The Employers’ Liability (Compulsory Insurance) Act 1969 imposes a requirement on employers to have insurance for employee injuries and also imposes criminal liability on directors and other officers of a company who fail to obtain such insurance.
Mr. Campbell was an apprentice joiner who injured his hand at work and issued a claim after the company went into liquidation. It became apparent that the company did not have insurance cover at the time of the accident. Mr Campbell issued proceedings against the company as well as the company’s sole director, Peter Gordon. Mr Campbell argued that failure to insure the company against injury claims rendered Mr Gordon personally liable.
At first instance the Court of Session held that the 1969 Act allows a director to be held liable for breach of the qualified statutory duty not to permit the company to conduct its business without having insurance. This decision was appealed by the director and at a subsequent hearing of the Inner House there was a split decision.
The matter was recently considered by the Supreme Court which held by a majority of three to two that there was no authority for the proposition that a person could be made indirectly liable for breach of an obligation imposed by statute on someone else.
Whilst the decision confirms that no personal liability will attach to directors who fail to insure their employees against work injuries, it should be remembered that they could still be liable to criminal prosecution if they ignore their statutory duties.
If you require advice on health and safety please contact Mark Stouph, head of Health & Safety at mstouph@jacksons-law.com or call 01642 873757. For advice on directors’ duties, contact Tony Wentworth, Partner and head of Corporate and Commercial at twentworth@jacksons-law.com or call 01642 873742. For advice on service agreements please contact Mark Forster, Partner and head of Employment at mfoster@jacksons-law.com or call 01642 873727.
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