A recent Scottish case highlighted the importance of EL insurance. The case was Campbell -v- Peter Gordon Joiners Limited & Peter Gordon. The court found that as well as it being a criminal offence not to hold insurance, the company and its directors could also be civilly liable for any failure to hold EL insurance. This means that if an employee becomes aware that the company does not hold insurance, that employee could raise a court action with a view to forcing both their employer and any directors to obtain cover. It seems somewhat unlikely that any employee would take such a step.It also means that if an employee has an accident at work for which the employer company is liable, if there is no insurance in place the employee may sue both the company and its directors. A likely scenario where directors could be sued personally would be where the employer company was insolvent and therefore unable to pay any damages. That was the situation in the Campbell case.This approach by a Scottish court is different to a previous English court's interpretation of the same statutory provision. It may not be the last we hear north or south of the border on this issue.
What lessons can employers learn from this?
- It is important to hold EL insurance.
- EL insurance should be checked carefully to ensure it covers all aspects of work undertaken by the company (in the Campbell case, some insurance was in place but it did not cover the type of work being undertaken at the time the accident happened).
- Directors should ensure they are personally satisfied that the requisite EL insurance is in place, as they may be both guilty of a criminal offence and personally liable in damages if the insurance cover is insufficient.
If you need any advice about your obligations as employers, or insurance matters more generally, we are happy to help.