Employers' Liability and Workers' Compensation 9783110270211, 9783110269963

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Employers' Liability and Workers' Compensation
 9783110270211, 9783110269963

Table of contents :
Preface
List of Contributors
Introduction
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
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?
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
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
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
Employers’ Liability and Workers’ Compensation: Denmark
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
Employers’ Liability and Workers’ Compensation: England and Wales
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
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
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
Employers’ Liability and Workers’ Compensation: France
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
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 co-employees
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)
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
Employers’ Liability and Workers’ Compensation: Germany
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
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
Employers’ Liability and Workers’ Compensation: Italy
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 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
Employers’ Liability and Workers’ Compensation: Japan
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
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
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
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
Employers’ Liability and Workers’ Compensation: Poland
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
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
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
Employers’ Liability and Workers’ Compensation: Romania
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
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
Employers’ Liability and Workers’ Compensation: United States.
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
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
The European Coordination of Employers’ Liability and Workers’ Compensation
I. Introduction
II. Empirical Evidence
III. Workers’ Compensation
A. Limitation to national territory
B. European coordination of social security systems
C. Sources of law
D. Scope of cover
E. 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
The Changing Landscape of Work Injury Claims: Challenges for Employers’ Liability and Workers’ Compensation
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
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
New Perspectives on Employers’Liability - Basic Policy Issues
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
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
Index
Publications

Citation preview

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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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 . . . . . .

1 1 1 3 4 5 5 7 8 10 14 15 15 16 17 19 20 22 23 25 25 27 27 28 28 28 29 30

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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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35 36 36 37 38 38 38 38 39 39 39 39 40 41 41 41 42 43 43 44 44 44 45 45 46 46 47 47 47

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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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48 48 49 49 49 50 50 50 51 51 51 52 53 53 54 55 55 56 58

63 63 63 63 65 66 67 68 68 68 69 70 72 73 73 73 74 74 75 75 76

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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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81 81 83 83 87 87 89 90 91 91 91 93 93 94 94 94 98 98 98 100 101 103 103 103 104 104 105 105 105 106 106 106 107 107 109 110

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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

111 111 112 112 112 112 115 117 118 120 120 121 122 123 124 124 125 127 128 130 131 132 133 134 134 134 135 135 135 135

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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137 137 138 140 141 143 143

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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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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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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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437 437 438 438 439 439 441

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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 . . . . . . . . . . . . . . . . . . . . . . . . .

XXIV

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519 519 521 523 523 524 526

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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 . . . . . . . . . . . . . . . . . . .

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563 564 564 565 567 567 568 568 569 569 570 570 572

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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.

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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.

5

Mark Lunney

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.

Australia

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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Mark Lunney

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).

Australia

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.

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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

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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

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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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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

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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).

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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

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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

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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

Austria

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.

Austria

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 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

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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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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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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

142

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.

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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

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R(I) 45/59. R(I) 2/63(T).

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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

154

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

158

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

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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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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.

202

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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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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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.

215

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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Florence G’sell and Isabelle Veillard

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

218

Cass civ 2, 1 July 2003, no 02-30576, RJS 10.03 no 1222. Cass civ 2, 15 June 2004, no 02-31194, RJS 8-9/04 no 965. Art L 1226-7 Labour Code.

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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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Cass civ 2, 13 November 2008, no 07-19618, RJS 2/09 no 217.

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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

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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



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.



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).

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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

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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

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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

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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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France

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.

264

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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Germany

(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

274

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.

Germany

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

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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.

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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.

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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.

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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

304

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,

Italy

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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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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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

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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’

81

82

83 84

85

86

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

90

316

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

94

95

96

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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

102

103 104

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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;



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’);



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

111 112

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;



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

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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