Section 69 of the Enterprise and Regulatory Reform Act 2013 (“ERRA”) is a key step forward in the Coalition government’s agenda to cut red tape and reduce the regulatory burden on UK businesses, however the failure of the Act to recognise the rigorous offshore safety regime could have significant implications for businesses operating in the highly regulated energy sector.
The effect of Section 69 is that most workers seeking compensation for injuries suffered as a result of accidents at work on or after 1 October 2013 will no longer be able solely to rely on a breach of health and safety regulations: instead they now need to show that their employer was actually at fault or negligent.
Prior to 1 October, workers raising personal injury claims could rely on a raft of health and safety regulations which imposed strict duties on employers to take certain precautions to protect their employees. The great majority of accidents at work have traditionally been covered by these regulations which often imposed ‘strict liability’ on employers. As a result of this strict liability rule, employers were held legally responsible for workplace accidents, despite having done everything that was reasonable to avoid them.
This has often been a source of considerable frustration for employers who made every effort to protect their workforce. Nevertheless, it was justified on economic grounds on the basis that the cost of a workplace accident is a production cost and should be insured by the employer and passed on to the ultimate consumer of the goods or services provided. However, the government-commissioned report published by Professor Löfstedt in November 2011 concluded that these regulations pass unnecessary costs to business while offering little benefit in terms of improving health and safety. That report formed the basis of the changes introduced in the ERRA.
The way this change to the law has been introduced is by removing civil liability for breaches of any regulations made under section 15 of the Health and Safety at Work Act 1974, except where those claims are made by new and expectant mothers who will continue to be able to recover compensation where there has been a breach of health and safety regulations. While these changes affect claims by both onshore and offshore workers, they do not affect claims based on regulations made under the Merchant Shipping Act 1995, for example. So, in certain circumstances, workers will be able to rely on a breach of those regulations alone (without the need to prove fault or negligence) where accidents occur while they are working on UK ships.
However, a number of questions arise in relation to the effect of the ERRA for the energy sector.
Do I still need to comply with health and safety regulations?
It is important to emphasise that the duties imposed by health and safety regulations still apply – a breach of the regulations remains a criminal offence.
In fact, many expect that when courts come to consider whether an employer has been negligent, they will bear in mind the duties imposed on that employer by health and safety regulations. During the passage of the Enterprise and Regulatory Reform Bill through Parliament, Viscount Younger told the House of Lords that:
“The Government are committed to maintaining and building on the UK’s strong health and safety record. The codified framework of requirements, responsibilities and duties placed on employers to protect their employees from harm are unchanged, and will remain relevant as evidence of the standards expected of employers in future civil claims for negligence”.
This could see workers in workplace accident claims citing breaches of a broad number of statutory regulations where they may have previously focused their case on a specific provision within one piece of health and safety legislation. This may have a greater impact on claims by offshore workers, where the more rigorous health and safety regime imposes a larger number of statutory duties on employers.
Will we see a piecemeal re-introduction of civil liability in the energy sector?
ERRA takes a broad brush approach to health and safety regulation and it is surprising – and perhaps unintended – that it fails to address the particular health and safety regime that applies to those operating in offshore sector.
The requirement to establish fault or negligence is recognised as being much more difficult in the context of offshore drilling operations. The prevalence of mutual indemnity and hold harmless clauses in energy sector contracts reflects the fact that, when things go wrong offshore, it is often difficult to attribute all fault to one particular party.
If it is thought that claimants are being unduly prejudiced in the raising of personal injury claims owing to the complex nature of offshore operations, we may see a piecemeal re-introduction of civil liability for health and safety breaches occurring offshore. The energy sector has often been singled out for special treatment when it comes to health and safety. For instance, until 2008, a breach of health and safety regulations directed at fulfilling the objectives of the Offshore Safety Act 1992 attracted a more severe penalty, than a breach of other health and safety regulations.
Will offshore accident claims become easier to defend?
One key object in an employer’s armoury will be any written materials which will show that the employer has identified and sought to reduce risk to its lowest possible level. This may magnify the effect of the ERRA on claims by offshore workers. As there are greater requirements for employers to document the precautions they take to minimise the risk of accidents offshore (e.g. under the requirement to prepare a safety case under the Offshore Installations (Safety Case) Regulations 2005) and the often more rigorous industry practices adopted by employers in the energy sector, it is expected energy sector employers will have more in the way of evidence to defend offshore workplace claims, particularly where an accident was unforeseeable or an employer took all reasonable precautions to minimise the risk of injury.
What effect will this have on the number of workplace accident claims?
Workers raising claims arising out of accidents which occurred prior to 1 October 2013 are still able to take advantage of the health and safety regulations, so the full effect of these changes may not therefore be seen for a few years.
While these changes may not reduce the number of claims raised by workers following accidents at work, they may affect the number of successful claims, particularly where the risk of injury is unforeseeable. So while the standards expected of employers in terms of health and safety compliance have not changed, the issues of fault and/or negligence will need to be given much closer attention by both workers raising accident claims and employers defending them.
David Hennessy is a health and safety specialist in the insurance and risk team of Brodies LLP.
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