (and not merely unlawfulness), even if not all systems classify it as such,160 because ‘strict’ health and safety standards can be seen as concretising the employer’s standard of care, rather than moving away from the normal ‘fault basis’ of the liability. This general fault requirement161 represents the most significant restric- 52 tion on the scope of EL, and leads to fine and (from the victim’s perspec157 See no 11 above, but note the additional claim available to injured workers in France through the social security courts where there is inexcusable negligence. 158 Australia no 78; Austria nos 110 and 119 ff; Denmark no 49; England & Wales no 99; Italy no 86 ff; Netherlands no 16; Poland nos 4 and 92; Romania no 92; USA no 89. Whether the violation of the required standard of conduct goes to ‘fault’ or ‘unlawfulness’ varies from system to system: see H Koziol, Conclusions, in: H Koziol (ed), Unification of Tort Law: Wrongfulness (1998). 159 Australia no 81; England & Wales no 111. 160 Australian, English and German law, for example, treat breach of specific statutory duties as an independent basis of liability, distinct from liability for fault. See Australia no 81; England & Wales no 108 ff; Germany no 54 (referring to § 823 II BGB). See also Netherlands no 20 f. 161 Australia no 82; Austria no 111; Denmark no 52; England & Wales no 14 and 161; France no 131; Germany no 48 f; Italy no 88; Japan no 52 ff; Netherlands no 19; Poland no 94 f; Romania no 104; USA nos 91 and 94; Wagner (fn 21) nos 18 and 38. Almost all systems, however, provide for strict liability in some circumstances: Australia no 82; Austria no 127 ff; Denmark no 52; England & Wales nos 14, 100, 108, 111 and 162; France nos 113 ff and 175; Germany nos 48 and 50 ff; Poland no 94. Poland is perhaps exceptional in that strict liability based on the risk of the business activity is said to
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tive) arbitrary distinctions between those injured by a breach of duty and those injured otherwise. This seems particularly harsh where, as in the Netherlands, there is no workers’ compensation to fall back on, and the innocently injured worker has to make do with the minimum protection levels of social security. The same is also substantially the case in the UK, where workers compensation as such was abolished in 1948 and replaced by the Industrial Injuries Scheme, which has now been largely integrated into the social security system and no longer offers earnings-related benefits (even if the value of industrial injuries benefits can be significant in long-term disability162). 53 Some would maintain, however, that the employer’s fault provides the injured worker with an additional basis of entitlement to compensation, and justifies a higher award. Both perspectives have supporters, and it is unrealistic to expect that a study of this nature should reconcile, or adjudicate between, the competing views. The objective here is in any case different, namely to highlight the particular attribution issues posed by new work injury claims in applying the required standard of conduct. For present purposes, these can be reduced to issues relating to the time dimension of the inquiry.
b) The time dimension of the inquiry 54 Because many of the new types of work injury claim that are the focus of this chapter involve long-term exposure to noxious substances or risks of some other kind, it becomes especially important to pay attention to the time dimension of the inquiry into the required standard of conduct. In cases involving protracted exposure of this nature, perceptions of the risks involved in particular types of work, and the availability of safeguards against those risks, may change over time. It is thus no straighforward matter to determine exactly when the employer ought to have known of the risk and guarded against it.163 Uncertainty on this score may impede settlement negotiations, require costly expert evidence to resolve, and result in what may be seen – from the victim’s perspective – as an arbitrary distinction between those entitled to damages and those not. account for the majority of cases: Poland no 94. Note also the element of equivocation in the discussion of fault and strict liability in Romanian law: Romania no 102 ff. 162 See England & Wales no 76 ff. 163 For a recent illustration from the UK of the complications that can arise, see Baker v Quantum Clothing Group Ltd [2011] UKSC 17. See also Italy no 86 fn 94. Cf Denmark no 52, referring to the sole case of strict liability in Danish EL law, which may be seen as illustrating the pervasiveness of the perception that arbitrary outcomes may result and should be avoided if at all possible.
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2.
Causation
The new landscape of work injury claims also highlights the difficulties in 55 establishing causation that arise in many cases of injury, especially disease, that is alleged to have resulted from prolonged exposure to toxic conditions in the workplace, especially where the harm only becomes apparent several years later. It has often proved impossible to establish more than the fact that exposure to a certain agent may cause injuries of the sort suffered by the claimant, which is not sufficient to satisfy the causal requirement that the claimant was in fact injured by that agent.164 Even then, it may be unclear whether the claimant’s condition arose from occupational rather than environmental exposure. And even if it did, it may not be possible to isolate the causative exposure to a specific employment, as opposed to successive employments with different employers. Indeed, employers’ liability systems must address not only uncertainty as to when the injury was suffered, but also such consequential issues as how to allocate liability as between different employers who contributed to a cumulative or progressive condition, or when different employers exposed the victim to the same (type of) risk, but it is uncertain which was responsible for its materialisation. Comparable issues arise where an individual employer is responsible for both ‘innocent’ and ‘guilty’ exposure to risk.165 Growing awareness of such issues has prompted the abandonment or 56 modification of established principles in some jurisdictions, as the courts have sought to overcome problems of alternative defendants and even uncertainty whether the victim’s condition resulted from a ‘guilty’ rather than ‘innocent’ cause at all. Actions for damages relating to asbestos provide a good illustration of the complexities that arise, and allow a comparison between the approaches taken in the legal systems which rely most extensively on employers’ liability, namely, England and the Netherlands. Strikingly, both English and Dutch courts have opted to introduce proportional liability to strike a fair balance between the interests of those suffering from asbestos-related disease and their erstwhile employers.166 In England, however, Parliament intervened to impose solidary (‘joint and several’) liability on the employer, even if responsible for only a small part of the total exposure, and not proven to have made any contribution at all to the victim’s condition – a material contribution to the risk of harm being
164 Stapleton (fn 123) 33 ff. 165 Cf McGhee v National Coal Board [1973] 1 Weekly Law Reports (WLR) 1. 166 England & Wales no 154; Netherlands no 23.
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sufficient.167 An illustration of the striking outcomes that may result is provided by a recent UK Supreme Court decision where the employer was liable for 100 % of the victim’s loss despite being responsible for only 15 % of the total exposure, the rest being purely environmental exposure.168 But the English approach is not all good news for employees, because it suffers from a limitation – shown up by the corresponding Dutch case-law – in that the exceptional approach to causation described is applicable only where the possible causes of the victim’s injury are of the same type, and is therefore inapplicable to conditions like lung cancer, for which inhalation of asbestos fibres is only one of several possible causes.169 The same limitation is also recognised in Australia.170 In the Netherlands, by contrast, proportional liability has in fact been applied in the lung cancer scenario, notwithstanding the impossibility of ruling out alternative possible causes (including genetic predisposition, smoking and background risk).171 57 Such issues arise with especial frequency in the new landscape of work injury claims. As the English developments just outlined may be considered to demonstrate, the new solutions adopted by some systems are often insufficiently thought-through and consequently lack coordination, with sometimes arbitrary implications for large numbers of injured workers, as well as for employers and liability insurers.
3.
Time limits (prescription)
58 The new landscape of work injury claims also raises tricky issues relating to the limitation of actions (known in some systems as ‘prescription’),172 especially because of the long latency periods that are a characteristic feature of such claims.173
167 England & Wales no 154 (referring to Compensation Act 2006, sec 3). 168 Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10. 169 See Fairchild v Glenhaven Funeral Services [2002] United Kingdom House of Lords (UKHL) 22, [2003] 1 Appeal Cases (AC) 32 and Barker v Corus (UK) plc [2006] UKHL 20, [2006] 2 AC 572. 170 Australia no 83 (no liability in a case of lung cancer where the victim’s smoking was a possible cause). 171 Netherlands no 23 (discussing Nefalit/Karamus, 31 March 2006, SC Netherlands). 172 As to time limits in EL claims generally, see France no 152; Japan no 50; Netherlands no 6. As to whether the contract or tort limitation period (if they are different) applies to work injury claims, see Japan no 50. 173 See Stapleton (fn 123) 21 ff.
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If time starts to run at the moment the damage is suffered, the victim may 59 be deprived of the opportunity to claim before even becoming aware of the injury. Many systems overcome this by providing that the relevant period commences only when the damage, and the defendant’s responsibility for it, are reasonable discoverable.174 However, there are still hard cases where medical science uncovers a causal link between a certain occupational activity or exposure and a particular condition, but provides an insufficient evidential basis for individual workers who suffer the condition to be confident of establishing causation in their specific case if they bring an action for damages. Their knowledge of the generic causal connection may be sufficient to set the clock running for limitation (prescription) purposes, but not to make litigation advisable. The dilemma in such a case is whether or not to wait until there is better medical evidence – at the risk of losing the claim altogether. A strict interpretation of the ‘discoverability’ test may therefore have harsh and arguably unfair consequences for the victim. A further issue is where national law includes a ‘long-stop provision’ (that 60 is, a maximum time limit between the occurrence for which the defendant is held responsible and the victim’s commencement of an action for damages).175 Now that medical science has recognised latency periods of well in excess of 30 years for such conditions as mesothelioma and silicosis, it seems questionable for such longstop provisions to be maintained – at least where (as in England176) it is a liability against which the employer must insure, which disposes of the argument that a long-stop is necessary to provide protection for the debtor.177 Italian law in any case does without a long-stop for all civil claims,178 while French law does so in respect of claims for bodily injury.179 The English Law Commission has
174 See further R Zimmermann/J Kleinschmidt, Prescription: General Framework and Special Problems Concerning Damages Claims, in: H Koziol/BC Steininger (eds), European Tort Law 2007 (2008) 26. 175 For a comparative analysis, see Zimmermann/Kleinschmidt (fn 174) no 40 ff. 176 England & Wales no 150. See also Australia no 106. In the Netherlands, insurance is not compulsory and it is estimated that 50 % of companies do not have it: Netherlands no 37. There is no compulsory ELI in systems where EL is only a top-up on workers’ compensation or is restricted through recognition of an employer privilege: France no 166; Germany no 71; Italy no 130; Japan no 71; Poland no 132; Romania no 130. 177 For consideration of the various policy considerations, see Zimmermann/Kleinschmidt (fn 174) no 5. 178 Zimmermann/Kleinschmidt (fn 174) no 47. 179 Previously, as in Italy, there was no long-stop provision at all (ibid), but a reform in 2008 introduced an overriding 30-year limit in civil claims other than for bodily injury: see Law no 2009-561 of 17 June 2008, noted by O Moréteau, France, in: H Koziol/ BC Steininger (eds), European Tort Law 2008 (2009) no 1 ff.
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also recommended that personal injury claims should be exempted from the normal 30-year long-stop provision that currently applies in English law.180 It considered this to be preferable to increasing the long-stop’s duration because a reform of that nature would still not guarantee that all claimants with latent disease claims are covered, and would make the long-stop too long to serve any useful purpose.181
4.
Insurance
61 The problems associated with protracted exposure and long latency are multiplied where each employer has taken out employers’ liability insurance (ELI) from different insurers during the relevant period, especially where the insurance contracts are written on different terms. The question arises of which insurers are liable for the condition that arises, and how much each is to pay. 62 The resultant complexities are well illustrated by the ‘trigger litigation’ relating to occupational exposure to asbestos that has been a major focus of employers’ liability in the UK in recent years. As Lewis points out in his contribution to this volume, ‘Broadly there are three possible triggers for the insurance policy: first, when the claimant was initially exposed; second, when physical change first occurs, even if it cannot be discovered; and finally, when the injury becomes manifest.’182 But which of these dates is intended if the ELI policy refers to the time the injury or disease was ‘contracted’ or ‘sustained’? In an eminently sensible judgment,183 the UK Supreme Court recently declined to treat the precise choice of words as decisive – as the language used was not carefully considered but, on the contrary, sometimes inconsistent and capable of leading to absurd outcomes – and preferred to focus on the commercial purpose of the insurance. This was to cover employers for liability risks relating to current employees and current employment practices, not employees and practices at a date possibly 30 years or more in the past – as is evident in the calculation of premiums on the basis of current, not historic, payroll. In the Court’s view, this interpretation of the commercial purpose was
180 181 182 183
548
Law Commission, Limitation of Actions (Law Com No 270, 2001) para 3.107. Ibid, para 3.104. England & Wales no 152. Trigger Litigation [2012] UKSC 14. The Supreme Court’s decision was handed down too late to consider in the chapter on England & Wales, no 152 of which should be read in the light of the Court’s judgment.
The Changing Landscape of Work Injury Claims
further buttressed by the introduction of compulsory ELI in 1972,184 because insurance offered after that date was clearly intended to discharge the employer’s statutory obligation to insure, and the obligation’s protective purpose required cover in respect of things done during the cover period, irrespective of when the harm manifested itself. However, the Court’s interpretation of the commerical purpose applied to policies issued even before insurance became compulsory.
5.
The risk of insolvency
EL systems face further difficulty when one or more of the employers who is 63 notionally liable, and/or such employer’s insurer, has gone out of business or cannot be identified.185 These prospects are rendered more likely by the long latency periods which, as noted, are a characteristic of many new claims coming before the courts. Difficulties of this nature have been a particular feature of claims relating to occupational exposure to asbestos. In one recent English case relating to mesothelioma, for example, insolvent employers were responsible for 83 % of the exposure in question, and the question arose whether their share of the liability should be borne by the defendants who remained solvent (or insured by a solvent insurer).186 The traditional rule applicable to multiple tortfeasors responsible for the 64 same damage is solidary (‘joint and several’) liability.187 This places the risk of one tortfeasor’s insolvency, or absence from the proceedings on other grounds, on those tortfeasors who can be identified and remain solvent: any one of them can be sued for the full amount of the loss. The fairness of this outcome in principle has been called into question in the United States, where several jurisdictions have abolished solidary liability – in tort law generally – in favour of one form or other of proportional liability.188 English and Dutch courts have also adopted proportional liability in some claims against employers – as a fair means of resolving fundamental uncertainties relating to causation on specific facts (see no 56 above). This shifts the risk of a tortfeasor’s insolvency to the claimant,
184 185 186 187
See England & Wales no 150. Romania no 141. Barker v Corus (UK) plc [2006] AC 572, noted briefly in England & Wales no 154. See generally WVH Rogers, Comparative Report on Multiple Tortfeasors, in: id (ed), Unification of Tort Law: Multiple Tortfeasors (2004) 269, no 3 ff. 188 MD Green/BM Hanner, Aggregation and Divisibility of Damage in the United States: Tort Law and Insurance, in: K Oliphant (ed), Aggregation and Divisibility of Damage (2009) 379, no 33 f.
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which may also be considered objectionable – as evidenced by the swift legislative intervention in the UK to restore solidary liability in mesothelioma cases after the decisive court ruling in favour of the proportional approach. Potential hardship to the employer who is the ‘last man standing’ is mitigated by legislative provision for the defendant’s claim for contribution from other responsible persons to be paid out of the compensation fund which guarantees payments in the event of an insurer’s insolvency if it appears that the other responsible persons are insolvent.189 65 Even this is no answer, however, where there is only one tortfeasor – who is now insolvent – and there is no insurer to sue as an alternative, whether because the employer was uninsured, or because the insurer cannot be identified or is also insolvent, or because the sum for which the employer is liable exceeds the limits in the applicable liability insurance.190 Or where each of several concurrent tortfeasors is bankrupt (etc). Insolvency may then prevent recovery of any part of the victim’s loss. 66 The inequity of such an outcome has been seen in many systems as warranting the creation of new special funds to ensure the injured worker is compensated at least to some extent. Such funds have been established in France and the Netherlands for the protection of victims of asbestos,191 and in the UK for specified dust-related diseases where the employer has gone out of business.192 At least in England and the Netherlands, it seems plausible to regard these reforms as having been introduced to remedy the deficiencies of employers’ liability as a primary mechanism for ensuring the compensation of injured workers when workers’ compensation has been wholly or substantially dismantled.
B.
Issues for workers’ compensation
67 The attribution issues highlighted above – arising from protracted exposure, long latency, etc – are generally less problematic for WC than for EL. There is no need to identify which employer(s) caused or contributed to the injury, only that it was caused or arose out of employment. Neither need it be shown that the employer causing the condition was at fault, so it is unnecessary to determine the precise date on which there was sufficient
189 Compensation Act 2006, sec 3(7) and Compensation Act 2006 (Contribution for Mesothelioma Claims) Regulations 2006, Statutory Instrument 2006/3259. 190 England & Wales no 152. 191 France no 35 ff; Netherlands no 6 192 Pneumoconiosis etc (Workers’ Compensation) Act 1979.
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notice of the risk to require the taking of precautions against it, and no need to divide the employment between periods before and after it became negligent not to safeguard against the risk (with the resultant problems of causation and apportionment thereby entailed). Neither is the worker disadvantaged if the employer goes bankrupt and is uninsured.193 Additionally, because the risk of injury to the worker is usually insured by a single agency, there can be no dispute as to which insurer was ‘on risk’ at the relevant time(s), and no need for anything like the ‘trigger litigation’ that has arisen in employers’ liability systems. Even if multiple agencies are involved,194 it is possible to stipulate legislatively in advance how the burden of compensation is to be allocated. The risk of the insolvency of workers’ compensation funds is also low – in fact, in most systems, probably negligible.195 That is not to say, however, that attribution issues do not arise. There 68 remains in many workers’ compensation systems a reluctance to attribute certain forms of ill-health, especially diseases, an occupational cause. Long latency periods and uncertain aetiologies mean that it is not always possible to establish conclusively a relationship between the disease and prior workplace exposure.196 The result may be a failure to prescribe conditions that are common in the population at large, which entails the consequence in closed-list systems that such conditions are not recognised for compensation purposes at all. This demonstrates the interdependency of the recognition and attribution issues that are the focus of the present chapter: difficulties of attribution may result in a refusal to recognise certain conditions as even potentially compensable.
193 Austria no 115; Romania no 141. 194 Self-insurance and insurance on a competitive basis by private insurers are allowed or even required in some systems: see Australia no 48 ff; Denmark no 28 ff; USA no 72 (noting the requirement to provide financial security in such cases to prevent bankruptcy impeding the victim’s recovery of compensation). In other systems, different public agencies may be responsible for different economic sectors: see eg Germany no 32. 195 But cf the ‘liquidity problem’ noted in Romania no 140. 196 SafeWork Australia (fn 79) 8.
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IV. Challenges for Employers’ Liability and Workers’ Compensation A.
Introduction
69 The issues of recognition and attribution raised by new work injury claims pose a number of consequential challenges for EL and WC systems, and their mutual coordination. These are in some respects technical challenges relating to the way in which new claims are to be handled in practice, and how payments made in them are to be funded. In the case of a newly recognised injury, both workers’ compensation institutions and employers’ liability insurers face the difficulty of fitting these new risks into old risk classifications, designed with regard to accident and fatality rates rather than the risk of (for example) mental illness, repetitive strain or harassment. A further challenge is to devise pricing structures that contain the appropriate incentives to control risk and address moral hazard. For EL insurers, there is also the question of what product to use: a traditional ELI policy, employment practices liability insurance or D&O (directors and officers) insurance? 70 Although new attributions of responsibility for recognised types of illhealth also raise similar issues, a separate set of challenges also arises. As outlined above, the characteristics of new work injury claims include protracted exposure, uncertain causation, and long latency. When injuries with such characteristics are attributed to the employment, or to the employer, this entails making today’s employers pay for yesterday’s employers’ deeds – under both EL and WC. It is the price of historic employment practices and risk exposures, which (typically) were reflected inadequately in the levies and premiums charged to yesterday’s employers at the time. Current reserves may be inadequate to bear the revised costs. But it may be difficult to justify – politically and to the market – why rates have to go up. In such circumstances, it may be seen as appropriate to require public intervention via the application of general tax revenues to prevent today’s employers being penalised for the sins of their forebears and to protect victims whose notional rights to damages are worthless. 71 Beyond these technical, financial and political challenges, there is also the deeper challenge of ensuring that workers’ compensation and employers’ liability both attain their own distinct objectives, and that the overall system in which they are combined functions coherently.
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B.
Challenges for Workers’ Compensation
At the most general level, the challenge for workers’ compensation is to 72 provide monetary recompense for injuries which are fairly attributable to the employment. The employer is charged with the burden of compensation according to the principle that ‘those who cause industrial injuries should pay for them’.197 To some extent, however, the objective is still to be met. There has been a widespread – though not universal – failure to compensate particular categories of work-related ill-health, notably in the case of disease and mental injury, which are recognised only under restrictive circumstances, if at all, especially where the accident/process distinction is applied rigorously and a closed-list approach taken to occupational illness.198 This failure is exacerbated where an ‘employer privilege’ excludes EL claims by the injured employee.199 The result is a failure to internalise to the employer the full costs of the enterprise, and consequently a reduction in the law’s preventive effect,200 and a denial of compensation to victims who have given up their rights to sue by virtue of a ‘social contract’ that purported to replace the entitlement to damages with rights against a workers’ compensation fund.201 It is hard to justify the elimination of the damages action without the introduction of any substitute claim at all. There is therefore something to be said for giving serious consideration to the European Commission’s recommendation for the injured worker to have a right to compensation even for diseases that are not on the relevant list.202
C.
Challenges for Employers’ Liability
In comparison with workers’ compensation, employers’ liability is neces- 73 sarily limited from the victim’s perspective because of the general requirement to establish fault or some other deviation from the required conduct.203 That is an intrinsic feature of EL systems. As is the case with workers’ compensation, however, there is also the risk that employers’
197 198 199 200
USA no 73. See also Italy no 142 (distribution of the costs of workplace injuries). See no 16 ff and 21 ff. See no 11 above. Austria no 152; Germany no 75. But, for sceptical views of the law’s deterrent potential, see Australia no 123; Denmark no 94; Germany no 75. 201 France no 1; USA no 121 (‘the essential bargain of workers’ compensation’); Wagner (fn 21) nos 66 and 80. Cf Australia no 120. 202 See no 30 above. 203 See no 51 ff above.
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liability might fail to achieve its own goals – above all, the compensation of the victim by the wrongdoer (corrective justice), and the deterrence of future injuries204 – because of the particular challenges posed by the new landscape of work injury claims. For EL, these mostly concern the attribution of responsibility for conditions whose onset is gradual, and whose aetiology is uncertain, especially in cases of long latency. This may result in the need to modify existing liability rules, or to create special funds to step in when the party notionally liable cannot be traced or is unable to pay. 74 The modification of existing principles has already been seen in some systems in the areas of causation, joint and several liability, and time limits. Under EL, there is the risk (not found to the same extent under workers’ compensation) that uncertainty as to the precise cause of the condition may preclude any liability at all, even when the injury is clearly employment-linked. Such practical injustice to the victim has been addressed in some systems by allowing a departure from orthodox rules of causation, sometimes with a corresponding adjustment in the law of joint and several liability to protect employers from an excessive burden.205 The time limits applied to personal injury claims have also been amended in many jurisdictions – especially in recognition of the long latency periods involved in many new types of work injury claim.206 75 Long latency periods have also meant that there is a heightened risk of the employers’ insolvency or ceasing to carry on business – or indeed of the same happening to the employer’s insurer.207 From the victim’s perspective, insolvency may render illusory the right to compensation that arises in strict law. For the employer or insurer who survives to face a claim relating to employment years before, it may seem unfair to require – under the traditional approach to joint and several liability, where it still applies – payment of compensation for all of the loss when there is no effective recourse against others who contributed to the harm to the same or greater extent. 76 Compulsory ELI is a partial answer to such concerns, but not a complete answer, because employers do not always comply with the obligation to insure, and even if they do the insurer can also go out of business. Some systems have therefore created special funds to deal with particular types
204 205 206 207
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See Wagner (fn 21) no 34 ff. See no 55 ff. See no 58 ff. See no 63 ff.
The Changing Landscape of Work Injury Claims
of case (eg asbestos-related disease), either as a primary fund or – where the responsible employer cannot be found or is unable to pay – a fund of last resort. Equity between victims, however, should make us ask whether this focus on asbestos and other specific risks is justified. Should there instead be a general solution for injured employees whose notional compensation rights prove illusory in practice? And should it be required as a matter of EU law in systems where workers’ compensation does not perform this role already? A fund providing compensation in all cases where the employer cannot be identified, or is uninsured and cannot pay, would protect victims at the same time as furthering the free movement of workers across national boundaries in the Union.208 EU law already guarantees compensation for the victims of uninsured motor accidents:209 why should it not also do so for the victims of uninsured employers?210 Going beyond the motor accident model, it might also be provided that the newly created fund should indemnify employers too, where they are unable to recover from a concurrent tortfeasor in recourse proceedings, and so protect against the risk of the latter’s insolvency or ceasing to trade.211 It is no objection that the protection offered by such a fund would gloss 77 over differences between the substantive compensation principles adopted by the national systems, with some maintaining liability for fault while others have provide no-fault compensation outside the liability system. The Motor Insurance Directives do this already in respect of road traffic accidents, apparently without unsustainable consequences. The cost could be borne without difficulty by means of an extra premium added to ELI, which is in any case relatively cheap compared with the cost of workers’ compensation in systems where this is the primary mechanism.212 In the UK, for example, the cost of employers’ insurance in total is only about 0.25 % of the national payroll,213 which compares very favour-
208 Cf T Thiede, The European Coordination of Employers’ Liability and Workers’ Compensation, above. 209 Directive 72/166/EEC, Directive 84/5/EEC, Directive 90/232/EEC, Directive 2000/26/ EC and Directive 2005/14/EC (the Motor Insurance Directives). 210 In the UK, the establishment and finding of an employers’ liability insurance bureau to meet claims against uninsured employers was proposed by RC Simpson, Employers’ Liability (Compulsory Insurance) Act 1969 (1972) 35 MLR 63). 211 See no 64 above (considering the UK fund protecting employers liable in mesothelioma claims). 212 As to the cost of workers’ compensation, see Austria no 153 f; Denmark no 95; Germany no 76 f; Romania no 137. 213 England & Wales no 150.
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ably with the cost of workers’ compensation in Austria (1.4 % of payroll), Germany (1.26 % of payroll) and United States (2.13 % of payroll).214
D.
Coordination of the two systems
78 Of course, the two systems (EL and WC) have to be considered not just independently, but also in combination. Their mutual coordination is a further challenge for courts, administrators, governments and legislatures. A problem looming on the horizon is the tension that ensues from the disparity in the availability and levels of the monetary remedies provided by the two systems. 79 Three aspects of the interrelationship should be addressed. A first question that arises is whether employers’ liability claims should be allowed for loss suffered by the victim in excess of that which is covered by workers’ compensation, whether it amounts to ‘complementary damage’ (a head of loss not covered by WC) or a deficit in the compensation paid under a recognised head of loss (‘differential damage’).215 Workers’ compensation replaces lost earnings only partially, subjects the amount recovered to a maximum cap and ignores the injured worker’s foregone prospects of promotion, etc, while pain and suffering are not compensated at all.216 Several national jurisdictions allow EL claims as a ‘top up’ for workers’ compensation (Denmark, Italy, Japan, Poland and Romania), while England allows unimpeded pursuit of civil liability claims subject to the deduction of industrial injuries benefit from the damages and its reimbursement to the state.217 Where an ‘employer privilege’ applies, however, as in Austria, France, Germany and some Australian and US states, access to the civil justice system is barred, at least in cases of ordinary negligence.218 This reflects a distinct view of the nature of the ‘bargain’ by which workers’ compensation was introduced, emphasising its value to employers as a means of curbing costs at the same time as ensuring fair
214 Austria nos 69 and 153; Germany no 76; USA nos 74 and 115. Cf Romania no 137 (between 0.15 % and 0.85 % of payroll). For Austria and Germany, the figures here are in respect of payroll for which contribution is due, which may not be the case for the other countries mentioned in this context. 215 As to the terms ‘differential’ and ‘complementary’ damage, see no 11 above. 216 See Wagner (fn 21) no 10 ff, with further references. 217 See no 11 above. 218 Ibid. In France, the social security court handling the workers’ compensation claim can order the employer to pay extra compensation in cases of inexcusable negligence.
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compensation of injured workers, which has attracted critical comment from torts scholars.219 A second question that arises is whether EL claims should be allowed for 80 bodily or mental injury for which there is no workers’ compensation cover at all. Here, the combination of an employer privilege and a closedlist approach to occupational illness may be perceived as resulting in unfairness, as the privilege is interpreted to exclude EL claims in respect of conditions that are not on the list, but may be occupational in origin and nature, even though no WC claim is possible either. Stress-related mental illness may be cited by way of example.220 The outcome in jurisdictions in this category (Austria, France, Germany and some US states) is arguably unfair, because the victim is precluded from bringing a claim which would have been possible if the injury had not been workrelated. Thirdly, in almost all jurisdictions,221 EL claims are available in respect of 81 discrimination, harassment and interference with dignitary interests,222 even where a general employer privilege is recognised. The victim of harassment or discrimination who suffers injury to feelings and loses income may be entitled to a very substantial sum by way of damages,223 without restrictions comparable to those applying to awards of workers’ compensation. For employers, allowing liability claims for such harms may mean that workers’ compensation fails to fulfil its promise of excluding ordinary civil liability and curbing costs (and indeed entails the higher costs associated with ordinary court procedures – as opposed to streamlined workers’ compensation claims processes). At the same time, workers who sustain bodily or mental injury may feel a sense of unfairness that colleagues who suffer merely dignitary or financial injury are entitled to full compensation for both pecuniary and non-pecuniary losses (without the limits that apply to WC awards). This analysis suggests that there are a number of issues in respect of which 82 worker disenchantment with workers’ compensation might grow because of the disparity between EL and WC awards, especially where there is an
219 The unfairness of precluding liability claims for pain and suffering, while excluding such harm from workers’ compensation, is noted in Austria no 155 ff. Cf Germany no 41. 220 See no 31 ff above. 221 By way of exception, some US states treat workers’ compensation as the exclusive remedy even for dignitary injuries: see USA no 34. 222 See no 45 ff above. 223 See no 45 above.
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employer privilege. Injured workers then get less than those injured in other contexts (assuming the latter can establish liability) and for some conditions – especially stress-related mental illness – may not be entitled to any compensation at all. Further unfairness may be perceived because of the disparity between awards to workers who are injured and get workers’ compensation, and workers who suffer harassment or discrimination and get substantial awards of damages through the liability system. 83 The data collected for this study do not allow firm conclusions to be drawn about the extent to which these disparities in fact exist, or dissatisfaction about them is felt. It seems to the present author, however, that they have the potential to undermine the ‘social contract’ under which workers’ compensation was introduced, and provide a reason to consider whether the employer privilege (where it still exists) can still be retained, and for investigating alternative approaches, for example, allowing claims for ‘top-up’ damages in a new integrated procedure,224 or the better alignment of workers’ compensation benefits and damages.225
V.
Conclusion
84 Of the challenges posed by new injuries, the most fundamental is who is to bear the loss. Is the loss to be left on the victim (casum sentit dominus) or shifted through employers’ liability, workers’ compensation, social insurance, or a special dedicated fund? There is no definitive and universally correct answer to this question, but rather a set of alternatives that may appeal to different people at different times and in different places. The present chapter therefore has had the somewhat modest aim of identifying some difficulties arising from the failure of individual parts of the overall system to attain their own objectives, and a lack of coordination in the system as a whole. 85 Three main conclusions may be drawn as to how employers’ liability and workers’ compensation may be developed in future, and their mutual coordination improved. 86 First, as regards workers’ compensation, the combination of a closed-list approach to compensation for occupational illness and a bar on civil claims in respect of work-related injury (the employer privilege) constitutes a significant obstacle to the pursuit of the objective of placing the cost
224 See Wagner (fn 21) no 70 ff. 225 See Wagner (fn 21) no 63 ff.
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of such injury on employers. Consequently, the introduction of a right to compensation even for non-listed conditions – as proposed by the European Commission – should now be given serious consideration.226 Secondly, as regards employers’ liability, attainment of the goals of com- 87 pensation (corrective justice) and deterrence is frustrated if the employer notionally liable is uninsured or has gone out of business. This can result in unfairness, either because the victim goes uncompensated, or because the full burden of compensation falls on another employer who is jointly liable, or that employer’s insurer. Introduction of a regime of compulsory insurance and establishment of a fund to compensate for injuries caused by uninsured employers – along the lines of the existing EU regime in respect of motor insurance – would thus be desirable.227 Lastly, as regards the coordination of the two systems, disparities in the 88 scope of entitlement and levels of award – not just between work and nonwork injuries, but also between workers suffering injury and workers suffering harassment and discrimination – are likely to cause increasing dissatisfaction with the current approach, especially where an employer privilege is recognised, and requires further consideration of alternative approaches, for example, allowing claims for ‘top-up’ damages in a new integrated procedure, or the better alignment of workers’ compensation benefits and damages.228
226 See no 72 above. 227 See no 73 ff above. 228 See no 78 ff above.
559
New Perspectives on Employers’ Liability – Basic Policy Issues Gerhard Wagner*
I.
Introduction
‘New perspectives on employers’ liability’, this seems to be an odd topic. 1 In the late 19th century, industrial accidents were numerous and political endeavours around the compensation of injured workers were intense. After Germany’s chancellor Bismarck had designed and implemented the world’s first workers’ compensation scheme, it quickly spread to other developed countries, in Europe and elsewhere. Even though there are many differences between the respective national systems, the crucial elements, which will be set out below, are the same.1 Overall, it seems that workers’ compensation systems have been a great success. Without claiming to be anywhere near the discussions around workers’ compensation in the various countries it seems fair to say that workplace accidents and occupational diseases remain outside the scope of political dispute in countries that operate workers’ compensation systems. In many jurisdictions, the law of workers’ compensation has developed into a backwater of injury law which is observed, cultivated and developed by small groups of insiders. The attention of scholars remains low and is often focused on the interfaces with the general tort system. So what is really new about employers’ liability, given that workers’ compensation systems seem to pick up the slack created by work-related accidents and diseases? It is a salient feature of workers’ compensation systems that they protect 2 the employer from damages claims brought against him in civil courts. There is variation between jurisdictions as to whether the protection is merely de facto, owed to the fact that workers’ compensation carriers take care of the victim’s needs and, in doing so, remove much of the incentive
* The author is grateful to Steven Reinhold for his help in editing the text. 1 See no 5 ff below.
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to go against the employer or whether it is also de jure, as the employer is immune from damages claims. For these reasons it is not surprising that the ‘new’ topics in employer’s liability are to be found in areas beyond the pale of workers’ compensation systems. Access to the tort system is not foreclosed entirely in many jurisdictions. There remain some lacunae which allow for civil claims for damages. In some jurisdictions, the employer remains exposed to liability where the accident was caused intentionally or with gross negligence. Furthermore, all jurisdictions of the developed world have seen a dramatic increase in claims for nonpecuniary losses in general and for dignitary injuries in particular. This development continues to have a bearing on workers’ compensation systems and their relationship to employers’ liability. While workers’ compensation systems remain focused on traditional forms of harm, namely personal injury, disease and death, they are being challenged by modern categories of harm such as mental illness, sexual harassment, and discrimination on grounds of gender, race, and age.2 Thirdly, workplace accidents and job-related diseases have reached the civil courts in the form of damages claims directed not against employers but against third parties who may have contributed to the harm in question and do not enjoy the immunity granted to employers. 3 In addition to these challenges that have developed within established workers’ compensation systems, there are also more fundamental ones. Over the last few decades, two important European jurisdictions – England (and Wales) and the Netherlands – abandoned their subscription to workers’ compensation entirely and restored or revivified employers’ liability.3 The time has now come to assess the experience these two jurisdictions have made in coping with the consequences of industrial injury. 4 The three challenges explained above, that is, the replacement of workers’ compensation by a full-scale revivification of employers’ liability and the extensive use of actions against third parties not immune from liability of work-related losses have in common that they call the adequacy of workers’ compensation into question. It may well be that the calmness of the waters in workers’ compensation jurisdictions somewhat conceals the existing problems with this kind of mechanism. From this view, workers’ compensation is just another old-fashioned institution of the welfare state of bygone days which should be phased out in favour of employers’ liability sooner rather than later. 2 For a discussion of the problems raised by these new forms of harm cf K Oliphant, The Changing Landscape of Work Injury Claims, above, no 46. 3 England and Wales no 11; Netherlands no 2 ff.
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II.
Systems of Workers’ Compensation: Basic Features
There is no single workers’ compensation system but as many systems as 5 there are jurisdictions running such programmes. As this survey has revealed, Australia, Austria, Denmark, France, Germany, Italy, Japan and Poland may be labelled as workers’ compensation jurisdictions.4 The same is true for the United States where each state operates its own workers’ compensation system.5 In spite of all this variance, the central features of workers’ compensation systems seem surprisingly stable across jurisdictions. It may help to briefly recall them.
A.
Compensation regardless of fault of employer and contributory fault of employee
The primary goal of workers’ compensation systems is to compensate 6 workers who suffered job-related accidents or diseases. In order to achieve this goal, workers are entitled to compensation regardless of fault on the part of the employer.6 Even where the injury or disease is the consequence of a contingency that could not have been avoided at reasonable cost, compensation is granted. In this sense, workers’ compensation systems are based on the principle of strict liability. The employer or the workers’ compensation organisation against which claims are to be directed cannot defend him- or itself by establishing that due care was taken in the organisation and administration of the respective business operation. It does not help either that the harm was caused by a fellow employee, even if the latter acted negligently, grossly negligent or even with intention. Finally, the claim survives even in cases where the worker inflicted the injury upon himself through behaviour that would be classified as contributory negligence within a tort setting.7
4 Australia no 9 ff; Austria no 1 ff; Denmark no 1 ff; France no 1 ff; Germany no 1 ff; Italy no 1 ff; Japan no 1 ff; Poland no 1 ff, Romania no 9 ff. 5 USA no 1 ff. 6 Australia no 9; Austria no 25; Denmark no 2; France no 2; Germany no 9; Italy no 23; Japan no 2; Poland no 8; Romania no 3; USA nos 4, 13. 7 Australia no 17; Austria no 25; Denmark no 10; France no 20 ff; Poland no 12 ff; USA no 13.
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B.
Insurance or collectivisation of claims
7 The original German model of workers’ compensation deliberately avoided the private insurance market and thus eschewed the option of a combination of strict employers’ liability and mandatory insurance.8 Instead, new administrative institutions were created which combine features of a public insurance company with those of a regulatory agency, charged with overseeing firms and ensuring workplace safety.9 The German model has spread to Austria, France, Italy, Japan and Poland.10 Within this framework, the party who is strictly liable is not the employer himself but the newly created public-law insurance carrier. However, the burden of funding the system through contributions rests with the employers, who continue to bear the full financial burden of it and thus remain ‘strictly liable’ for the costs of defending, processing and satisfying claims for compensation of work-related accidents and diseases.11 8 In the US, some states have organised workers’ compensation as a government-sponsored institution. Others opt in favour of market solutions, that is, a combination of employers’ no-fault liability under the workers’ compensation regime and mandatory liability insurance.12 The same variance can be observed in Australia.13 Denmark operates a mixed system that uses the combination of employers’ liability and mandatory liability insurance with regard to accidents while diseases are the responsibility of public institutions.14
C.
Scope of protection
9 Workers’ compensation systems do not compensate any harm suffered by employees in the course of their work. Their scope of protection remains limited to particular categories of harm, namely personal injury, disease and death.15 Damage to property as well as pure financial losses always remain outside the scope of protection. In principle, the same is true for
8 M Stolleis, Geschichte des Sozialrechts in Deutschland (2003) 53 ff. 9 Germany no 32 ff. 10 Austria nos 5, 7; France nos 1, 75; Italy no 4; Japan no 3; Poland no 1. 11 Australia no 50; Austria no 25; Denmark no 2; France no 2; Germany no 9; Italy no 23; Japan no 2; Poland no 8; Romania no 3; USA nos 4, 13. 12 USA nos 5, 72. 13 Australia no 50. 14 Denmark no 28. 15 Australia no 25 ff; Austria no 17 ff; Denmark no 11 ff; France no 23 ff; Germany no 9 ff; Italy no 23 ff; Japan no 13 ff; Poland no 21 ff; Romania no 9; USA no 14 ff.
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dignitary injuries and other types of harm to non-physical interests of the person. However, it has become increasingly difficult to draw the line between physical and non-physical personality rights.16 These cases pose one of the challenges currently faced by workers’ compensation systems.
D.
Limited compensation, simplified assessment
Tort law generally provides for full compensation. While it may be 10 difficult to establish the elements of a private cause of action in tort, the successful claimant is entitled to comprehensive relief. The party held liable must make the victim whole, that is, restore the victim to the situation she would have been in but for the wrongful behaviour.17 In cases of personal injury, the tortfeasor is liable for the costs of medical care, full replacement of lost wages and any other pecuniary loss suffered as a result of the injury, such as the costs of devices and appliances which assist disabled persons in their daily lives. On top of that come damages for non-pecuniary loss, that is, for the pain and suffering sustained due to the injury and the disability or disfigurement that remains after the resources of medical treatment have been exhausted. While it may not be possible to return the victim to a state in which he or she feels indifferent to the harm that was caused by means of a monetary payment, it remains the goal of full compensation to get as close to this state as possible. Workers’ compensation systems function very differently from the private 11 law of torts and damages. As far as medical care is concerned, tort damages provide for the full reimbursement of medical fees incurred by the victim. In contrast, workers’ compensation administrators normally provide medical services ‘in kind’, by referring patients to medical service providers operating on their behalf and under their control, or by at least requiring the patient to obtain authorisation from the administrator before they turn to the physicians and hospitals.18 Damages for lost earnings are not calculated in each individual case with a view to making each victim whole but are based on schedules or grids19. To the extent that benefits are not scheduled, they are calculated on the basis of reduced
16 17 18
19
Cf Oliphant (fn 2) no 38. Australia nos 47, 90 ff; Denmark nos 46, 58 ff; France nos 54, 127 ff; Italy no 108 ff; Japan no 59 ff; USA no 100 ff. Austria no 13 ff; France no 47; Germany no 20; Italy no 31; cf also Japan no 18; USA no 41 f, these jurisdictions place the control of the supply of medical services into the hands of the employer. France no 51; Germany no 19; Japan no 19; USA nos 50, 56.
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earning capacity or, depending on the jurisdiction, reduced physical capacity, which are both independent of the amount of income lost by the victim-applicant.20 In the US, the federal Supreme Court has famously held that a worker named John Rambo (sic!) who, subsequent to the injury, underwent re-training and managed to earn three times the amount of his pre-injury salary was nonetheless entitled to partial disability benefits.21 12 In Europe, the common method of benefit assessment in cases of partial or full, temporary or permanent disablement is to have the handicap resulting from the injury or disease assessed by a medical expert who suggests a percentage-degree of disablement, and then to award a pension which reflects the degree of disablement and the level of wages earned before the harm.22 Depending on how the system is calibrated, the employee may be entitled to full income substitution where the degree of disablement is 100 %, while in the remaining cases of partial disability the level of compensation will be set correspondingly, as a fraction of the income earned at the time of injury. Income benefits are commonly subject to an absolute cap as well as to a relative cap of, for example, two thirds of preinjury wages.23 Typically, compensation is not offered as a lump sum but in the form of a pension paid in addition to whatever wages are continued to be earned.24 From time to time, the level of the pension will be adjusted to account for inflation and possible increases in the overall level of wages. It is paid regardless of any real loss suffered by the employee. It is irrelevant whether the worker really incurs wage losses in an amount equal to the pension. In this sense, workers’ compensation systems grant damages in the abstract, independent of the circumstances of the individual case. 13 Another striking difference between the damages available under tort and the benefits due under workers’ compensation is that the latter exclude compensation for non-pecuniary harm.25 In particular, damages for pain and suffering are not available from workers’ compensation institutions. 20 21 22 23
24 25
566
Denmark no 22; France no 51; Germany no 23; Japan no 19. Metropolitan Stevedore Co v Rambo, 521 United States Supreme Court Reports (US) 121, 126–139 (1997). Australia no 36; Austria no 49; Denmark no 22; France no 50 f; Germany no 24; USA no 51. Germany no 19; USA no 52; in Japan the maximum fraction is 80 %, Japan no 19; in France it is 60 % or 80 %, depending on the duration of the absence from work, France no 50. Australia no 36; Austria no 46; Denmark no 27; France no 56; Germany no 22; Japan no 20; USA no 68. France no 54; Germany no 25; Japan no 23; Poland no 56; USA no 58.
New Perspectives
This is different in Italy where, arguably, non-pecuniary losses are compensated under the concept of danno biologico.26 A similar situation seems to exist in Denmark and also in the jurisdictions of Australia.27
E.
Resolution of disputes out of court
The concentration of liability in a single entity, be it a public workers’ 14 compensation carrier or a private insurance company, overseen by an administrative agency, makes it easier to implement special procedures for resolving disputes. While there is great variance in the institutions incumbent and procedures available in the several jurisdictions, they all have in common the adoption of features of alternative dispute resolution.28 Typically, the aggrieved worker files her claim with the competent workers’ compensation carrier who, in case of approval, will provide immediate relief in the form of medical care and income replacement. If the claim is rejected and a dispute arises, special dispute resolution boards will investigate the case and, depending on the jurisdiction, either propose a settlement or enter into a binding decision.29 In other jurisdictions, the decision rejecting the claim may be challenged in courts specialised in disputes involving social security matters.30 In either case, the settlement of disputes without court intervention is encouraged and court procedures are streamlined. This is one reason why the overall administrative costs of workers’ compensation systems are low if compared to the tandem of tort law and civil litigation.31
F.
Immunity of employers from damages suits
The flipside of the no-fault liability of workers’ compensation for the 15 consequences of work-related injuries and diseases is employer immunity.32 The employer is shielded from damages claims brought by the
26 27 28
29 30 31 32
Italy no 34 ff. Australia no 39; Denmark no 23. Australia no 57 ff; Austria no 74 ff; Denmark no 31 ff; France no 62 ff; Germany no 32 ff; Italy no 59 ff; Japan no 30 ff; Poland no 70 ff; USA no 75 ff; this is also true in those jurisdictions of the US where workers’ compensation schemes are based on the market solution of mandatory liability insurance; cf MA Rothstein/CB Craver/EP Schroeder/EW Shoben, Employment Law, vol 2 (1999) § 6.34, 159 f. Denmark no 33; Japan no 31; USA nos 75, 78. Austria no 78 ff; France no 64; Germany no 34; Italy no 66. For details see no 51 below. Austria no 7 ff; France no 82; Germany nos 3, 36, 46; Japan no 4; USA no 88.
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victim-employee against him. This rule is almost universally followed in all the surveyed jurisdictions to the extent that the employee actually collected benefits from the workers’ compensation carrier. If, in this situation, the worker could launch a private claim against her employer for the same loss, she would receive double compensation and employers would not only have to fund the system of workers’ compensation but also come up for the costs of individual damages claims brought against them. Jurisdictions remain divided with regard to the issue whether the employee is allowed to sue the employer for additional compensation, for example, with regard to losses not covered by workers’ compensation. Claims for such ‘complementary damage’ are allowed in some jurisdictions, including Australia, Denmark and Italy.33 16 A second principle that is widely shared is that the immunity principle allows for exceptions in cases of aggravated fault and with regard to third parties. Where the employer has caused the harm intentionally, the immunity rule does not apply.34 Some jurisdictions have gone even further and allowed claims against the employer even in cases of gross or inexcusable negligence. Furthermore, claims against third parties remain beyond the ambit of the immunity rule for the simple reason that third parties do not contribute to funding the system of workers’ compensation so that there is no reason to protect them from being held liable individually.35
III. Employers’ Liability: Basic Features A.
Bases of liability
17 The basic elements of workers’ compensation systems have been set out above. The alternative is a system of more or less pure employers’ liability without any involvement of workers’ compensation carriers. In such a world, the employer is personally liable for the damage sustained by his employees in the same way that he is liable vis-à-vis third parties. It is doubtful whether such liability would sound in contract or in tort. While civil law systems will ground the action in the law of contract,36 that is, in the employment contract, common law jurisdictions like England and 33 34 35 36
568
Such claims are allowed in some jurisdictions, eg Australia no 75 f; Denmark no 3; Italy nos 51, 85; Japan no 44. France no 83 ff; Germany no 42; Italy no 69; USA no 88; at no 57 ff below. France no 74; Germany no 38; Japan no 34; USA no 81. Netherlands no 14, citing art 7:658 New Burgerlijk Wetboek (NBW); France no 89.
New Perspectives
Wales base it on tort,37 and still others will apply both heads of liability cumulatively.38 While the differences between a contract and a tort approach may be important in theory, it remains inconsequential in practice. In the following, the cause of action against the employer will be labelled as ‘tort’, without attaching any doctrinal meaning and without excluding private damages actions based on contract.
B.
Central features of private liability regimes
Under both theories, liability for the consequences of workplace accidents 18 and occupational diseases shares the common features of private claims for damages: ■
The responsibility of the employer is based on fault, that is, on a failure to take the requisite care in the organisation of the workflow, the equipment of the workplace and the training of workers.39
■
The defence of contributory negligence is available.40
■
The victim is entitled to full compensation of pecuniary and nonpecuniary losses.41
■
Damages are calculated in every single case, not awarded on the basis of statutory schedules and grids.42
■
Disputes are resolved by the civil courts, without prior involvement of ADR-type dispute resolution boards.43
C.
Thresholds for establishing civil liability
These features of employers’ liability create a rich and highly complex 19 framework that is familiar from tort litigation generally. As employers’ liability requires a finding of fault on the part of the employer, courts are required to set the requisite standard with respect to a range of practical situations in industrial and vocational environments. Other difficult tasks are to determine the scope of liability in cases where the harm was caused
37 38 39 40 41 42 43
England and Wales no 90. Germany no 47; Italy no 81 ff; Japan no 48 ff. England and Wales no 92 ff; Netherlands no 16 ff. England and Wales no 110 f; Netherlands no 24. England and Wales no 114; Netherlands no 29 ff. England and Wales no 115; Netherlands no 28. England and Wales no 117 ff, Netherlands no 32.
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by the negligence of a fellow employee,44 and when the employee was guilty of contributory negligence.45 20 If the claimant succeeds in establishing the elements of liability, she is entitled to full compensation of losses incurred, including damages for pain and suffering and loss of amenities. Lost earnings will be replaced in full, with the size of the award depending exclusively on the decrease in earnings caused by the accident or disease. This requires difficult projections about the earning prospects of the claimant in the impaired and the hypothetically unimpaired state of the world. Disputes that cannot be resolved by the parties out of court are dealt with under the normal procedures of the civil justice system. While these may seem adequate or even superior to the services of special tribunals set up to dispose of claims brought in workers’ compensation, they consume more resources, and they take much longer to dispose of a case.46 21 Private systems of liability, regardless of whether they are based on contract or tort, are powerless to ensure the actual satisfaction of claims for damages. The risk that the tortfeasor or other responsible party no longer exists at the time of suit or judgment is a real possibility which remains with the victim. The same is true for the risk that the responsible party is insolvent or otherwise unable to compensate injured workers. 22 In summary, employers’ liability offers a package of virtues and vices, advantages and disadvantages. From the theoretical point of view, tort excels in making the victim whole. Even in theory, however, the achievement in terms of compensating victims comes at a price, namely high administrative costs to be incurred for disposing of each individual claim on a case-by-case basis. In practice, the enforcement of damages claims in civil litigation is a challenging enterprise with an uncertain outcome. And even where the victim succeeds in winning a favourable judgment, she must still fear losing out due to the insolvency or dissolution of the defendant.
IV. The Revival of Employers’ Liability A.
Against the industrial preference
23 From a comparative perspective it is surprising that two important jurisdictions – England and the Netherlands – defected from the dominant 44 45 46
570
England and Wales no 94 ff. England and Wales no 106; Netherlands nos 17, 19, 24. England and Wales no 121.
New Perspectives
solution of providing a separate liability regime for work accidents and occupational injuries. The obvious question to ask is why these two jurisdictions abandoned workers’ compensation and embraced employers’ liability. No doubt, the political processes in England and the Netherlands generated distinct sets of motives for shifting back to employers’ liability. However, there seems to be a common theme, namely the idea that preferential treatment of workers over non-workers – the so-called ‘industrial preference’ – is unwarranted.47 The underlying reasoning is that workers’ compensation operates in a legal world where everyone enjoys protection against harm caused by the culpable behaviour of others, including employers. Against this backdrop, what workers’ compensation systems essentially do is to extend the protection of workers to cases where fault on the part of the injurer – the employer – cannot be established. In these cases, workers gain access to compensation on the basis of the principle of strict liability, with the special feature that the defendant is not the employer in person but an insurance carrier or other institution that is funded by employers. The crucial point for the reform movement dominating the 1960s and 70s 24 was that workers were protected against accidents for which no-one is to blame while members of the general public are not. If someone falls from a ladder while painting a ceiling, she will be compensated if the accident happened at work, in the course of employment, while the same injury is left uncompensated if the ceiling was the one of the victim herself and the accident happened at home. From the needs-centred point of view of the victim, it may be difficult to see the justification for the unequal treatment of these two cases. The difficulty becomes even more serious in the context of disease. Here the question is whether the provision of health care, the replacement of lost earnings and other benefits should depend on the cause of the disease at all. It is a telling fact that health insurance schemes never look to the sources of disease or injury but provide assistance and care regardless of the source that caused the need. One may generalise these observations and maintain that a needs-based approach would always counsel in favour of abandoning source-based distinctions. For social policy makers concerned with meeting the needs of citizens, the cause of such need must be irrelevant.
47
England and Wales no 12 ff; Netherlands no 3.
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B.
The promise of social security
25 The critical idea of lawmakers in England and the Netherlands who worked to abandon workers’ compensation was that the financial needs created by bodily injuries and diseases were to be the same for everyone in society. The general system of social security was to be designed accordingly, treating everyone equally and making the level of benefits contingent on needs only. 26 This was the approach underlying the development of the relevant body of law in the Netherlands. In that country, the system of workers’ compensation that had been introduced in 1901 and was roughly similar to the original German model, was abolished in 1967, at the height of the economic boom that followed the end of the Second World War.48 At this time, the idea was not so much to scale down the benefits available to workers who had suffered accidents or contracted diseases in the course of their employment, but rather to bring the rest of the population up to the same level, that is, to provide generous benefits in the form of health care and income replacement to everyone who was in need of such benefits. In effect, the Netherlands broadened one aspect of workers’ compensation – expedient provision of health care and income replacement – to include the population at large by creating a general social insurance scheme which provided for compensation in cases of disability, or incapacity to work, regardless of the cause of such disability. 27 The development in England must likewise be seen in the light of its longstanding policy to create an all-encompassing welfare system, funded by general taxes and providing the same benefits to every citizen. The intellectual framework for this approach was set out in the Beveridge Report of 1942 that explicitly intended to overcome ‘sectional interests’ and to provide equal basic protection for every member of society.49 In the years to follow, many of the proposals of the Beveridge commission were implemented, albeit not always in pure form. One major step was setting up the National Health Service in 1946, which provides medical care in cases of injury or disease, without asking whether the harm was incurred at work or somewhere else.50 But the Beveridge approach was incompatible with the English version of workers’ compensation that had been put in place in 1897, without ever eliminating the private action against the
48 49 50
572
Netherlands no 3. Social Insurance and Allied Services: Report by Sir William Beveridge (1942) Cmd 6404; England and Wales no 13. England and Wales no 57.
New Perspectives
employer. Consequently, the Beveridge commission had argued against the continuation of this programme and the implicated preferential treatment of workers.51 Parliament, no doubt influenced by ‘sectional interests’, refused to abandon workers’ compensation altogether and rather opted for its reform in the guise of the National Insurance (Industrial Injuries) Act of 1946. Up to the present day, workers who suffer workplace injuries or occupational diseases enjoy access to the industrial injuries disablement benefit that provides compensation in the form of lump sums or pensions.52 Other than in the law of torts, compensation does not require the establishment of fault on the part of the employer, and it remains available even for those employees who contributed to the injury through their own negligence.53 The amount of the industrial injuries disablement benefit is regulated by statute and depends on the degree of disablement.54 Disputes are resolved by tribunals which operate outside the civil justice system and are said to be faster and more efficient than courts of law.55
C.
The failure of social security
At the time when workers’ compensation was integrated into the general 28 social security system of the Netherlands in 1967, the tort action against the employer played a merely supplementary role. In essence, its function was to compensate the victim for non-pecuniary losses as those are not recoverable under social insurance. In reality, the Netherlands replaced the system of workers’ compensation with a combination of (generous) social security benefits and added employers’ liability on top.56 Contrary to first impressions, systems of employers’ liability are not pure in the sense that they are counting on the tort system only or even primarily. Rather, they combine broad coverage of needs caused by bodily injuries and diseases under social security schemes with the private tort action for damages.
51
52 53 54 55 56
Beveridge Report (fn 49) no 80: ‘If a workman loses his leg in an accident his needs are the same whether the accident occurred in a factory or in the street’. For a recent discussion cf S Jones, Social Security and Industrial Injury, in: N Harris (ed), Social Security Law in Context (2000) 461–494. England and Wales no 57 f. England and Wales no 35. England and Wales no 65. England and Wales nos 74, 76. Netherlands no 9.
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29 As we know today, the idea of providing generous support to all members of society in instances of need was an illusion. It is a matter of speculation whether such a system would be able to function if economic conditions were constantly bright and the number of claims made against the system was held constant. In reality, economic conditions are not always bright and, more importantly, the number of claims is not constant. Social security programmes which provide for generous benefits for disablement inevitably increase the demand for such benefits. In times of economic downturns unemployed workers have strong incentives to pass themselves off as disabled even where the level of the benefits available is low.57 The Dutch experience is evidence of the fact that generous systems may not even survive during good times. The high level of benefits that was foreseen under the original version of the Wet op de arbeidsongeschiktheidsverzekering turned out to be unsustainable over time.58 Step by step, the level of assistance available under the Dutch disability to work scheme was lowered. At the same time, the courts began to increase the bite of employers’ liability by imposing ever more ambitious duties of care. The Hoge Raad (Supreme Court of the Netherlands) even went as far as to create a duty to take out market insurance for the benefit of employees, if only for injuries suffered in traffic accidents.59 In practical effect, this comes close to a duty of care to provide for something roughly equivalent to workers’ compensation. A similar story may be told with regard to England and Wales. Again, the benefits available under the industrial injuries scheme have gradually been diminished until benefits for lost wages were eliminated altogether.60 30 In parallel to the scaling back of social security, the requirements for successful tort claims against the employer were lowered. This increased the chances of victims to rely on the private cause of action as a supplement to whatever benefits were available from struggling social security schemes. In English law, the well-established tort doctrines of vicarious liability and contributory fault provided anchors for the holy – or rather unholy – trinity of defences available to the employer under the law as it stood in the late 19th century.61 The scope of vicarious liability had been seriously curtailed by the so-called doctrine of common employment or
57
58 59 60 61
574
This seems to be what happened with the workers’ compensation system in California, cf GT Schwartz, Waste, Fraud, and Abuse in Workers’ Compensation: The Recent California Experience, 52 Maryland Law Review (Md L Rev) 983 (1993). Netherlands no 3 f. Netherlands no 5. England and Wales no 60. WV Horton Rogers, Winfield & Jolowicz on Tort (18th edn 2010) no 8–9.
New Perspectives
fellow-servant rule which exonerated the employer from liability for the fault of fellow employees, provided that such fellow employee was not charged with organising and ensuring the safety of the workplace. Even where the victim succeeded in establishing a prima facie case against the employer, she was still subject to the defences of assumption of risk and contributory negligence. Thus, the injured employee lost her claim for compensation if the accident in question involved negligence on her own part, but also where it appeared to be a natural consequence of the general risk caused by the plant or operation in issue. It is interesting to note that the two European jurisdictions that resolved to revive employers’ liability and to abandon workers’ compensation were cautious to leave the unholy trinity of defences in their graves. In the modern law of employers’ liability in England and the Netherlands, respondeat superior has trumped the fellow-servant-rule, assumption of risk has been abolished, and contributory fault has been limited to a small set of cases involving egregious behaviour of the employee. Lawmakers in England also addressed the risk that even those victims who 31 were successful in court were left empty-handed due to the inability of the defendant to pay the damages due under the court judgment. In England and Wales, liability insurance is mandatory with regard to personal injury claims growing out of the employment relationship.62 In the Netherlands, liability insurance is voluntary for business entities, including risks growing out of employers’ liability.63 In reality, roughly 50 % of all businesses carry such insurance. Plans to introduce mandatory liability insurance for claims involving workplace accidents and occupational diseases have not seen the light of day as of yet.64 The consequences of the sole reliance on the civil action against the 32 employer became apparent in asbestos cases which are characterised by a long interval between the wrongful act, that is, the exposure of the worker to asbestos dust, and the manifestation of the disease, mesothelioma. Systems of workers’ compensation are able to deal with such cases relatively easily for several reasons. The question as to the foreseeability of the harm is moot because liability is strict, the issue of causation may easily be resolved if the scheme covers whole industries rather than individual employers and the insolvency or dissolution of corporate employers remains inconsequential if there is a public institution or a private insurance
62 63 64
Cf the Employers’ Liability (Compulsory Insurance) Act of 1969; Rogers (fn 61) no 8-1. Netherlands no 37. RIR Hoop, Shifts in Work-Related Injuries: An Explanatory Analysis, in: S Klosse/ T Hartlief (eds), Shifts in Compensating Work-Related Injuries and Diseases (2007) 111.
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carrier present and solvent enough to compensate the victim. For these reasons, asbestos claims were never an issue in jurisdictions like Germany. Compare that to England and Wales where the House of Lords settled on joint and several liability of employers, then switched to proportional liability and finally had to see Parliament intervene in favour of the original ruling of joint and several liability.65
D.
Conclusion
33 The development that can be observed in Dutch and English law suggests that it is misguided to frame the choice faced by lawmakers in the area of industrial accidents and occupational diseases as being one between workers’ compensation and employers’ liability. In reality, the choice was made between workers’ compensation as an exclusive system on the one hand, and a combination of the general protection under the social security system with the private damages action against the employer, as a supplement. It seems that nowhere have lawmakers relied exclusively on the private liability system, and for obvious reasons: a regime that bases the liability of the employer on the fault principle fails to insure the victims of accidents that were not caused through the negligence of the employer. In addition, the workings of the private liability system inevitably take time while the injured worker is in urgent need of assistance. This explains why employers’ liability regained ground in jurisdictions that provide rather comprehensive coverage for the costs of medical treatment through public health insurance schemes and that make sure that victims of accidents and diseases receive some form of income replacement during the time of recovery.
V.
Functional Analysis
34 In order to assess the relative virtues and vices of workers’ compensation and employers’ liability one needs to identify the parameters of comparison. In the analysis to follow, these parameters will be compensation, deterrence and administrative costs.
65
576
Fairchild v Glenhaven Funeral Services Ltd [2002] United Kingdom House of Lords (UKHL) 22, [2003] 1 Appeal Cases (AC) 32 (HL 2002); Barker v Corus UK Ltd [2006] UKHL 20, [2006] 2 AC 572 (HL 2006); Sec 3 no 4 Compensation Act 2006; cf A McAdams, Barker and the King of Persia, 156 New Law Journal 1433; R Herbert, The Compensation Act 2006, 4 Journal of Personal Injury Law 337 (2006).
New Perspectives
A.
Compensation
The compensation goal may be understood in a number of ways. An 35 important distinction is between needs-based and justice-based perspectives.
1.
Needs-based interpretation of the compensation goal
From a needs-based perspective, compensation requires that those who 36 are in need of funds actually receive benefits in an amount sufficient to cover the underlying need. Within the context of personal injuries and diseases, needs-based compensation calls for institutions which are responsive to the requirements of victims, either by providing medical care in kind or by supplying the funds necessary to buy medical services in the market. In addition, victims who are temporarily or permanently disabled as a consequence of injury or disease need to receive money benefits replacing lost income. From this perspective, strict liability is superior to fault-based liability because it is broader. If fault is not a prerequisite for recovery, the victim merely needs to prove her damages – in other words: her needs – in order to prevail. Phrased in the terms of economic analysis, strict liability is a form of 37 insurance of risk-averse victims on account of injurers. If these injurers are not risk-averse but risk-neutral, strict liability creates a net advantage for society.66 In the 19th century, before the introduction of workers’ compensation schemes, the classic setting in cases involving workplace accidents was a poor worker who depended on his salary to make ends meet and to pay his medical bills pitched against a large corporation that could calculate the expected costs of such accidents over the financial year and set its prices accordingly. As the costs of risk bearing are lower for the corporate injurer than for the individual victim, strict liability is preferable because it promotes economic welfare. The choice between fault-based and strict liability maps on to the distinc- 38 tion between employers’ liability and workers’ compensation. The fit is not necessary, as the pairs could easily be separated in order to mix the components. It is perfectly conceivable to think of a system of employers’ liability where the employer is strictly liable for the consequences of workplace accidents and occupational diseases, just as workers’ compensa-
66
G Calabresi, The Costs of Accidents (1970) 39 ff; S Shavell, Economic Analysis of Accident Law (1987) 186 ff.
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Gerhard Wagner
tion systems could be based on the principle of fault liability. In reality, this is not the case, however. Systems relying on employers’ liability are based on fault,67 while workers’ compensation systems are invariably associated with strict liability.68 As a consequence, it remains true that workers’ compensation systems are superior to employers’ liability from the perspective of a needs-based understanding of the compensation goal.
2.
Corrective justice interpretation of the compensation goal
39 A corrective-justice approach towards the compensation goal would take the needs of the victim only as a starting point for the inquiry whether there is a good reason to hold the other party, whose liability is in question, responsible for the harm suffered. The most important reason that may justify the imposition of liability is the wrongdoing, or fault, of the other party. A finding of fault implies that the harm in question was foreseeable and could have been avoided at adequate costs for a reasonable person in the position of the defendant ex ante. The failure to adjust one’s behaviour accordingly and thus to avoid the harm in question justifies making the tortfeasor pay for the needs of the victim. 40 At first blush, a system of employers’ liability, without workers’ compensation, seems to outperform workers’ compensation systems under the corrective-justice measure. After all, employers’ liability is based on the fault principle, which is the main pillar of civil liability outside of contractual relationships and well-grounded in notions of corrective justice. This would suggest that systems of employers’ liability that are based on the fault principle fare better than workers’ compensation systems where liability is strict. 41 However, fault is not the only principle that may justify the shifting of losses under a view of corrective justice. Concepts of strict liability are justifiable as well, if only with regard to particular activities such as the control of a source of abnormal danger.69 The critical question then becomes whether no-fault liability for workplace accidents and occupational diseases is justifiable. The explanation would have to be different from the one underlying strict liability for sources of abnormal danger because it is obviously wrong to maintain that work in itself is abnormally dangerous. Rather, the justification for no-fault liability of employers is
67 68 69
578
See no 17 above. See no 6 above. Cf European Group on Tort Law, Principles of European Tort Law (2005) 104 ff.
New Perspectives
based on the argument that workplace accidents cannot be avoided even by reasonable workers over the course of their working lives. While it may be possible to avoid every single incident of injury, nobody is able to control her behaviour at all times, and to behave prudently and diligently over long periods of time. Since perfection is an unattainable ideal, the costs of imperfection must not rest with the worker who happened to drop the ball. This seems to be the rationale behind the rule, accepted in most jurisdictions running workers’ compensation systems, that contributory fault on the part of the worker does not bar or diminish the claim for benefits, at least absent a showing of aggravated fault.70 In summary, strict liability of employers for workplace accidents and occupational diseases is justifiable under a corrective justice view of the liability system. This conclusion gains support from the tendency of the Dutch Hoge Raad 42 to move fault-based employers’ liability under art 7:658 BW ever closer to a regime of strict liability.71 The means employed are the tightening of the employers’ duties of care and, most strikingly, the development of a duty to protect workers through first-party insurance policies that the employer is forced to underwrite. This jurisprudence suggests that the justices of the Hoge Raad believe in strict liability of employers and try to supply such a regime, in disregard of the contrary language of the statute.
B.
Deterrence
1.
Strict liability vs fault-based liability
The deterrence function tests liability systems with regard to their ability 43 not only to compensate losses ex post but also to contribute to the prevention of losses ex ante.72 It is a central assumption of the economic analysis of law that the anticipation of future liability for harm provides an incentive for current actors to adjust their behaviour in the state ex ante. The threat of liability for harm done provides rational actors with a financial incentive to take precautions up to a point where a marginal increase in effort would equal the reduction in damages caused by the behaviour in question, and to increase the amount of dangerous activities up to a point where the marginal increase in utility derived from such activity equals the costs of additional harm. Within the field of law and
70 71 72
See no 6 above. Netherlands no 15. RA Posner, Economic Analysis of Law (8th edn 2011) 213 ff.
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economics it is received wisdom that both, fault-based liability and strict liability, generate optimal incentives to take precautions.73 44 A second concern of liability rules is to generate incentives for choosing efficient activity levels.74 The activity level denotes the amount or quantity of a potentially dangerous activity, given a particular liability rule. The goal is to make sure that potential injurers engage in dangerous activities only up to the point where the gain from another unit of the activity is equal to the loss in terms of additional accidents costs, assuming that efficient care has been taken. In the case of a business entity, the price charged for its goods and services should reflect the full costs of production, including the costs of any harm caused in the course of production.75 Under the fault principle firms would be able to deny responsibility for any damage that was caused, even though appropriate care had been taken. For this reason, the balance sheet of the firm would not reflect the full costs of production, prices for the goods and services supplied would be too low, and demand for such goods and services too high, in other words: activity levels would be excessive. In order to avoid the misallocation of resources implicit in excessive demand, ‘the cost of the production should bear the blood of the worker’.76 For the familiar reason of gauging activity levels in the form of industrial output a regime of strict employer liability seems to be preferable to its fault-based alternative. 45 For a comparative evaluation of workers’ compensation and employers’ liability it is important to keep in mind the important caveat, pointed out above, that the link between workers’ compensation and strict liability on the one hand and the alignment of employers’ liability and fault liability is not necessary. With that said, workers’ compensation systems clearly fare better in terms of deterrence, as they provide the same incentives to take care as employers’ liability but offer the additional advantage of incentives to adjust the amount of potentially harmful activities to the efficient level.
2.
Insuring against liability
46 One major shortcoming of workers’ compensation systems may be thought to be the fact that the costs of compensating victims and of defending suits are not borne by the employer but by a public institution
73 74 75 76
580
Shavell (fn 66) 5–32; Posner (fn 72) 226 f. Shavell (fn 66) 21 ff; Posner (fn 72) 226 ff. Shavell (fn 66) 48–51. W Page Keeton, Prosser and Keeton on the Law of Torts (5th edn 1984) 573.
New Perspectives
or a private insurance carrier, depending on the institutional set-up chosen by the jurisdiction in question. Both types of solutions shift major parts of the costs of workplace accidents and occupational diseases away from the employer and onto a third party. By removing the threat of liability these institutions seem to destroy whatever incentives are generated by the underlying liability rule.77 The conclusion would be that workers’ compensation systems are a complete failure with regard to deterrence. However, such a conclusion would be premature. On the one hand, it 47 must be remembered that employers’ liability fares little better because liability insurance is mandatory in some jurisdictions with regard to industrial injuries.78 Even where it is not, most businesses carry liability insurance on a voluntary basis.79 For the incentives to take care and to adjust activity levels it does not matter much whether the insurance scheme is public or private as long as the costs of accidents are shifted to another party. If this were all there was, then workers’ compensation and employers’ liability would be indistinguishable, namely: equally bad. In reality, it is not the case that liability insurance destroys the incentives 48 to avoid accidents at reasonable cost. To the extent that insurers succeed in monitoring the insured and in adjusting premiums to adequately reflect the risks created by the employer, the incentives generated by a given liability rule are preserved.80 While it is true that, in the real world, insurers never succeed in restoring the incentive structure of the liability system in full, it would be wrong to believe that their efforts have no effect at all. Rather, tools like pre-underwriting risk assessment, deductibles, and experience rating go a long way towards preserving incentives to take care. While the incentives of private insurers to monitor and risk-rate insureds 49 are well-understood, one may question the incentives of public insurers to engage in such costly activities. In Germany, workers’ compensation carriers used to shun instruments of experience rating and exclusively relied on risk classification ex ante.81 In order to improve incentives to take care and with a view to driving down the accident rate, the German legislature intervened and imposed a statutory duty upon workers’ com-
77 78 79 80 81
G Wagner, Tort Law and Liability Insurance, in: MG Faure (ed), Tort Law and Economics (2009) 377, 389 ff. England and Wales no 150; Australia no 108. Netherlands no 37; Poland no 128; Japan no 71. Wagner (fn 77) 391 f. Germany no 30.
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pensation institutions to devise and implement bonus-malus schemes.82 An empirical study comparing the accident rates before and after the introduction of such elements of experience rating have revealed that they made a measurable contribution to the decline of the accident rates in the industries surveyed.83 50 In conclusion, the same tools that allow private liability insurers to create incentives for insureds to take care and adjust activity levels are at the disposal of workers’ compensation carriers too. With regard to the deterrence goal of liability the additional function of workers’ compensation to provide insurance does not serve to its disadvantage. Shortcomings of realworld workers’ compensation schemes that have been observed here and there are not systematic, but merely evidence of poor management and probably also of a deficient legal framework. In some jurisdictions, workers’ compensation has been designed in a way that may even be superior to the combination of employers’ liability and liability insurance. Under German and Italian law, for instance, workers’ compensation institutions are not only charged with administering the compensation scheme but also with the task of actively improving workplace safety.84 In order to implement this task, workers’ compensation institutions are authorised to visit and inspect the facilities of employers within their jurisdiction, and to issue binding administrative orders with regard to the design and maintenance of machinery and other appliances, the safety of buildings and the overall organisation of the work environment. If the employer fails to comply with such orders, he is subject to sanctions in the form of administrative fines. In addition, workers’ compensation institutions are heavily engaged in research and development with regard to all aspects of occupational safety.
3.
Conclusion
51 In essence, workers’ compensation systems combine strict liability on the part of the employer with mandatory liability insurance. This combination is particularly apparent in jurisdictions, such as those of the US, that do not establish mandatory public insurance carriers but allow employers
82 83 84
582
Germany no 31; G Wagner, Kollektives Umwelthaftungsrecht auf genossenschaftlicher Grundlage (1990) 90, 208 f. H Kötz/H-B Schäfer, Schadensverhütung durch ökonomische Anreize – Eine empirische Untersuchung, 189 Archiv für die civilistische Praxis (AcP) 501 (1989). Germany no 75; Italy no 59.
New Perspectives
to insure the risk in the private market.85 Contrary to first impression, such systems work well in terms of deterrence. This conclusion finds support in empirical studies which compared the accident rates under workers’ compensation with those achieved under the systems of employers’ liability, which they replaced.86 While the number of claims for minor injuries tended to rise with the introduction of workers’ compensation schemes, the death-rate and the number of serious injuries declined significantly.87 The obvious explanation is that the introduction of strict liability and the award of benefits independent of actual loss as hallmarks of workers’ compensation increase moral hazard and therefore a frequency of claims in the area of minor injuries.88 Deaths and serious injuries are much less likely to fall prey to moral hazard and are, therefore, a much more reliable indicator of the performance of workers’ compensation systems. And it is precisely in this area that these schemes shine, which is solid evidence for their beneficial effects on workplace safety.
C.
Administrative Costs
Private liability systems, for all their benefits, are costly to operate. They 52 consume a large amount of resources which must be accounted for in one way or another. The civil justice system is the natural choice in search for an institution to resolve disputes over civil claims for damages. The establishment of negligence on the part of the employer and the assessment of damages in cases of personal injury is a complex task that calls for a procedural mechanism that matches up to it. Therefore, systems of employers’ liability necessarily involve expenditures for the costs of the
85 86
87 88
USA no 72. These studies are summarised in D Dewees/D Duff/M Trebilcock, Exploring the Domain of Accident Law (1996) 381 f. Given that schemes providing for broad and generous protection of workers from occupational risk generate both, more moral hazard, and stronger incentives to take care, and that the only observable data for researchers are the number and value of claims, it is very difficult to isolate the effects of workers’ compensation schemes. Cf A Morantz, Opting out of Workers’ Compensation in Texas, in: DP Kessler, Regulation Versus Litigation: Perspectives from Economics and Law (2011) 209 f. And even where it can be done, the question remains: compared to what? Systems of employers’ liability vary widely, not only with regard to the scope of liability and defences such as common employment and contributory negligence, but also in the area of damages levels and enforcement. In Texas, for example, where employers may opt out of workers’ compensation, practically all of the firms that used this option resorted to mandatory arbitration for resolution of disputes; cf Morantz (supra) 223, 230. MJ Moore/WK Viscusi, Compensation Mechanisms for Job Risks: Wages, Workers’ Compensation, and Product Liability 13–20 (1990) 121–135. GT Schwartz, Reality in the Economic Analysis of Tort Law: Does Tort Law Really Deter?, 42 University of California at Los Angeles Law Review (UCLA L Rev) 377, 392 f (1994).
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civil justice system. While it is of course true that most cases are never litigated but settled, overall costs will still be substantial. 53 It is a hallmark of workers’ compensation systems that they foreclose access to the courts of law. There is a lot of variation within the various systems but they share the ADR-type mechanisms of dispute resolution.89 In some jurisdictions dispute resolution boards are offered as a first attempt to settle the dispute in question. If this attempt fails and the claimant is dissatisfied with the proposal or decision of the board, access to the courts remains preserved. Other jurisdictions have gone further in replacing the civil courts with specialised tribunals and allowing them to proceed in a much more informal way. The economic benefits of such measures are obvious, namely a rather dramatic reduction in administrative costs. 54 The cost savings generated by workers’ compensation systems are further increased above the level to be expected from any shift towards alternative dispute resolution. Replacement of fault-based liability with a system of strict liability eliminates one major battleground for intensive litigation. In removing the defence of contributory negligence from the equation, workers’ compensation systems exclude the fault issue altogether, rendering it unnecessary to set standards of care with regard to the behaviour of employers and employees. As every experienced litigator knows, the issue of quantum often raises highly complex problems that require extensive pleading and costly fact gathering and collection of evidence. As a consequence, the costs of litigation again tend to be high. Workers’ compensation systems avoid this pothole for administrative costs, too, by eliminating the need to calculate damages on an individual level in favour of wholesale justice on the basis of compensation schedules and grids. The assessment of damages in workers’ compensation systems does not require extensive factfinding for the purpose of establishing, upon the balance of probabilities, the loss in earnings caused by the injury or disease in question. Rather, it suffices to establish the total or partial disability of the claimant in terms of an impairment of earning capacity and to then apply the rate of disability to the wages earned before the accident in question.90 The determinations necessary to assess the diminution of earning capacity are primarily of a medical nature and may thus be made by doctors, who in turn work together with the dispute resolution boards of workers’ compensation institutions. Together, these features dramatically reduce the complexities of litigating a claim for damages in civil court.
89 90
584
See no 5 ff above. See no 10 ff above.
New Perspectives
One basic idea behind workers’ compensation systems was always that the 55 sizable savings in administrative costs that they promise and the associated result that those in need of compensation will receive a larger share of the payments made by injurers and their insurers would make the system more efficient. The proposition that the operation of no-fault systems involves relatively low administrative costs seems to hold up in practice, even though the numbers vary widely from jurisdiction to jurisdiction. In England and Wales, the administrative costs of the industrial disablement benefit scheme are said to be no more than 2 % of benefit expenditures,91 while the figure for general social security schemes is 5 %. Compare these figures to the average administrative costs of the tort system for personal injury claims that routinely exceeds damages, sometimes by a factor of 1.8.92 In Germany, the administrative costs of workers’ compensation institutions are around 10.5 % of total expenditures.93 This number not only includes the pure costs of processing claims and resolving disputes which amount to no more than 1 % of expenditures, but also the overall operating costs of the respective agencies which are also charged with occupational safety regulation and oversight.94 In the United States, the share of administrative costs of workers’ compensation is said to amount to as much as 35 % of total costs of claims,95 while the respective number for the tort system is said to be 60 %.96
91
92
93
94 95
96
D Walters, An International Comparison of Occupational Disease and Injury Compensation Schemes, 5 (2009), available at . R Jackson LJ, Review of Civil Litigation Costs: Final Report 16 no 2.6 (2009), with regard to a sample of personal injury cases: ‘It can be seen that for every £1 which the liability insurers paid out in damages, they paid out £1.80 in claimant costs.’ See also ibid, 19 no 4.4. Germany no 77; Geschäfts- und Rechnungsergebnisse der gewerblichen Berufsgenossenschaften und Unfallversicherungsträger der öffentlichen Hand 2009 (Annual Report of the German Association of Accident Insurers, DGUV) 56, 61; available at . See fn 84. USA no 70; pursuant to the most recent report of the National Academy of Social Insurance workers’ compensation has a benefits-to-total-costs-ratio of 0.73 for 2008, which means that for every dollar paid by employers, either as self-insurers or in the form of insurance premiums under workers’ compensation, 73 cents went to injured workers in the form of benefits. Administrative expenses, including the administrative costs and profits of insurance companies, amounted to 27 % of total expenditures. Cf National Academy of Social Insurance, Workers’ Compensation: Benefits, Coverage, and Costs 2008, 32 (2010), available at . USA no 115; cf also Dewees/Duff/Trebilcock (fn 86) 393 f, who maintain that the tort system consumes 50–55 % of the damages in administrative costs.
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D.
Conclusion
56 The previous analysis suggests the conclusion that workers’ compensation, even though it has been around for a long time, still looks attractive today. It outperforms employers’ liability based on the fault principle as it ■
creates incentives for employers to adjust activity levels to the efficient level,
■
provides insurance coverage to risk-averse victims and the expense of risk-neutral injurers,
■
and reaches its goals with comparatively little administrative effort that results in a low administrative costs/benefits received-ratio, particularly if compared to the tort system.
VI. Challenges for Workers’ Compensation Systems A.
The common root of current challenges
57 Despite the advantages of workers’ compensation systems, they face serious challenges. The common root of these challenges seems to be the same, namely the obvious divergence between workers’ compensation benefits and tort damages. As explained above, workers’ compensation systems avoid the calculation of damages in each individual case and instead award pensions on the basis of an abstract assessment of the loss in terms of the degree of disablement.97 While it is not clear that this move under-compensates victims systematically, it does under-compensate those who sustained the most serious injuries and are thus completely disabled so that they have to forego their earnings altogether. In addition, damages for pain and suffering are unavailable under workers’ compensation. With regard to the law of the United States, it needs to be recalled that punitive damages are not an option in workers’ compensation either.98 58 The shortfall of workers’ compensation benefits compared to full tort damages has triggered a number of developments which are of great concern because they tend to undermine the principles of workers’ compensation and, more importantly, dissipate the advantages the system was designed to harness in the first place. The main inroads into these principles are the following:
97 98
586
See no 10 ff above. Cf USA no 100.
New Perspectives ■
The calls for upgrading workers’ compensation benefits to full income replacement.
■
The compensation of non-pecuniary harm by workers’ compensation institutions.
■
The prosecution of third parties who are not subject to the immunity rule that protects the employer from private suits.
As will be shown below, these challenges raise substantive as well as 59 procedural issues that need to be addressed separately.
B.
Inroads into the immunity principle
1.
The expansion of aggravated fault
In all jurisdictions that operate workers’ compensation schemes the im- 60 munity rule is set aside where the employer caused the harm intentionally.99 In such cases, the employer may be sued in civil court, in contract or in tort, the aim being the recovery of damages in full. While these principles are followed everywhere, the scope of the exception varies greatly. A narrow reading of intention would require the employer to have acted with an intention to cause bodily harm to the employee. In many jurisdictions courts have gone far beyond the core meaning of the 61 concept of intentional harm and have included accidental injuries. French law provides a telling example. The French social security system not only incorporates the common rule that the employer may be sued in civil court where he caused the harm intentionally, but carves out another exception for cases of inexcusable negligence (faute inexcusable).100 Where inexcusable fault has been established, the victim receives an additional sum as compensation from the competent workers’ compensation carrier, on top of her pension.101 Alternatively, she may also sue the employer directly, and before the same administrative tribunal that is competent to hear the claim in workers’ compensation.102 Provided that this tribunal finds that the behaviour of the employer amounted to inexcusable negligence, the workers’ compensation institution may recoup any payments made to the
99 100 101 102
Cf for example France no 71; Germany no 42; USA no 88. France nos 71, 88. France no 72. France nos 87, 132.
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victim from the employer so that the latter bears the full loss.103 As a consequence of the relaxation or supplementation of the intentional-harm exception, litigation for additional benefits has increased considerably. In France, it seems that an allegation of inexcusable fault is now almost routinely added to a claim for workers’ compensation benefits.104 The French courts have facilitated this development by interpreting the concept of faute inexcusable in an objective, strict-liability-like way: under the theory of a strict duty to provide a safe work environment (obligation de sécurité de résultat), the employer is liable if it can be established that rules of safety had not been followed. 62 In addition, France made the choice to award victims of asbestos-related diseases the privilege of close-to-full tort damages independent of a showing of intention or inexcusable negligence by entrusting the compensation of these victims to a special branch of the social security system.105 The so-called FIVA (Fonds d’indemnisation des victimes de l’amiante) serves the double function of, on the one hand, supplementing the workers’ compensation system by providing additional benefits in the form of higher pensions and a lump-sum payment for non-pecuniary harm, and, on the other hand, providing compensation to ‘secondary victims’ like the spouses of workers who were exposed to asbestos dust through their interaction with the primary victim. As a practical matter, the availability of additional funds for compensating victims of asbestos helped to deter litigation in the civil courts where victims had begun to claim for full compensation based on the theory that employers were guilty of gross negligence (faute inexcusable) and thus could not avail themselves of the workers’ compensation’s immunity rule.
2.
The substantive issues: Full income replacement and damages for non-pecuniary losses?
63 The drive towards private causes of action is fuelled by the shortfall of workers’ compensation benefits when compared to the amount of damages available in tort. An alignment of workers’ compensation benefits and tort damages would immediately remove the incentive to turn to the courts for the enforcement of claims against an employer who is guilty of 103 Art L 452-2 Code de la sécurité sociale, available at ; France no 72. 104 Cour de cassation, Chambre sociale (Cass soc) 28 February 2002, Dalloz (D) 2002, 2696; France nos 72, 102. 105 France no 32 ff.
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New Perspectives
intention or aggravated negligence instead of, or in addition to, collecting from workers’ compensation carriers on a no-fault basis. The question whether workers’ compensation benefits should be upgraded to approximate or equal tort damages raises two separate points, namely income replacement and damages for non-pecuniary losses. As it turns out, the two are closely linked to each other. Workers’ compensation systems do not award damages for non-pecuniary 64 losses, such as pain and suffering, disfigurement, and loss of amenities.106 This is not to say that the damages available under workers’ compensation systems never include such a component. In cases of comparatively minor bodily injuries that still impede or destroy some bodily functions, the victim will be awarded a pension for the resulting loss of her ability to work. While the degree of disability will be small and the pension modest, over time it will accumulate to a sizable award. However, in many cases of minor injuries, the victim’s income is not diminished, presumably because many victims adapt quickly to the disability and manage to make up for it in daily life. Even though no pecuniary loss is being suffered, the pension will be awarded regardless and continue to run during the work life of the victim. In such cases, the victim is being over-compensated for her pecuniary losses so that the pension assumes the function of compensating non-pecuniary losses. It allows the injured party to engage in some costly activities which would otherwise not have been affordable. The matter is different with regard to serious injuries and diseases which 65 leave the victim fully disabled. For this class of victim, which remains excluded from the workforce, the pension will often fall short of the actual loss in the form of lost earnings, particularly where these earnings had been above average.107 To the extent that the full pension is needed and used for the purpose of income replacement – as it must be in cases involving serious injuries or diseases – it does not contribute anything towards the compensation of non-pecuniary harm. With regard to serious injuries, the black-letter proposition that workers’ compensation does not offer benefits for pain and suffering is still valid. Arguably, it amounts to a failure of workers’ compensation systems to over-compensate the lightly injured and to under-compensate those who have been seriously disabled. In Germany, the exclusion of damages for non-pecuniary losses from the 66 benefits offered by workers’ compensation schemes has been challenged
106 See no 10 ff above. 107 See no 10 ff above.
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on constitutional grounds twice.108 The petitioners pointed to the inconsistency of a legal regime that denies compensation for non-pecuniary losses and at the same time extends the immunity rule which shields the employer from liability for these heads of damages, so that the victim ends up empty-handed. The Federal Constitutional Court disagreed and failed to see an imbalance here.109 In the eyes of the justices, workers’ compensation systems are based on an implicit bargain in which the worker eschews full compensation of any loss sustained in exchange for no-fault liability of a public insurance carrier which provides rather generous support in cases of minor injuries, still adequate compensation in cases of major injuries and eliminates the risk of insolvency. 67 While this is all true, the question remains whether it is sound policy to exclude non-pecuniary losses from the scope of compensation altogether and whether it makes sense to over-compensate those who sustained only minor injuries. As a matter of policy – rather than constitutionality – these choices seem hard to defend. First of all, empirical studies suggest that workers would be prepared to pay the price, in the form of reduced wages, for more comprehensive coverage.110 This finding contradicts the assumption, made in the general economic theory of compensation systems, that it is not in the interest of workers to insure against non-pecuniary losses, provided that they have to pay for it, as they must here in the form of wage reductions.111 The major shortfall of the current system seems to be that there is no inverse relation between the gravity of the injury and the demand for pain and suffering damages. Quite the opposite: victims who have the strongest interest in damages for pain and suffering are those who sustained the most serious injuries. But it is precisely this class of victims who suffer most from the current system that denies compensation of non-pecuniary losses to those who need it most and awards it to others who need it less. If any discrimination between victims were appropriate, then the rule would have to be the other way around, that is. to award damages for non-pecuniary loss to the severely injured and deny it to those who suffered only minor injuries.
108 Bundesverfassungsgericht (Federal Constitutional Court, BVerfG) 7 November 1972, Entscheidungen des Bundesverfassungsgerichts (Decisions of the BVerfG, BVerfGE) 34, 118, 129–135; BVerfG, 8 February 1995, Neue Juristische Wochenschrift (NJW) 1995, 1607 f; H Kötz/G Wagner, Deliktsrecht (11th edn 2010) no 604 f. 109 Germany no 41. 110 Moore/Viscusi (fn 87) at 51: ‘Taken at face value, these results imply that existing levels of workers’ compensation benefits are suboptimal from the standpoint of insuring income levels.’ 111 Shavell (fn 66) 228–230.
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New Perspectives
An important consideration counselling against an increase in workers’ 68 compensation benefits is moral hazard.112 Empirical studies have shown that increases in benefit levels generate moral hazard in the form of an increased number of claims and a longer duration of disablement.113 However, this conclusion does not necessarily counsel against increasing benefits for serious injuries for two reasons. As far as ex ante moral hazard is concerned, workers will still prefer the state of the world without the serious injury, for example, loss of a leg or loss of eyesight, to a state with the injury even if the compensation package were increased significantly. This is most pronounced in the case of fatal injuries: increasing the benefits available to the family of dead workers does not lead to a decrease in precautions the worker takes against her own death.114 In addition and even more important, the risk of ex post moral hazard, that is, the fabrication of injuries, seems to be manageable too. After all, serious injuries are much more difficult to imitate, so that the risk of abuse and fraud is negligible. Again, fatal accidents provide the best example. In light of these considerations lawmakers would be well-advised to 69 remove part of the incentive to use the remaining private causes of action against the employer by redistributing the payouts under workers’ compensation away from the lightly injured and in favour of those victims who suffered major injuries. As to the latter, pensions should be increased up to the point of full equivalence of after-tax income, and damages for pain and suffering added to the bill.
3.
The administrative issue: upgrading workers’ compensation benefits vs private suits against employers
The next question concerns the choice of a procedural mechanism suitable 70 to claims for full compensation. One way to improve the current situation would be to abandon the immunity principle altogether and to allow ordinary tort suits against the employer in all cases. Such a move would obviously raise the fundamental question of the justification for the continued existence of workers’ compensation systems. Why run special compensation schemes if the victims may resort to the general law anyway? To the extent that victims use workers’ compensation as an institu-
112 RA Epstein, The Historical Origins and Economic Structure of Workers’ Compensation Law, 16 Georgia Law Review (Ga L Rev) 775, at 801, 809 (1982). 113 Moore/Viscusi (fn 87) 53–68. 114 Ibid, at 29.
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tion of first resort and the tort action as a subsequent addition for topping up damages, such duplicative mechanisms are very costly to operate. 71 An alternative to the present state of affairs, where exceptions to the immunity rule increase in number and scope, is offered by the French solution of integrating claims for damages based on inexcusable fault into the system of workers’ compensation. In cases of inexcusable fault the victim may not only collect additional damages from the competent workers’ compensation carrier, but also sue the employer directly in the same court.115 In both cases, the courts of general jurisdiction do not become involved at all. The important advantage of this solution is that claims are settled in one step and within a single type of proceeding. The involvement of the civil courts in addition to the workers’ compensation boards leads to duplicative litigation of identical issues and thus wastes scarce judicial and administrative resources. 72 Even more efficiency gains could be realised if the upgrade for serious injuries and diseases would be built into the benefit scheme of workers’ compensation and the option to sue the employer for damages be excluded. In addition, the upgrade available in workers’ compensation should not be limited to cases involving aggravated fault.116 In limiting the additional compensation to cases of aggravated fault, French law introduces a requirement that is foreign to the other areas of the workers’ compensation system and whose elements are difficult to plead and prove. Therefore, it is not surprising that litigation around the concept of faute inexcusable is intense and administrative costs are significant. In addition, the requirement of aggravated fault does not remedy the inconsistency inherent in current systems of workers’ compensation, that is, to overcompensate minor injuries and to under-compensate the severely injured. There is no correlation between the degree of fault and the severity of the injury or disease. If the current situation is to be improved, additional benefits must be channelled into the pockets of those victims who suffered the most serious harms, and not be distributed evenly across the class of victims who were affected by grossly negligent behaviour of the employer. 73 Changes in the law that would allow the seriously injured to recover damages for non-pecuniary harm and a pension achieving full income replacement would adequately correspond to the shortcomings of current workers’ compensation systems while at the same time avoiding the additional litigation and associated costs the current system generates.
115 See fn 101, 102. 116 See fn 100 f, and no 15 f above.
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New Perspectives
C.
Claims against third parties
1.
The US experience
Another strategy aimed at making victims whole does not target the 74 employer but third parties. Even though the immunity granted by workers’ compensation schemes is limited to employers everywhere,117 suits against third parties are pervasive in the United States only, if one disregards cases involving traffic accidents. In the United States, manufacturers of machinery, plant equipment, and raw materials have been sued on a large scale by employee-plaintiffs seeking to recover full damages for the consequences of workplace accidents and diseases.118 The most prominent examples are the various illnesses caused by the inhalation of asbestos dust at the workplace. The fact that the major American producers of asbestos products were driven into bankruptcy by an avalanche of tort claims is well-documented, and the evolution of American tort law that helped to bring about this outcome has been discussed repeatedly.119 From a comparative perspective, one striking feature of this story is the total absence of workers’ compensation from the picture.120 It was easy to foresee that asbestos-related diseases would create problems in jurisdictions that had abandoned workers’ compensation, like the United Kingdom and the Netherlands, but in the US one would have expected that asbestos would be dealt with primarily, if not exclusively, under workers’ compensation schemes. But this is not what actually happened. Rather than bankrupting workers’ compensation carriers, the flood of claims for damages associated with asbestos bankrupted the manufacturers of asbestos-made products. The obvious question to ask is how this could happen. The explanation for the large-scale responsibility of third-parties for the 75 harm caused by asbestos products covers two areas, namely the interface
117 See no 15 f above. 118 Cf PC Weiler, Workers’ Compensation and Product Liability: The Interaction of a Tort and a Non-Tort Regime, 50 Ohio State Law Journal (Ohio St L J) 825 (1989); RA Epstein, The Legal and Insurance Dynamics of Mass Tort Litigation, 13 Journal of Legal Studies (J Leg Stud) 475, at 485–488 (1984); WA Dreier, Injuries to Production Workers: Reform of the Workers’ Compensation Product Liability Interface, 48 Rutgers L Rev 813 (1996). 119 The leading bankruptcy case is In re Johns-Manville Corp, 68 Bankruptcy Reporter (BR) 618 (Bankr SDNY), decision affirmed in part, 78 BR 407 (SDNY 1987), order affirmed, 843 Federal Reporter, Second Series (F 2d) 636 (2nd Cir 1988). For a comprehensive study by the RAND Institute for Civil Justice cf SC Carroll/D Hensler/J Gross/EM Sloss/M Schonlau/A Abrahamse/JS Ashwood, Asbestos Litigation 107–123 (2005). 120 For an early critique of this situation Epstein, 13 J Leg Stud 475, 486 (1984).
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between workers’ compensation and tort on the one hand, and product liability on the other. To begin with the first area, the relationship between workers’ compensation and the general law of torts is organised by two principles: ■
While the employer is protected from private suits for damages based on workplace accidents and occupational diseases, third parties are not so protected but remain fully exposed to damages claims raised by employees against them.
■
To the extent that third parties are held liable for the consequences of work-related risks, their responsibility takes priority over the responsibility of the employer, or the workers’ compensation carrier that insulates the employer from liability. Depending on the way in which workers’ compensation systems are set up, either the employer or the workers’ compensation carrier succeeds to the damages claim of the victim against the third party by way of subrogation or assignment. Vice versa, the court awarding damages in a successful tort action against a third party has to set-off prior payments made under workers’ compensation schemes. As a consequence, the incentive of the victim to seek benefits from workers’ compensation carriers is weak in the presence of an arguable third-party claim, as there is nothing to gain but an advance on the recovery available in tort.121 In practice, it seems that damages suits against third parties for personal injuries are often not even initiated by victims and their lawyers, but by employers and their insurers who bring or finance tort actions for their own benefit.122 An empirical study has found that no less than one quarter of product liability actions involving occupational hazards were brought not by victims but by employers or workers’ compensation carriers, enforcing their subrogation rights.123
2.
Explanation
76 The combination of these doctrines led to a situation where a considerable portion of the costs of workplace injuries and diseases is shifted away from employers and workers’ compensation carriers and on to manufacturers of equipment and raw materials. As early as the mid-1970s, the total payouts
121 Epstein, (fn 120) 486. 122 Weiler, (fn 118) 836. 123 WK Viscusi, The Interaction between Product Liability and Workers’ Compensation as Ex Post Remedies for Workplace Injuries, 5 Journal of Law Economics & Organization (J L Econ & Org) 185, 192 (1989).
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New Perspectives
to employees under tort for permanent disablement were more than twice the amount of the benefits received under workers’ compensation.124 This result is surprising in light of the fact that the two principles – no immunity against tort claims protecting third parties and rights of recourse of employers or workers’ compensation carriers against third parties who are liable in tort for the same harm – are not exclusive to American law but a common feature of workers’ compensation systems.125 Thus, the prevalence of third-party suits in the US remains a puzzle. The dominant reason to explain the development of American law in this 77 area is not the design of the interface between workers’ compensation and tort but is based on distinctive features of American tort law, or rather, of its special branch of product liability. The concept of product defect was applied to tools, machinery, equipment, and raw materials as if equipment and materials had been distributed to employees, without accounting for the involvement of employers. Under current doctrines of product liability law, equipment manufacturers must make sure that their products are safe even if the harm was caused by the negligent or even reckless behaviour of the employer.126 In the leading case starting off this jurisprudence, the operator of a high-lift loader was injured after he had jumped off the vehicle in apprehension of it tipping over. The manufacturer of the loader was held liable even though the victim had never received adequate training to operate the device and had been assigned to the task by his employer on the day of the accident only because the regular operator had not reported for work.127 What is most remarkable about this decision is that the court did not even care to discuss the involvement of the employer.128 Manufacturers of equipment and raw materials are held liable for the consequences of workplace accidents and diseases, not only if the employer entrusted the equipment to unskilled, untrained or otherwise unable employees, but also if he failed to take the simplest precautions, ignored safety instructions or removed safety devices installed by the manufacturer. A study undertaken in the 1970s – before the onslaught of mass tort litigation involving asbestos-related diseases – found that one
124 Weiler, (fn 118) 829. 125 Germany no 38; France no 74. 126 The leading case is Barker v Lull Engineering Co, Inc, 573 Pacific Reporter, Second Series (P 2d) 443 (Cal 1978); within the context of asbestos Anderson v Owens-Corning Fiberglass Corp, 810 P 2d 549, 552 f (Cal 1991); cf also Weiler, 50 Ohio St L J 825, 836 f (1989) and the cases cited in fn 35. 127 Barker v Lull Engineering Co, Inc, 573 P 2d 443, 447 (Cal 1978). 128 Ibid, at 454.
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quarter of all product liability cases filed by employees against third parties involved some negligence on the part of their employers.129
3.
Evaluation
78 The experience of the United States, that workers’ compensation is being pushed aside by third-party liability in tort, is troublesome for a number of reasons.130 One is deterrence: while the scope of product liability may be subject to debate and trade-offs, it seems obviously wrong to let employers off the hook completely. Employers are not only buyers of equipment and raw materials but professional parties with duties of their own to control the use and operation of such equipment, and to manage the associated risks. The employer decides on which safety equipment (such as a ventilation system) to install and how to use it, how to educate and train employees, how long to expose employees to hazardous conditions, which employees to assign to a certain task, etc. In effect, the party that is closest to the risk and could most effectively control the level of workplace safety – the party who is the ‘cheapest cost avoider’ – is isolated from liability.131 To the extent that a large portion of the costs of workplace accidents and occupational diseases are shifted away from employers and onto equipment manufacturers, the incentives of employers to take precautions and to invest in workplace safety are seriously undermined. The adverse effects of this shift are particularly obvious where the employer entrusted dangerous machinery to employees who are unskilled in its proper use. In this case, a liability rule targeting the manufacturer generates incentives to make equipment fool-proof, that is, so safe that it can even be operated by unskilled people without causing any harm. The same level of safety could be achieved at lower cost if the employer contributed his share of precautions. 79 The second concern raised by adding third-party liability in tort on top of workers’ compensation relates to the administrative costs involved in such a solution. While workers’ compensation systems are much cheaper to run than the tort system, they still consume resources in their administration.132 These resources are well invested if workers’ compensation insti-
129 Weiler, (fn 118) 837. 130 Epstein, 16 Ga L Rev 775, 776 (1982), at 808, arguing on the basis of privity of contract which excludes suits against remote third parties. 131 Shavell (fn 66) 17 f, discussing the notion of least-cost avoider in bilateral relationships. The present case is different as it presents a trilateral relationship involving the victimemployee, her employer, and the manufacturer of equipment or raw materials. 132 Weiler, (fn 118) 839.
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tutions manage to settle the dispute. In the US, however, this is not the case. Workers’ compensation provides only the first layer of compensation, to which another layer of tort litigation and, in case of success, compensation is added. It is difficult to see any advantage in such a twolayered system. In granting full tort damages on top of benefits available in workers’ compensation, American law imposes a double burden of administrative costs on society. To put this point in perspective, it may help to briefly review the estimates concerning the costs of dealing with asbestos-related diseases. In the US and as of 2005, these costs were estimated to run up to $ 72 billion, of which $ 40 billion or roughly 57 % were spent on litigation costs. And there is more to come, as illustrated by the (failed) proposal of the ‘Fairness in Asbestos Injury Resolution Act of 2005’ which contemplated setting up a trust fund in the amount of an additional $ 140 billion.133 In contrast, the German workers’ compensation carriers are expected to spend roughly $ 10 billion on benefits and health care for asbestos-related diseases.134 Given that the administrative costs of this system are 10 % and that the population of Germany is a little more than one quarter of that of the United States, these numbers translate into a hypothetical bill of $ 44 billion. This includes administrative costs of $ 4 billion which compares to $ 40 billion spent on litigating asbestos claims in court in the US up to 2005.
VII. Final Remarks Workers’ compensation is a traditional institution that mixes elements of 80 public regulation with market-type elements. Even though it may look old-fashioned to the modern eye, it worked remarkably well over many decades. The experience made in jurisdictions that abolished workers’ compensation in order to get rid of the ‘industrial preference’ and to treat victims of any kind of injury or disease, regardless of its source, equally are not encouraging. If this is true, then lawmakers would be ill-advised to push back workers’ compensation systems by allowing exceptions to the immunity principle. The bargain offered by workers’ compensation systems is to balance a more generous liability rule by rather parsimonious quantum rules and by savings in the form of administrative costs. The balance between these cost items is disturbed, and any savings in administrative costs are wasted if victims are allowed to sue the employer in civil 133 L Brickman, An Analysis of the Financial Impact of S 852: The Fairness in Asbestos Injury Resolution Act of 2005, 27 Cardozo L Rev 991 (2005). 134 J Breuer, Asbest – eine globale Herausforderung, Bundesarbeitsblatt (2005) 20.
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court for complementary damages. In fact, such a two-layered system represents the worst of all worlds because it burdens society with the administrative costs not of one but of two sets of compensation mechanisms. The same argument applies with regard to claims against third parties. While these cannot be banned altogether, courts must be careful not to misallocate the responsibility to provide a safe work environment away from employers and workers’ compensation institutions by allowing victims to claim full tort damages from equipment manufacturers. There is no doubt that the decision to subject workplace accidents and occupational diseases to a separate liability regime administered by special institutions involves considerable costs. Precisely for this reason, lawmakers and courts need to make sure that the financial and administrative burden of dealing with claims for damages that have grown out of the workplace remains with these institutions, instead of being shifted to third parties and the civil justice system at large.
598
Index The numbers refer to the marginal notes and the letters refer to the reports; A stands for Austria, AU for Australia, CL for Changing Landscape, D for Germany, DK for Denmark, EU for European Union, EW for England and Wales, F for France, I for Italy, J for Japan, LT for Lithuania, MT for Malta, N for Norway, NL for the Netherlands, NP for New Perspectives, P for Portugal, PL for Poland, RO for Romania and US for the USA. abuse of rights RO 94, 97 act of God, see force majeure adequacy PL 96 administration of claims AU 55; D 32– 33, 54, 57, 65, 67, 75; DK 74–76; EW 82; F 75–76; I 59–65; J 27–31, 63–64; PIL 31–33; PL 125–128; RO 69–74, 122–124; US 75–80, 103 adjudication of claims A 74–87; AU 56– 58; D 33–34; DK 31–33; EW 82–83; F 152–155; I 59–67, 120–121; J 29–32; NL 32; PIL 34, 63; PL 76–81; RO 122– 124; US 75–80 administrative act, see public liability administrative costs A 87; AU 63, 100; D 35, 64, 77; EW 85, 138–139, 164; I 68, 141; NP 79–80; US 116 advertisement D 77 affection damage, see psychological harm agriculture EW 19 allowance A 43–44 animals EW 27 annuity A 58–60; F 161; I 39, 44, 54 armed forces EW 21 asbestos AU 83; CL 2, 6, 29, 39, 41, 56, 63, 66, 76; DK 52; EW 58, 116–117, 152, 154; F 3, 34–42, 70–73, 90, 97, 121, 132; NL 6; NP 32, 62, 74–75, 79; US 22, 24–25, 27
assault EW 27, 108; US 35 assessment of damages, see damages, calculation of ~ asthma EW 57 attribution CL 19, 40, 42; 48, 67–68, 70, 73 auxiliary aids A 41, 139; F 56–57, 64 bankruptcy AU 52; CL 50, 63–67, 75– 76, 87; NL 6; NP 22, 32, 66, 74; PIL 64 battery F 124; US 35 benefits PL 55 deductibility of ~ AU 69, 71, 74, 103; CL 14, 79; D 42, 68; DK 45–46, 80– 82; EW 91–93; F 93, 99; I 124; PL 85, 131; RO 109, 119, 127 dependents’ ~ A 58–63; AU 10, 39– 41, 43; D 4, 26, 60, 83; DK 23, 25, 58, 71, 83; F 50, 62–63; J 22, 37– 39, 73; RO 57, 119; US 1, 59–62, 77 in kind D 20 special ~ EW 21 unemployment ~ US 86 breach of duty AU 76, 78, 86; CL 52; EW 98– 99, 105, 114; F 121; I 82–83, 96; J 78; NL 38; PIL 50; RO 89 of orders EW 44
599
Index
breaks in work AU 14; EW 35; F 12; RO 16, 19, 22 Brussels I PIL 63–69 burden of proof CL 23–24; DK 13, 49, 54, 91; EW 23; I 25, 94, 96; F 121; NL 23, 24; PL 89; RO 34; US 21, 90 reversal of the ~ A 110; AU 19; CL 46, J 53; NL 19, 42 cancer CL 56; DK 52; EW 152; US 72 catastrophes EW 4 causal uncertainty CL 8; 48, 55–56, 70, 74; DK 55; NL 23 causation AU 11, 18–19, 22, 83; CL 41; D 15; EW 25–26, 112, 114; F 119, 123; I 25, 91, 95–96, 99; RO 92, 105–106; US 15 legal ~ EW 25 proof of ~ AU 83; CL 50, 55–56, 59; DK 54, 91; EW 24; F 36, 132–133; I 94; J 55; NL 23; PL 125; US 25 chemicals CL 3; EW 49 child abuse, see sexual abuse choice of law PIL 24–25, 49, 51–52, 69 civil procedure AU 97–98; J 63; NL 41 civil servants F 47 coincidence EW 33–34, 36 collateral source rule J 44–46, 69; US 105 commuting A 22; D 42; EW 37–38; F 16–22; PL 36–42; US 12 cross–border ~ PIL 4, 6–7 compensation, see damages conflict of laws PIL 2, 16, 19–30, 38, 41, 43, 49–53 congruence A 90 construction EW 19 contra bonos mores, see good faith contract AU 9; D 7; PIL 46, 51–52, 54– 55, 62, 65–66, 69 breach of ~ AU 76; D 54; I 94; J 5, 58, 66 contractual liability A 110–111, 121– 122; AU 76; D 47, 49, 57; F 107; I 70, 82–83; J 50, 54, 58, 66, 68, 78– 79; NL 14; NP 17; PIL 41, 44–50; RO 4, 35, 90–92, 115; US 89
600
contribution A 64, 66–70, 72–73, 156; CL 13, 62, 70, 77; D 29–31; DK 36– 37; F 67–69, 72–73, 77, 80, 109, 163, 173; PIL 19; PL 72–75 contributory conduct of the victim PL 12–20, 97 negligence A 91, 126, 130, 134, 157; AU 84–85; D 49, 61–62, 73; DK 57; EW 41–42, 113, 161; F 135–136; I 19, 97–98; J 56, 66, 123; NL 18, 24, 42; NP 6, 19, 27, 30, 54; RO 107; US 13, 94, 125 corrective justice CL 73, 87; NP 39–42 costs A 153–154; AU 90, 113, 119; CL 77; D 76–77, 83; DK 95; I 139–141; NL 44; NP 22, 52–55, 79; PL 138; RO 53, 132, 137; of medical care A 139; AU 28–29, 46, 68, 71–72, 89–90; D 19, 59, 61; DK 16, 20, 43, 58, 63–64; EW 4, 64, 124, 149, 159; F 43, 56–59, 100, 147; I 110; J 18, 60, 73; NL 2, 29; NP 11; PL 114, 117; RO 39, 43, 118; US 1, 61, 81, 100–101, 123 of rehabilitation A 139; AU 31, 38, 91; D 19, 59; DK 16, 20, 43, 63–64; EW 64, 124; F 57; I 110; J 60; NL 34; PL 55, 117; RO 41, 118; US 1, 100–101 of re–training PL 61, 114; RO 43, 118; US 1 course of employment AU 11–16, 79; D 14; DK 8–9, 50, 53; EW 12, 19, 23, 27–30, 36, 103, 106, 156; NP 24; US 11–13, 20 crime victims F 98 criminal act EW 122; F 108, 117–118, 120, 127; I 79, 84 criminal law EW 109, 151; I 16 criminal liability D 53; F 119, 125, 129–130, 166; RO 1, 34, 99 criminal procedure CL 14; F 108, 117– 118, 132 culpa in contrahendo PIL 47 damage abstract D 23, 60, 83 actual ~ A 111
Index
aggravation of ~ EW 66, 126; J 15; US 26, 41 aesthetic ~ A 52, 98, 108–109, 114, 155; F 102, 138, 141, 145, 149, 167; PIL 30; RO 117 complementary ~ CL 11, 79; I 77–78, 85 differential ~ CL 11, 79; I 77–78, 85 future ~ AU 95; EW 126–127, 145; NL 28; US 101 indirect ~ I 103; RO 118 latent ~ CL 50, 60–61, 63, 68, 70, 73– 75; D 46; EW 152 non–pecuniary ~ A 98, 108; AU 34, 37, 45–46, 70, 89, 93; CL 12, 81; D 25, 57–58, 78; DK 17, 61, 63, 67; EW 67, 124–125, 147, 159; F 38, 46, 64, 142, 161; I 39, 42, 54, 101, 111, 114–117; J 5, 23; NL 29, 31, 41; NP 2, 10, 13, 58, 62–64, 73; PL 63, 102, 115–116, 122; RO 58, 117; US 58, 102 pecuniary A 108–109, 137, 140; CL 81; D 46, 56, 58, 62; EW 69, 124, 159; F 43, 142; I 39, 54, 101, 109– 110, 114; NL 29, 41; NP 10, 66; PL 102, 121; RO 58; US 102 proof of ~ DK 86; EW 3 to integrity A 52–56, 108, 113–114, 151, 155, 160 damages adjustment of ~ J 39–41 calculation of ~ A 58–59, 61–63; AU 37, 89; D 22, 74; DK 23–24, 26, 66, 69, 71; EW 70–73, 124, 127, 158, 165; F 61, 148–150, 161; I 30, 116– 117; NP 11–12, 18, 54, 57; PIL 50; PL 108; US 70 caps on ~ A 129; AU 29, 38, 45, 92– 93; CL 79; EW 121–122, 158; I 29, 46, 48, 101; NP 12 ;US 1, 52 exemplary ~, see punitive damages quantum of ~ CL 4; EW 65, 78–79, 125, 157, 165; I 30, 98, 108; NP 63 reduction of ~ AU 85, 94; DK 10, 23, 42, 68; EW 146–148; F 161;I 53; J 56; RO 107 danger F 123; RO 22
dangerous work A 2; EW 14 danno biologico I 28–29, 34–43, 47–48, 53, 111–112; NP 13 DCFR PIL 51 Death AU 7, 10–11, 16, 39, 43, 45, 94, 111; CL 43; D 26; DK 10, 71; EW 69; F 13, 50, 120, 139; I 26, 44, 61; J 8, 14–15, 22, 37, 61; NP 9, 51, 68; PL 17, 20, 31, 62, 64–66, 120–121; RO 8, 22, 56–57, 119, 130; US 1–2, 59, 102 wrongful ~ I 114; US 102 defamation I 102; NL 31; US 34 defect DK 78, 88; NP 77 defence of justification AU 1, 80, 85, 123; EW 101–102, 114; US 13, 71, 90, 94, 125 depression CL 34; F 143; US 13 deterrence CL 73, 87; NP 43–45, 50–51, 78 disability AU 17, 38; CL 52; DK 58; EW 13, 69–70; F 125; J 20–21, 37, 73; NL 10; NP 27, 29, 36, 54, 57 degree of ~ A 49; AU 37–38, 89; D 22, 24, 60; DK 27, 61, 63, 68; EW 72, 158; F 79, 144, 150; I 38–39, 53; J 20, 37; NL 11; NP 12, 27 partial ~ AU 20, 33, 35; F 141, 144; I 28, 41, 47; NP 12; US 50, 54–55, 69 percentage of ~ A 47; AU 37; DK 66, 68; EW 60, 71–73; F 49, 61, 66, 144, 150 permanent ~ AU 7, 37, 89, 111; D 41; DK 17, 23, 65; F 4, 6, 61, 92, 120, 125, 132, 141, 144, 147, 168; I 28, 33, 36–37, 47; PL 59; RO 47, 52, 55, 130; US 50–51, 53–55, 69 temporary ~ AU 7, 111; F 60, 92; I 28, 36, 41, 47; PL 59; RO 45–47, 77; US 50–51, 53–54 total ~ AU 20, 33–35; US 50–52, 54, 69 discretion F 10, 22, 136, 143, 148, 150 disclaimer, see waiver of liability discrimination AU 24; CL 13, 36, 38– 39, 43, 45–47, 81–82, 88; D 46, 56– 58, 80; DK 61; EW 63, 121, 123; F 53, 125; I 27, 102; J 16; NL 27; NP 67;
601
Index
PIL 56; PL 103–104; RO 30, 33–34, 110–111, 113; US 34, 97 dismissal CL 43, 46; EW 121; F 48–49, 103; PIL 56 dispute settlement D 64; EW 132–133, 164; I 121; NP 14, 52–54 distress EW 118, 121; F 38, 46–47, 107; RO 23, 27; US 13 double recovery A 90; PIL 39; NP 15; US 105 duty of care A 110, 116, 119–121; AU 76, 78, 80, 86; DK 49; EW 102, 114, 120; F 125, 132; NL 1, 4–5, 13, 15–16, 19–21, 25; NP 29, 42; US 89 to inform AU 58, 107; F 75–76; I 60; RO 76 to mitigate the loss A 51; AU 84 Emergency EW 39–40 emotional harm, see psychological harm empirical evidence A 16; AU 5–7, 111; CL 27–29; D 5–6; DK 6; EW 18, 45; F 4–6; I 131, 135; NL 7–8; PIL 3–5; PL 7; US 7–8 employers’ liability A 108–126, 152 155–157; AU 3, 73–77, 80–82; CL 39, 44, 48–50, 69–71, 73–88; D 6, 40–58, 78, 80, 85; DK 48–51; EW 6, 94, 97–106, 108; F 101–108; I 46, 48, 79, 81–99, 122–123, 132, 144, 150; J 48–55, 78–79; NL 2, 4–6, 13–24, 40–42, 48; NP 2–3, 8, 23, 33, 38; PIL 2, 40, 41, 72–74; PL 3–4, 87–92, 101, 136; RO 1, 4, 89–92, 95–97, 99–107, 115–116, 125, 141; US 89–94 employment country of ~ PIL 16–25, 57, 67–68 equal treatment EW 123 equalisation A 71–72 EU Law CL 30, 36, 46–47, 76–77, 86– 87; EW 56, 110 European Court of Justice PIL 10, 39, 45–46, 72
602
family of the worker A 58–63; AU 94; CL 43; DK 7; EW 69; F 38, 50, 139, 146; I 115, 118; J 3, 22, 37, 61, 69; NP 68; PIL 10; PL 17, 62, 64–66, 121; RO 56; US 60, 77, 102 fault CL 51–53; NL 2, 5, 17; NP 33, 39, 41; RO 102–103, 130 proof of CL 67; EW 3; RO 103 fellow servant rule US 125–126 fine D 53; RO 34 fire officer EW 62 force majeure I 16; RO 95, 106 foreseeability AU 78, 86; EW 111; J 58; NP 32, 39 fraud I 128–129; RO 140; US 123, 127 free movement of workers CL 76; PIL 3–5, 8–9, 11 full compensation principle D 73; EW 158–159; F 64, 96, 102, 120, 140, 148; NP 10–11, 18 funding system A 64–70, 72; AU 48, 50, 52–53, 57, 64; CL 64, 66–67, 72, 73, 76–77, 87; D 28–31; DK 28–29, 35– 37; EW 80–81; F 67–74; RO 62–68, 137; US 72–73 funeral costs A 57; AU 42; D 26; DK 71, 82; J 22; PL 58, 120; RO 119; US 61 gratuitous care D 61 harassment A 120; CL 13, 31, 34, 36, 38–39, 43, 45–46, 81–82, 88; D 46, 56–57; EW 122; F 24, 53, 55, 125; I 105; PL 107–110 health insurance A 32, 102–103, 146; AU 71; F 59; NP 24; PL 84–85 heart disease J 24; PL 24 heirs J 61; I 115 housekeeping activity I 14; NL 29 illegal, see wrongfulness immunity of employer NP 15–16 incentives AU 54; CL 69; D 31, 75; NP 48–50; PL 74–75 increased needs A 129
Index
independent contractor AU 80; DK 7; I 8; EW 105; US 9 industrial injury EW 1, 10 inflation EW 76–77, 127, 160 injury AU 17, 23 bodily ~ AU 23; CL 19–20, 60, 80–81; D 46; EW 50, 62; F 44, 125, 141, 143; NL 31; PL 32, 89, 98, 113; RO 21, 117, 130; US 28–29, 96 dignitary ~ A 36; CL 8, 35, 38, 40, 81; D 17; DK 17, 61, 70; EW 63, 121; F 53; I 27–28, 47, 102, 104; J 16, 57–58; NL 27; NP 2; PL 102, 104, 106–110; RO 29–33; US 34, 98 mental ~ A 34; AU 23–24, 86; CL 3, 8, 31–35, 38–40, 43, 80–81; DK 12, 16–17, 58; EW 48–49, 54, 62, 118, 122; J 16, 60; NL 31 minor ~ NP 51, 64, 66–67; US 109 personal, see personal injury serious ~ AU 16; CL 27; EW 67, 75, 77, 79, 127, 158, 160, 164; F 120; NP 51, 57, 65–68, 72–73 insurance AU 49–52, 116; D 71–72; EW 133–135; DK 85; F 106, 110, 117, 128, 153, 156; I 122; J 35–36; PIL 36; RO 69–74, 88 accident ~ A 1, 6, 17–18, 102–103, 146, 149, 163; EW 120; J 42, 70; PL 69–70, 84, 136, 140 compulsory ~ A 1, 149–150; AU 106; CL 62, 76–77, 87; D 28, 72; DK 2, 28–29, 87; EW 97, 150–152; F 2, 8–9, 116, 166; I 5, 34, 12, 130; J 4; NL 15, 38, 46–47; NP 7–8, 31, 47, 51; PL 69; RO 12, 60, 91, 100, 129– 130; US 1 first party ~ NL 46–47; NP 42; US 105–106, 116 liability ~ A 148, 150; AU 107–109; CL 61–62, 76–77; D 72, 75; DK 77, 88–89; EW 140–141, 143; F 164, 166; I 126; J 42–43; NP 46–50; PL 134; US 107 minimum A 106–107 private~ A 92; AU 48, 50, 52–53, 72, 105, 110; D 20, 67, 70, 77; DK 28, 30, 43, 80–81; EW 90, 93, 136,
163; F 43, 59, 64, 74, 91–93; I 58, 124, 127–129–131; J 28, 70–71; NL 36; NP 32, 50; PL 85; RO 2, 128, 130–131; US 72–73, 83–84, 105 third party ~ NL 39 trigger CL 62; EW 152 voluntary A 149; J 71; NL 37; NP 31; PL 132, 134; RO 11, 60, 67–68, 84, 130 intent A 8–9, 56, 112–113, 135, 148; AU 13, 16, 79; CL 11, 14, 50; D 38, 42–44, 46, 69; DK 10; EW 48; F 24, 51, 84, 86, 96, 101, 107–110, 119, 124, 127, 134, 160, 164, 166; J 20, 98–99; NL 13, 17, 24, 33; NP 2, 16, 60; US 13, 31, 91–93 interaction between systems A 11–15, 88, 101–104, 146–147; AU 4, 70–72, 74, 114, 123; D 4, 39, 67, 78; DK 4–5, 38–47; F 39, 90–92; I 50–52, 73–75, 78, 80, 145; NL 35–36; PL 5–6, 84– 88, 139; RO 7, 87–89, 127–128; US 30, 32, 34, 88, 117–121 interest DK 73 International Labour Organisation EW 15 Intoxication AU 84; F 22; PL 12, 14–18, 42; RO 21, 24, 27–28; US 13, 90 jurisdiction A 74, 81, 84, 141; AU 27, 59, 96; D 34, 64; DK 34–35, 74; F 78– 80; I 120; PL 78, 125 international ~ PIL 2, 34, 54–57, 60– 62, 65–69 legal person RO 93–94, 96 liability of co–workers’ A 109; CL 11 contractual, see contractual liability of the college A 10 fault–based ~ AU 82, 114; D 48–49; DK 52; EW 100, 103, 161–162; F 131; J 52, 54; NL 1, 19, 41, 43; NP 18–19, 38, 40, 43–45; PL 94– 95; RO 92, 104, 115; US 94 joint and several ~ CL 56, 64, 74–75; DK 77, 79; EW 153–154; I 70; NP 32
603
Index
non–contractual ~ PIL 41–42, 44–48, 58–59; NL 14; NP 17 for other persons (see also vicarious liability) pre–contractual ~ PIL 47 proportionate ~ CL 55–56, 64; EW 113, 153–154; J 67; NL 23–24; NP 32 for supervisors A 123, 125 lightning EW 27 limits CL 16, 37, 42–43; EW 53 territorial ~ EW 22 limitation, see prescription list of diseases CL 22–25, 35–36, 68, 72, 80, 86; EW 72–73, 158; F 32–33; I 25; PL 46–48; US 56–57 litigation costs A 144; RO 131 loss of amenities of life F 38, 46–47, 102, 138, 141, 145, 167; NP 20 of a chance F 102, 138, 145, 167 of earning capacity AU 3, 45–46, 89, 92; CL 11; D 4, 19, 59, 61; DK 4–5, 10, 16–17, 26–27, 41–42, 58, 63, 66, 83, 93; F 150; I 40; J 60; NL 29; NP 11, 54; PL 114, 119; RO 50, 52, 117, 129; US 55–56 of earnings A 129; AU 4, 26, 33–34; CL 45, 79; D 19, 23, 57, 59, 61; DK 16, 21, 44, 48, 58, 63, 65, 81, 89; EW 4, 68–69, 92, 120, 123–124, 159; F 43, 60, 91–92, 107, 138, 147, 151, 167; I 110; J 19, 60, 69; NL 2, 11, 29; NP 11–12, 20, 29, 36, 54, 65; PL 60, 62, 116; RO 34, 117; US 1, 50–52, 58, 85, 100–101 of profit A 111 lump sum A 53, 105; AU 34, 38–40, 46, 71, 95; D 26; DK 23, 26–27, 66, 72; EW 4, 66, 77, 126, 160; F 1, 38, 66, 95, 139; I 38, 53, 62, 119; J 20, 22, 38–40, 46, 62; NL 28; PL 55, 57, 60, 62, 65–68, 123–124; RO 55, 59, 120– 121; US 63, 68–70, 100 maintenance loss of ~ PL 121 mediation AU 59–60, 97; NL 6
604
medical care A 39; AU 28; D 21; EW 64, 69; F 45, 88; I 31; J 3; NP 36; PL 55; RO 37–38, 73; US 40–43 medical evidence US 19 medical malpractice DK 41 military staff RO 10 miners CL 4; EW 116; RO 2; US 115 motor vehicles A 8–9, 99, 109, 117, 127–128, 133, 135, 150, 161; F 125, 160; 165 multiple tortfeasors CL 64–65; DK 78– 79; J 67–68 Negligence A 9, 56, 94, 97, 113, 156; AU 73, 76, 86–87; CL 11, 79; D 43– 44; DK 52–53, 78; EW 20, 27, 36, 88, 101, 140–141; F 24–25, 40, 55, 101– 106, 121–123, 126, 135, 137–138, 144, 152–153, 158, 163; I 19; J 5, 44, 53–54, 78; NL 22, 25; NP 77; RO 95; US 4, 90, 126 inexcusable ~ F 25, 41, 55, 78, 85, 102, 103–104, 106, 121–123, 126, 130, 135, 137–138, 144, 152, 158, 163; CL 11 gross ~ A 9, 53, 56, 94, 108, 113, 145, 152, 156, 163; CL 14; D 37, 41, 43– 44, 69; DK 77; F 51, 119, 157, 167; I 128–129; NL 2; NP 2, 16, 19, 61– 62, 71–72 nervous shock, see mental shock noise A 16; EW 116 number of claims EW 9, 129–132, 155 nursing care A 50–51; EW 128; F 138, 147 occupational disease A 16–18, 28, 31; AU 17–23; CL 16, 21–29, 30, 35, 37, 42; D 1, 11, 16; DK 12–14; EW 45– 47, 50–59, 65, 15; F 5, 26–27, 31–34, 48, 76; I 11; J 15, 24–25; NL 8; PIL 27–30, 35; PL 45–49, 76–77, 140; RO 23–24, 27–28, 75; US 14, 21–24 occupational stress CL 31, 34–35, 80, 82; EW 54, 62; PL 25 out of employment AU 11; CL 67; US 15–19, 32
Index
pain and suffering A 9, 52, 98, 108– 109, 114, 129, 155; AU 38; CL 11, 79; D 25, 41, 46, 57, 61, 85; DK 16–17, 44, 48, 58, 61, 63, 67, 89, 93; EW 125; F 38, 46–47, 102, 107, 138, 141, 145, 145, 149, 167; I 28, 42, 47, 111–113, 115, 117; NP 10, 14, 20, 57, 65, 67; PL 122; US 100–102 periodical payments AU 4, 36, 41, 46– 47, 61–62; D 4, 22, 24, 60–61; DK 4, 26–27; EW 66, 69, 74, 76–79, 124, 126–127, 160; F 6, 48, 65–66, 100, 145, 147; J 3, 20, 22, 37–40, 46, 60, 62, 73; NL 28; ; NP 12; PL 68, 115, 123–124; RO 52, 59, 120; US 68 pension disability ~ A 45–49, 139; F 49; NP 11, 65; PL 19, 55, 57, 59, 119 no–fault ~ EW 5 personal injury A 13, 33, 108, 112, 135–136, 138, 155; AU 4, 18–19, 21– 23, 86, 88; CL 19, 42, 60, 74; D 6, 15, 17, 19, 40–41, 46, 54–55, 59–61; DK 16–17, 43, 58, 61–62, 88; EW 6, 60– 62, 115–118, 127, 135, 142; F 44, 120, 141–142; I 26, 38, 53, 101, 111, 116; J 14, 57–58; NL 7, 25, 28, 32, 38–39; NP 9, 31, 36, 55, 75; PIL 47; PL 50, 98; RO 26, 109 personal rights D 46 personality rights D 57; NL 31 peripatetic occupation EW 37 permission of the employer EW 33, 35 perte d’une chance, see loss of chance place of business PIL 57, 67 of residence PIL 4, 16, 22, 27, 49, 53, 57, 61, 67–68 of work EW 32; F 10–11, 15; RO 14– 18, 22; US 20 posting abroad PIL 18–20, 26 post–traumatic stress disorder CL 34; EW 62 precautionary measures AU 81; D 75; I 57; NL 22; RO 112 prescription EW 55; NL 6; PIL 50 period CL 58; F 152; J 50; RO 84, 113 presumption EW 52–53
of causation CL 23; DK 15, 56; EW 59; F 10, 13, 33; PL 48 of fault DK 52; F 2 prevention A 121, 152, 154; AU 1, 112; CL 72; D 3, 27, 31, 54, 75–76, 84; DK 94; EW 111, 163; F 170–173; I 6, 136; J 24, 26, 75–76, 138; NL 43; NP 43, 78; PL 2, 137; RO 73, 100, 135; US 112, 114 privacy US 34 private law remedy A 11–13; AU 114, 117, 123; D 42, 61, 73; DK 17, 44–46, 48, 62, 74, 98, 96; F 54, 106; I 45, 48, 50–52, 77–78, 85, 132–133; J 5, 10, 81; NL 1, 40–42; NP 18, 22; RO 58; US 30, 32, 63–67, 88, 90–91, 96–99, 117–121, 126 product liability DK 78, 88; NP 77–78 property damage to ~ A 9, 37; AU 25, 86; CL 13; D 18, 50–52; DK 18, 59; EW 119; F 52, 120; I 28, 47, 106; J 17, 57–58; NL 25, 39; PL 52, 89, 111; RO 35–36, 115; US 36–38, 82, 99 protected interest A 19–24; J 57 protective purpose A 121 psychiatric care US 43 psychological harm AU 37, 86–87; F 44, 53, 139, 141, 143, 146; J 16; US 31 punitive damages EW 123; NP 57; US 100 pure economic loss A 37, 111; AU 26, 86; CL 38; D 18, 61; DK 19, 60; EW 62, 120; I 29, 47, 107; J 17, 57–58; NL 26, 39; PL 53, 112; RO 35; US 39; 99 rate of payment EW 74–75 recourse A 11, 88, 93, 104, 109, 146– 147, 152, 157; AU 20, 70–72, 104– 105; CL 14, 75–76; D 36–39, 66–67; DK 41, 77–79, 84–86; EW 86–87, 140, 143–144; F 82, 94, 109, 116; I 71, 79, 123, 127–128; J 33–34, 42, 70; NL 35; PIL 2, 35, 70–71; PL 83, 103; RO 87, 96, 103, 113, 125, 128; US 106
605
Index
against other employees A 9, 97–99; AU 65, 101; D 65; EW 88; F 86, 156–157; I 70; J 65–66; NL 33; PL 129; US 81, 104 against the employer A 94–96, 113, 145; AU 64; CL 14; D 69–70; DK 35, 47; F 83–84, 153, 160, 163– 165; I 69, 125; RO 82–83, 136 against third party A 100; AU 66–67, 102; DK 35; EW 89, 141; F 87, 111, 158–159; I 69, 125–126; J 34, 67– 68; NL 34; NP 75–76; PIL 36; PL 130; RO 86, 126, 136; US 81, 104 reform A 162–163; AU 115–117; D 79– 80; DK 97; EW 167; F 173; I 147; J 80; NL 46–47; PL 140; RO 139; US 122– 123, 129 Regulation 883/2004 PIL12–40 Rehabilitation A 40; AU 30, 32, 84; I 31–32; NL 30; RO 73 Assistance AU 28; D 21; I 33; J 21, 73; PL 61, 118; RO 37, 40, 42; US 44– 49, 69 reputation US 34 res iudicata A 78; F 118 retirement EW 70; F 42, 73 pension A 16 risk A 71, 131–133; AU 14; CL 48, 54; D 30, 75, 82–83; EW 43, 163; I 4–5, 13, 18, 56, 95, 98–99; NL 5, 15, 22; PIL 28; PL 45–46; RO 65–66, 135; US 17 allocation of ~ CL 55; D 52 assessment EW 111–112; F 132 assumption of ~ AU 85; EW 98, 114; NP 30; US 94, 125–126 increase of ~ CL 1, 41; I 96; NL 33; US 16–17 Rome I PIL 41–43, 47–57 Rome II PIL 41–43, 47, 58–62 safety AU 7, 111–112, 115, 123; D 27, 75; DK 52, 56; F 23; I 6–7, 57–58, 61, 84, 86–87, 136–138; J 51, 54, 58, 81; NL 4, 43; NP 30, 50–51, 55, 77–78; RO 135 legislation A 53–56, 108; AU 81, 116; D 46, 53–54; EW 98, 108–110; F 123,
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125, 129–130, 171; I 59; J 76; NL 20–21; PL 4, 12–13, 92, 137; RO 98–101; US 93, 112–113 school A 4 self–employed A 2–3, 5, 16, 20, 64, 66, 149; D 7–8; EW 19–20; I 13, 22; J 11, 74; NL 16; PIL 8, 10 sexual abuse F 120; US 33 sexual harassment A 34–35, 120; AU 24; CL 45; D 17; DK 17, 58, 61, 70; EW 63, 121; F 53, 125; I 27, 102–103; J 16, 57–58; NL 27; PL 51, PL 99–105; RO 29–31, 34, 110–114; US 30–33, 91, 97, 119 sickness benefit D 19; DK 81, 86; EW 69; PL 55–56 skylarking EW 27 social security AU 4; F 1–3; NP 25–30; PIL 2, 6–40, 64, 70–74; PL 1, 8–10, 87–88, 136 benefit A 9, 106–107, 115, 147; AU 69–71, 103–104; DK 80–84; EW 1– 2, 15, 64, 69, 91–92, 125, 142; F 56–59, 168; I 124; J 74; US 85–87 provision A 3, 5, 11; AU 4; CL 10; D 39, 59–61; DK 38–43; I 72–76; J 6; NL 3, 9–12, 40, 42, 46; RO 5–7, 9, 60–61, 140; US 83–84 social welfare agencies AU 103–104; D 69; EW 144; F 161–165, 170–172; PIL 38–40; RO 127–128; US 106 speed of claims’ AU 61, 99; EW 137; F 81; PL 82, 128; RO 81 sports RO 22, 141 standard of care AU 76, 78, 81; CL 50– 54; EW 109; J 49; NL 16, 20–23, 42 standard of proof AU 83; DK 12; EW 54; NP 55 state liability, see public liability statutory duty AU 76, 81, 86; EW 20, 99–100, 103, 105, 108–109, 114; NL 28; US 93 strict liability A 127–130; AU 82; D 48, 50–52, 63; DK 52; EW 3, 10–11, 14, 41, 89, 100, 105, 111–112, 162; I 88– 89; J 53; NL 19; NP 6–8, 23, 32, 36– 38, 40–45, 51, 55; RO 104; US 13 strike F 7
Index
student A 6, 10, 16–17; F 8; PIL 14 subrogation AU 75; D 36, 42, 66; DK 47; EW 86, 88; F 100, 156–159; J 47; NL 35; PIL 37–40; US 81–82, 105 legal A 88–92, 97, 100 suicide A 28; CL 32; F 14, 24, 121; J 16 tax EW 76–77, 91 territoriality principle PIL 6–7 third party EW 120; F 96, 101, 111– 112, 159–160; NP 2, 16, 58, 74–80; PIL 37–40; RO 106; US 41, 106 tort law AU 3, 44–45, 73, 76; D 57, 67, 75; DK 3, 17, 26, 44–48, 58–59, 61, 74, 94, 96, 98; EW 1–12, 14–18, 20, 45, 66, 71–72, 76–79, 85, 155–169; F 54, 64, 74, 96, 108, 111, 161, 166– 167; I 43, 45, 48–52, 77, 82, 85, 94, 102; J 34, 48–50, 55, 57; NL 2, 22; NP 10–11, 28, 74; PIL 38; PL 67, 87, 89; RO 58, 97, 114, 118, 138; US 1, 2, 32–39, 63–64, 88–121, 125–126 traffic accident CL 13, 76–77; F 3, 96, 101, 104, 113–116, 131, 133, 135, 166; NL 5, 15, 38, 47; NP 29 travelling A 20, 22–23; AU 13, 28; D 10, 42, 46, 82; DK 8, 50; EW 37–38; F 11; I 15–17; J 12, 73; PL 29, 34–35, 56, 65; RO 16–17, 19, 22; US 1 tribunals A 82–84, 86; AU 59–60, 96; EW 84, 121, 164; F 78–79; NP 20, 28, 53; RO 78, 80 unemployment EW 70; RO 9 vicarious liability A 122–123; AU 65, 79; D 47, 49, 54, 57–58; DK 53, 77;
EW 20, 88, 99–103, 105, 140; F 108– 109, 127–128; J 90; NP 30; PL 93; US 92 victim secondary ~ CL 43; F 143; NP 62 visitors EW 20 vis maior, see force majeure vocational training US 44–49, 61 welfare state EW 16, PIL 6 work accidents A 1–3, 16–18, 29–30; AU 13, 114, 123; CL 10, 16–20, 27– 28, 42; D 1–2, 9–10, 12–15, 17; DK 9, 11, 14, 40; EW 9, 13–14, 27, 45–50, 58, 65, 98, 115, 131; F 5, 7, 10–22, 26–30, 48, 75, 112; I 4, 6, 8–10, 23, 60, 62; J 8, 13, 81; NL 7; NP 23–24, 77; PIL 27; PL 21–44; RO 8, 19–22, 24–25, 27, 75, 77; US 2, 14, 93 work hours EW 31; F 10, 12, 15; RO 19, 37 workers’compensation AU 1–2, 4–75, 110, 113–115, 118–121, 123; CL 11– 14, 22, 38, 67–72, 78–88; D 1–4, 7–8, 17–18, 27, 32–33, 45, 73–74, 78, 81– 84; DK 1–5, 90–93, 98; EW 1–5, 10– 11, 19, 21–22, 139, 155–169; I 3–4, 132–134, 139–143, 148–149; J 1–7, 9, 27, 36, 72–74, 77; NP 2, 4–9, 56– 58, 72, 80; PIL 1,2, 6–40, 72–74; RO 2–3, 87–88, 132–134, 140–141; US 32, 63–67, 108–111, 117–121, 124– 125, 128–129 working capacity RO 8, 37, 55 working conditions PL 140 wrongfulness A 25; CL 51; I 90, 119, 123; RO 1, 92–94, 97
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Publications Principles of European Tort Law Series Volume 1: The Limits of Liability: Keeping the Floodgates Shut Edited by Jaap Spier Kluwer Law International, The Hague. Hardcover ISBN 90-411-0169-1. 1996, 162 pp Volume 2: The Limits of Expanding Liability. Eight Fundamental Cases in a Comparative Perspective Edited by Jaap Spier Kluwer Law International, The Hague. Hardcover ISBN 90-411-0581-6. 1998, 244 pp Volume 3: Unification of Tort Law: Wrongfulness Edited by Helmut Koziol Kluwer Law International, The Hague. Hardcover ISBN 90-411-1019-4. 1998, 144 pp Volume 4: Unification of Tort Law: Causation Edited by Jaap Spier Kluwer Law International, The Hague. Hardcover ISBN 90-411-1325-8. 2000, 161 pp Volume 5: Unification of Tort Law: Damages Edited by Ulrich Magnus Kluwer Law International, The Hague. Hardcover ISBN 90-411-1481-5. 2001, 225 pp Volume 6: Unification of Tort Law: Strict Liability Edited by Bernhard A Koch and Helmut Koziol Kluwer Law International, The Hague. Hardcover ISBN 90-411-1705-9. 2002, 444 pp Volume 7: Unification of Tort Law: Liability for Damage caused by Others Edited by Jaap Spier Kluwer Law International, The Hague. Hardcover ISBN 90-411-2185-4. 2003, 335 pp 609
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Volume 8: Unification of Tort Law: Contributory Negligence Edited by Ulrich Magnus and Miquel Martín-Casals Kluwer Law International, The Hague. Hardcover ISBN 90-411-2220-6. 2004, 300 pp Volume 9: Unification of Tort Law: Multiple Tortfeasors Edited by WV Horton Rogers Kluwer Law International, The Hague. Hardcover ISBN 90-411-2319-9. 2004, 313 pp Volume 10: Unification of Tort Law: Fault Edited by Pierre Widmer Kluwer Law International, The Hague. Hardcover ISBN 90-411-2098-X. 2005, 393 pp
Tort and Insurance Law Series Volume 1: Cases on Medical Malpractice in a Comparative Perspective Edited by Michael Faure and Helmut Koziol Springer, Vienna/New York Softcover. ISBN 3-211-83595-4 2001, 331 pp Volume 2: Damages for Non-Pecuniary Loss in a Comparative Perspective. Edited by WV Horton Rogers Springer, Vienna/New York Softcover. ISBN 3-211-83602-0 2001, 318 pp Volume 3: The Impact of Social Security on Tort Law Edited by Ulrich Magnus Springer, Vienna/New York Softcover. ISBN 3-211-83795-7 2003, 312 pp Volume 4: Compensation for Personal Injury in a Comparative Perspective Edited by Bernhard A Koch and Helmut Koziol Springer, Vienna/New York Softcover. ISBN 3-211-83791-4 2003, 501 pp
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Volume 5: Deterrence, Insurability and Compensation in Environmental Liability. Future Developments in the European Union Edited by Michael Faure Springer, Vienna/New York Softcover. ISBN 3-211-83863-5 2003, 405 pp Volume 6: Der Ersatz frustrierter Aufwendungen. Vermögens- und Nichtvermögensschaden im österreichischen und deutschen Recht By Thomas Schobel Springer, Vienna/New York Softcover. ISBN 3-211-83877-5 2003, 342 pp Volume 7: Liability for and Insurability of Biomedical Research with Human Subjects in a Comparative Perspective Edited by Jos Dute, Michael G Faure and Helmut Koziol Springer, Vienna/New York Softcover. ISBN 3-211-20098-3 2004, 445 pp Volume 8: No-Fault Compensation in the Health Care Sector Edited by Jos Dute, Michael G Faure, Helmut Koziol Springer, Vienna/New York Softcover. ISBN 3-211-20799-6 2004, 492 pp Volume 9: Pure Economic Loss Edited by Willem H van Boom, Helmut Koziol and Christian A Witting Springer, Vienna/New York Softcover. ISBN 3-211-00514-5 2004, 214 pp Volume 10: Liber Amicorum Pierre Widmer Edited by Helmut Koziol and Jaap Spier Springer, Vienna/New York Softcover. ISBN 3-211-00522-6 2003, 376 pp Volume 11: Terrorism, Tort Law and Insurance. A Comparative Survey Edited by Bernhard A Koch Springer, Vienna/New York Softcover. ISBN 3-211-01867-0 2004, 313 pp
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Volume 12: Abschlussprüfer. Haftung und Versicherung Edited by Helmut Koziol and Walter Doralt Springer, Vienna/New York Softcover. ISBN 3-211-20800-3 2004, 180 pp Volume 13: Persönlichkeitsschutz gegenüber Massenmedien/The Protection of Personality Rights against Invasions by Mass Media Edited by Helmut Koziol and Alexander Warzilek Springer, Vienna/New York Softcover. ISBN 3-211-23835-2 2005, 713 pp Volume 14: Financial Compensation for Victims of Catastrophes Edited by Michael Faure and Ton Hartlief Springer, Vienna/New York Softcover. ISBN 3-211-24481-6 2006, 466 pp Volume 15: Entwurf eines neuen österreichischen Schadenersatzrechts Edited by Irmgard Griss, Georg Kathrein and Helmut Koziol Springer, Vienna/New York Softcover. ISBN 3-211-30827-X 2006, 146 pp Volume 16: Tort Law and Liability Insurance Edited by Gerhard Wagner Springer, Vienna/New York Softcover. ISBN 3-211-24482-4 2005, 361 pp Volume 17: Children in Tort Law. Part I: Children as Tortfeasors Edited by Miquel Martín-Casals Springer, Vienna/New York Softcover. ISBN 3-211-24480-8 2006, 476 pp Volume 18: Children in Tort Law. Part II: Children as Victims Edited by Miquel Martín-Casals Springer, Vienna/New York Softcover. ISBN 3-211-31130-0 2007, 320 pp
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Volume 19: Tort and Regulatory Law Edited by Willem H van Boom, Meinhard Lukas and Christa Kissling Springer, Vienna/New York Hardcover. ISBN 978-3-211-31133-2 2007, 477 pp Volume 20: Shifts in Compensating Work-Related Injuries and Diseases Edited by Saskia Klosse and Ton Hartlief Springer, Vienna/New York Hardcover. ISBN 978-3-211-71555-0 2007, 236 pp Volume 21: Shifts in Compensation for Environmental Damage Edited by Michael Faure and Albert Verheij Springer, Vienna/New York Hardcover. ISBN 978-3-211-71551-2 2007, 338 pp Volume 22: Shifts in Compensation between Private and Public Systems Edited by Willem H van Boom and Michael Faure Springer, Vienna/New York Hardcover. ISBN 978-3-211-71553-6 2007, 246 pp Volume 23: Tort Law of the European Community Edited by Helmut Koziol and Reiner Schulze Springer, Vienna/New York Hardcover. ISBN 978-3-211-77585-1 2008, 693 pp Volume 24: Economic Loss Caused by Genetically Modified Organisms Edited by Bernhard A Koch Springer, Vienna/New York Hardcover. ISBN 978-3-211-77987-3. 2008, 747 pp Volume 25: Punitive Damages Edited by Helmut Koziol and Vanessa Wilcox Springer, Vienna/New York Hardcover. ISBN 978-3-211-92270-1. 2009, 322 pp Volume 26: Aggregation and Divisibility of Damage Edited by Ken Oliphant Springer, Vienna/New York Hardcover. ISBN 978-3-211-92208-8 2009, 568 pp
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Volume 27: Damage Caused by Genetically Modified Organisms. Comparative Survey of Redress Options for Harm to Persons, Property or the Environment Edited by Bernhard A Koch de Gruyter, Berlin/New York Hardcover. ISBN 978-3-89949-811-0 eBook. ISBN 978-3-89949-812-7 2010, 954 pp Volume 28: Loss of Housekeeping Capacity Edited by Ernst Karner and Ken Oliphant de Gruyter, Berlin/Boston Hardcover. ISBN 978-3-89949-813-4 eBook. ISBN 978-3-89949-814-1 2012, 339 pp Volume 29: Medical Liability in Europe. A Comparison of Selected Jurisdictions Edited by Bernhard A Koch de Gruyter, Berlin/Boston Hardcover. ISBN 978-3-11-026010-6 eBook. ISBN 978-3-11-026016-8 2011, 704 pp Volume 30: Tort Law in the Jurisprudence of the European Court of Human Rights Edited by Attila Fenyves, Ernst Karner, Helmut Koziol and Elisabeth Steiner de Gruyter, Berlin/Boston Hardcover. ISBN 978-3-11-025966-7 eBook. ISBN 978-3-11-026000-7 2011, 906 pp Volume 32: Medical Malpractice and Compensation in a Global Perspective Edited by Ken Oliphant and Richard W Wright de Gruyter, Berlin/Boston Hardcover. ISBN 978-3-11-026997-0 eBook. ISBN 978-3-11-027023-5 2012 (forthcoming)
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European Tort Law Yearbook European Tort Law 2001 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Softcover. ISBN 3-211-83824-4 2002, 571 pp European Tort Law 2002 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Softcover. ISBN 3-211-00486-6 2003, 596 pp European Tort Law 2003 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Softcover. ISBN 3-211-21033-4 2004, 493 pp European Tort Law 2004 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Softcover. ISBN 3-211-24479-4 2005, 674 pp European Tort Law 2005 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Softcover. ISBN 3-211-31135-1 2006, 711 pp European Tort Law 2006 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Softcover. ISBN 978-3-211-70937-5 2008, 576 pp
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European Tort Law 2007 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Hardcover. ISBN 978-3-211-77991-0 2008, 661 pp European Tort Law 2008 Edited by Helmut Koziol and Barbara C Steininger Springer, Vienna/New York Hardcover. ISBN 978-3-211-92797-7 2009, 708 pp European Tort Law 2009 Edited by Helmut Koziol and Barbara C Steininger de Gruyter, Berlin/New York Hardcover. ISBN 978-3-11-024606-3 eBook. ISBN 978-3-11-024607-0 2010, 735 pp European Tort Law 2010 Edited by Helmut Koziol and Barbara C Steininger de Gruyter, Berlin/Boston Hardcover. ISBN 978-3-11-023941-6 eBook. ISBN 978-3-11-023942-3 2011, 702 pp European Tort Law 2011 Edited by Ken Oliphant and Barbara C Steininger de Gruyter, Berlin/Boston Hardcover. ISSN 2190-7773 eBook. ISSN 2190-7781 2012, approx 700 pp
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Principles of European Tort Law Text and Commentary Edited by the European Group on Tort Law Springer, Vienna/New York Softcover. ISBN 3-211-23084-X 2005, 282 pp
Digest of European Tort Law Volume 1: Essential Cases on Natural Causation Edited by Bénédict Winiger, Helmut Koziol, Bernhard A Koch and Reinhard Zimmermann Springer, Vienna/New York Hardcover. ISBN 978-3-211-36957-9 2007, 632 pp Volume 2: Essential Cases on Damage Edited by Bénédict Winiger, Helmut Koziol, Bernhard A Koch and Reinhard Zimmermann de Gruyter, Berlin/Boston Hardcover. ISBN 978-3-11-024848-7 eBook. ISBN 978-3-11-024849-4 2011, 1175 pp
Others European Tort Law. Basic Texts Edited by Ken Oliphant and Barbara C Steininger Jan Sramek Verlag, Vienna Softcover. ISBN 978-3-902638-50-2 2011, 330 pp Medienpolitik und Recht. Media Governance, Wahrhaftigkeitspflicht und sachgerechte Haftung Edited by Helmut Koziol, Josef Seethaler and Thomas Thiede Jan Sramek Verlag, Vienna Hardcover. ISBN 978-3-902638-36-6 2010, 214 pp
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Journal of European Tort Law The Journal of European Tort Law (JETL) is the first law review to be dedicated to this important and dynamic area of European private law. It aims to contribute to the analysis and development of tort law in Europe by the publication of scholarly articles, comments and reviews. Its focus is primarily comparative, but it will also publish analyses of the tort law of single legal systems where the subject matter is of sufficient interest to the Journal’s general readership. Comparative analyses of non-European systems from the perspective of European tort law will also appear from time to time. The Journal embraces all scholarly perspectives, including economic analysis of law and socio-legal studies. Its subject matter is both substantive tort law, including its place in the general law of obligations, and the wider tort system, including its practical operation and its relationship with such institutions as private and social insurance. The Journal is published three times a year. The General Editor is Professor Ken Oliphant, Director of ETL. Professor Helmut Koziol, Director of ECTIL, is Honorary Editor in Chief. Further information, including subscription details and instructions for authors, is available on the JETL website: www.degruyter.com/jetl. Queries may be addressed to [email protected]. Articles, comments and reviews should be submitted for consideration to [email protected]. The Journal applies a policy of double blind peer review.
Eurotort EUROTORT is the first comprehensive database of European cases on tort law. This web-based research tool allows both researchers as well as practitioners to access the vast wealth of jurisprudence on tort law throughout Europe in a single language (English) and with a standardised index system. With a single search string, the most important aspects of tort law can be researched either in any one of the jurisdictions covered, in a selection of countries or without geographical limitation. The interface allows various types of retrievals including simple pattern search (full text search) and more elaborate retrievals like the search in specific database fields such as time period or keyword. At present, the collection contains over 1,800 decisions from 28 European countries, all categorised and indexed. The cases have been selected by 618
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experts from each respective jurisdiction, who have also drafted the English texts presenting the facts of the case and an abstract of the decision. Access to the database is free (subject to prior registration) at www. eurotort.org.
European Tort Law Blog A new feature recently added to the ECTIL/ETL homepages is the European tort law blog (www.europeantortlaw.net). This highlights important legislative changes and case-law developments in the European tort law field, as well as forthcoming events, new publications, useful web links and other items of topical interest. Suggestions of items for posting are always welcome.
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