Employers’ Liability Insurance
Employers liability insurance is not mandatory in Ireland, unlike the position in the United Kingdom. Employers liability insurance is, however, a practical necessity for employers and business owners.
Employers liability claims may arise from accidents and incidents in the workplace. They may also arise from occupational injuries, which manifest themselves many years after termination of employment.
Policies typically cover claims taken by employees, against both the employer and the occupier/owner who contracts for the works.
It is presumed in the absence of clear wording which otherwise provides, that an indemnity/insurance contract does not cover loss and damage incurred by the insured in consequence of his own fault or negligence. The courts will not read in liability to indemnify another against the consequences of his own negligence, in absence of clear wording.
The extent of duties owed by employers has increased through the recognition of new occupational diseases and conditions. They include repetitive injury strain, posttraumatic stress, passive smoking, noise causing hearing loss, bullying, stress, etc.
The Health, Safety and Welfare at Work Act enact numerous specific obligations and potential sources of liability. There are general and specific duties, breach of which causing physical injury or property damage, may lead to civil liability on the part of the employer.
Employers liability policies generally insure against liability and costs, in respect of personal injuries and diseases incurred, by employees in the course of employment, during the period of insurance.
The policy will usually extend to covering the employer in proceedings arising out of alleged breach of duty. This may include inquiries and criminal prosecutions under health, safety and welfare legislation. The policy may extend coverage to proceedings against directors and employees. They may cover legal expenses incurred.
The employer owes duties to its employees, primarily. Employees are generally defined as covering employees in the legal sense, as well as certain trainees, apprentices, persons on work experience, certain sub-contractors providing labour services in the workplace, certain members of the insured’s family and household who are not employees as such, certain hirees and agency contractors. The definition will be particular to the policy.
Health, safety and welfare at work legislation extend the statutory duties owed by employers to certain independent labour only contractors, agency employees, and similarly positioned persons. This makes civil liability in the event of a breach causing personal injury, almost inevitable. Accordingly, it is necessary that insurance coverage is extended to them.
Technically, an employer’s insurer may exercise subrogation rights against other liable parties including employees. Many policies are made specifically for the benefit of employees, as well as the employer, which would preclude subrogation.
Most employers liability policies cover accidents and incidents caused within the policy period. The position is usually clear in respect of accidents which cause personal injury. The position may be is much less clear in the case of occupational diseases, which occur gradually. It may be hard and difficult to pinpoint the date when the exposure and or/ the injury occurred. It will frequently have straddled several periods.
Employers liability policies typically cover accidents and diseases which arise out of, or in the course of employment. Whether or not the accident arises in the course of employment or not will depend on the circumstances. This may raise issues about the delimiting points, for the working day. Employers may be liable for accidents occurring in the course of transport provided by them to employees.
Travel between places during the working day, is likely to be in the course of employment. Employers liability policies will usually exclude cover, which is compulsorily required in respect of motor vehicle use.
Recent Directives have expanded the scope of mandatory motor insurance. It extends to cover passengers, where any element of seating is available within the vehicle. The effect is to transfer liability from the employer’s liability policy to the motor insurance policy.
The policy will generally have territorial limits. It may cover temporary absences from the jurisdictions. Prolonged absences are less likely to be covered.
An employer’s liability policy may extend cover in certain cases where the construction, engineering and similar contracts entered by the insured with public authorities and other contracting parties, so require. This extends to cover the liability of those parties arising from the performance of the contract, in relation to prospective liability to the employee.
The principal must agree to abide by the terms of the policy as if he was an insured party. The obligations of the insurer to the principal are equivalent to those owed to the insured.
The premium on an employers liability policy will be measured by reference to the risk and the number of employees. The level of wages and salaries will be important, as they will measure prospective loss.
The common cap on employers liability insurance is commonly £10 million; €12,700,000.
The insured must cede conduct of the claim to the insurer.
Claims against an employer are preferential claims in insolvency and bankruptcy. If there are no assets available and insurance, there is no recourse available.
The possibility of Personal Liability
The Irish Courts have allowed for the possibility that a senior manager or sole shareholder who is in control of a company, might be found personally negligent in the context of a workplace accident.
This would not normally occur, but it might arise where the shareholder/director who has been personally negligent, has exercised direct control of the situation and accordingly assumed a personal duty.
His liability does not arise because of his status as the director or a shareholder, but because of his assumption of liability in the particular circumstances.
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