Insurance & Benefits

Employers’ Liability

Employers owe extensive duties to their employees in relation to their health, safety and welfare. See the articles on health, safety and welfare at work and civil liability for workplace injuries. Where a workplace accident causing injury takes place, there is a high probability that the employer will be legally liable to compensate the employee.

An employer has very broadly based obligations, including obligations to devise, operate, and maintain a safe system of work, provide adequate and safe plant tools and equipment, provide competent and suitable fellow-workers, provide a safe place of work and a safe means of access and egress. In addition, an employer is vicariously liable for the civil wrongs of his other employees.

A workplace disease may manifest itself many years later. Claims may arise in relation to  workplace diseases, long after the initial exposure. There may be multiple claims based on similar causes. For example, there have been many claims based on historical exposure to asbestos and smoke filled environments.

In recent times, employers had been held liable where employees suffered medically diagnosed stress-related conditions. Stress may manifest itself with symptoms such as depression, fear, physiological effects, behavioural changes, weight loss, low morale absenteeism. Employees have been found liable in some cases where diagnosable psychological conditions have arisen as a result of workplace bullying.

Insurance Policies

Employer’s liability policies generally insure the employer against liability for damages and claims in respect of bodily injury or disease caused to an employee while employed in or temporally outside the Republic of Ireland during the period of cover and arising in the course of employment.

The policy covers legal liabilities only. It generally provides cover in respect of cost and expenses incurred. It may also provide cover for employees and directors in respect of prosecutions for breach of health, safety and welfare at work legislation including legal costs.

Consideration should be given to the question whether subcontractors should also be covered. Separate cover may be necessary in respect of liability to them.

The policy usually covers the injury loss or disease that arise out of or in the course of employment. Travelling to and from work in an employer’s vehicles is not necessarily “in the course of employment”. Travelling between workplaces is usually in the course of employment. A deviation, other than one which is incidental, may take the employee out of the course of employment return journeys on the same basis.

Professional liability

Professional indemnity insurance covers liability arising from negligent professional work or advice or breach of duty in the provision of services under a contract for professional services. Broadly speaking, where advice is given, or services are provided negligently, the person providing the service may be liable for loss or damage incurred by a client or other person to whom he has undertaken a duty of care.

Professional indemnity policies are invariably written on a “claims made” basis. This means that the insurance must be in place when the claim is made or the circumstance giving rise to the prosective claim arise and are reported. There will be financial limits on the extent of the indemnity. Costs may or may not be included in that limit.

Professional Indemnity policies commonly exclude liability for fraud or dishonesty of the insured. Depending on its wording, the dishonesty of an employee may, or may not be a ground for denying cover.  Most policies will cover defence costs.

The employees of a professional services firm may be personally liable for negligent advice, in much the same way, but more readily than other employees in the same circumstances. Their employer will also be vicariously liable in most cases. The employees should also be personally covered by their employer’s insurance.

Occupational Injuries Benefit

In some countries, an enhanced “workman’s compensation” scheme has substituted a no-fault system of compensation for workplace injuries. This is not the case in Ireland. There is a number of social welfare occupational injuries benefits which provide for payments, where a person is unable to work or is restricted in working, due to a workplace injury. However, they are at basic social welfare rates, and they do not debar a civil claim.

Entitlement to the benefit is dependent upon having made a certain number of social insurance contributions. The entitlement arises where there has been a recognised illness, or an injury has taken place in employment.  There are shorter-term and longer-term payments. The longer-term payment level increases, to some extent, with the extent of the injury.

Occupational injury benefits are separate from illness benefit (formerly disability benefit), which applies to workplace illness generally. However, the schemes do not provide cumulative or overlapping benefits.

Workmen’s Compensation

The Workmen’s Compensation Act 1897 (and later legislation), created (and developed) a system of compensation for workplace accidents.  This ultimately became part of the social welfare code in 1966 and are described as occupational benefits.  The benefits are at the relatively modest social welfare weekly payment rates.

The occupational injuries scheme provides benefits for people injured or incapacitated by an accident at work or while travelling directly to or from work. The scheme also covers people who have contracted a disease as a result of the type of work they do. There are a number of benefits available, and there are different conditions attached to each benefit.

The benefits are:

  • injury Benefit
  • disablement Benefit
  • incapacity Supplement
  • constant Attendance Allowance
  • medical Care Scheme.

There are also death benefits under this scheme:

Occupational Injury Schemes

The occupational injury benefit schemes provide for payments where an employee has suffered long term or short term injuries and is incapable of work or of performing his usual job. The schemes provide for entitlements which are separate to the matter of civil compensation for injury. It is not necessary to prove fault in order to qualify for payments under the scheme.

Entitlement to the payments is based on social insurance contributions. In some cases, no minimum accrual of contributions is required. There are no lump sum payments, with the exception of a limited lump sum under the Disablement Benefit Scheme. Payments are at general social welfare levels. They are not pay related. They do not compensate an employee for loss or injury. Rather, the purpose is to provide a minimum subsistence income level.

Payments based on contributions are not means tested. There are separate schemes covering short-term injury and long-term disability.  There are other means-tested payments, which depend on the person’s means and assets, being below prescribed levels.

Civil Law Compensation Preserved

Unlike the position in some other jurisdictions, the occupational injury benefit payments do not preclude and are not a substitute for a civil claim for compensation. However, the party paying compensation is obliged to reimburse the benefits paid to the Department of Social Protection.

The relevant legislation requires that the party who pays compensation must be given a statement. This may be an insurance company or the Injuries Board. The statement must set out any recoverable benefits that have been paid to the employee/ claimant for the same accident or injury. That party must then deduct a sum in the amount of the payments from the compensation settlement that the claimant is due to receive and pay them to the Department of Social Protection.

The obligation relates to payments received for the following benefits:

  • illness benefit
  • injury benefit
  • incapacity supplement
  • partial capacity benefit
  • invalidity pension
  • disability allowance

Injury Benefit

Injury Benefit is a weekly payment to a person unfit for work due to a workplace accident or disease. It can be paid for up to 26 weeks.  If the employee is  still unfit for work after 26 weeks, he may be entitled to  Illness Benefit or Disability Allowance.

Injury benefit is paid to an employee who is unfit for work due to:

  • an accident at work
  • an accident while travelling (on an unbroken journey) directly to or from work
  • an occupational disease

The Department of Social Protection has a list of Prescribed Occupational Diseases.

The employee must be unfit for work for more than 6 days as a result of the accident or disease (excluding Sundays or paid holiday leave). Even if the employee is not unfit for work for more than 6 days, he is entitled to a declaration that an occupational accident occurred. This safeguards his future rights to benefits under the Occupational Injuries Benefit Scheme (such as where is no immediate illness or disablement.)

Disablement Benefit I

An employee may be entitled to Disablement Benefit if he suffers a loss of physical or mental faculty because of:

  • an accident at work
  • an accident while travelling (on an unbroken journey) directly to or from work
  • a prescribed occupational disease
  • loss of physical or mental faculty

The extent of disablement is assessed following an examination by a Medical Assessor who assesses the extent of the loss of faculty as a result of the occupational accident or disease. ‘Loss of faculty’ is the inability to enjoy a normal lifestyle because of the loss or partial loss of an ordinary physical or mental abilities as a result of an occupational injury or disease.

Disablement Benefit II

In assessing the degree of loss of faculty, account is taken of how the employee’s current physical and mental condition compares to his pre-accident state of health and how he compare with a healthy person of the same age and sex.

Where the level of disablement is assessed at 20% or more, the benefit is paid by weekly or 4-weekly pension (called Disablement Pension). However, where the rate is assessed at less than 20%, the benefit is paid as a lump sum (called Disablement Gratuity). The size of the lump sum will vary depending on the degree of disablement and how long the employee is reasonably expected to be disabled.

A person who is in receipt of Disablement Benefit and is unfit for work, he may qualify for Illness Benefit based on his social insurance contributions (PRSI). If he does not qualify for Illness Benefit or another social welfare payment, he may receive Incapacity Supplement. This is supplement with Disablement Pension. A person may receive Incapacity Supplement if he is permanently incapable of work as a result of an occupational accident or disease and does not qualify for another social welfare payment. He may receive an increment for an adult dependant and child dependants.

Invalidity Pension

An invalidity pension is paid to a person who is incapable of work due to a long-term illness or disability. The claimant must be permanently incapable of work and satisfy the contribution period conditions.

In order to be permanently incapable of work, the person must be continuously incapable of work for at least a year and show to the satisfaction of the department officers, that he is likely to continue to be incapable of work for at least 40 years or be incapable of work and prove to the satisfaction of the department, that the incapacity is of a nature that the likelihood is that the person will be incapable of working for life.

The incapacity may be reviewed. The person in receipt of the payment may be examined by a doctor under the auspices of the department. The doctor will make a recommendation, and the Department will base its decision on the evidence.

The contribution conditions for an invalidity pension are at least 260 contributions since commenced in the firm’s employment and at least 48 paid or credited in the last year of contribution before the commencement of incapacity.

Disability Allowance

Disability allowance is a means tested payment, payable to persons who are restricted from employment due to long-term sickness and disability. It is a flat rate payment with increments for qualified dependent adults and children.

In order to qualify, a person must be of normal working age (16 to 66). He must, by reason of a specified disability be substantially restricted in undertaking employment of a kind which would be suited to his age experience and qualifications. The claimant must be habitually resident and satisfy the means test.

The person must satisfy the deciding officers or field officer that he is substantially restricted from undertaking suitable employment by reason of the particular disability. The disease, injury mental or physical illness must be expected to continue for at least a year. Entitlement may be reviewed if this position changes.

A person is disqualified from disability allowance if he fails without good cause to:

  • submit to medical examination or treatment;
  • comply with instructions of a doctor;
  • refrain from behaviour likely to hinder a recovery;
  • to make himself available to departmental officer

No Mandatory Insurance

Employer’s liability insurance is not mandatory in the Republic of Ireland. An employer is legally obliged to pay and meet its liability to an employee under a judgment or settlement, irrespective of whether he has insurance cover. As a matter of prudence, an employer should have and maintain employer’s liability insurance and will as other types of public liability insurance.  Employers typically maintain cover of €5,000,0000 to €13,000,000 liability insurance.

The Supreme Court refused to hold a controlling managing director personally liable, who was claimed to have been negligent in failing to ensure that the company had public liability insurance. It refused to imply in a term into the employment contract and refused to recognise a duty of care to maintain insurance.

Recourse to Corporate Employer Only

Generally, recourse is limited to the employer. If it is a company, it is the only liable entity.. Exceptionally a director or controller may have personal liability in the particular circumstances. However, that person is unlikely to have separate insurance cover.   In one case where the corporate employer was insolvent, an owner-manager was found to be personally liable, because his direct involvement in the company’s operations on a day to day basis was such as to place him within sufficient proximity to the claimant employee, such as to owe a duty of care in a personal capacity.

The Supreme Court upheld the separate legal personality of the company but recognised that in limited situations, it was possible in principle for a person who was a shareholder / director to assume a personal duty of care. The case is quite narrow and depended on its own particular facts.  The manager had been directly involved in the operations which caused the injury and could be found to owe a duty of care, which was breached.

UK Position

Unlike in Ireland, Employer’s Liability Insurance is compulsory in the United Kingdom.  The insurance must cover the costs of compensation and legal fees for employees who are injured or made ill in work by reason of fault on the part of the employer.  In practice, where an accident or injury occurs, it will be likely that it can be attributed to some element of fault or failure to observe occupational safety standards in the workplace, so that the employer may accordingly be made liable to pay compensation.

Employment Liability cover of least £5,000,000 is mandatory.  This mandatory requirement does not apply in the case of certain family businesses and where there is only one employee who owns 50% or more of the company.  The Health & Safety Executive enforces the law and can impose fines.

The insurance policy must be issued by an authorised insurer in order to comply with the Law. The insurer should be a member of the Association of British Insurers.  The Certificate of Employer’s Liability Insurance must be displayed in the workplace and copies of it must be kept for at least 40 years.