Employers' Liability Bill (Hansard, 13 June 1989)

§ Mr. Frank Doran (Aberdeen, South)

I beg to move, That leave be given to bring in a Bill to require employers to provide death-in-service insurance benefits for their employees; and for connected purposes. The main purpose of the Bill is to extend the obligation on employers to insure their employees against death or injury at work. The existing scheme was introduced in 1969 and now covers the great majority of Britain's 22.5 million workers. The main difficulty with the present scheme, however, is that it still requires proof of negligence or fault on the part of an employer before a claim for compensation will be successful.

In most cases an injured employee, or his representative if the accident was fatal, will instruct a solicitor. The case will be intimated to the employers, who will pass the case to their insurers. There will be a period of haggling between solicitors and insurance companies. Many cases are settled at this stage. A great many are not and require legal proceedings.

Cases which do not go to court can take a great many months, sometimes even years, to settle. When they go to court cases certainly take years; delays of seven or eight years are quite common. Even then there is still the problem of proving fault or negligence on the part of the employers. Many employers and their insurers escape liability on technical legal grounds. The whole system is a lottery.

One particularly graphic example of the difficulties which are experienced is the case of the mv Derbyshire, which sank in 1980 with the loss of the whole crew of 44. The representatives of those 44 crew members have been involved in litigation ever since. They have been unable to prove negligence and it is unlikely that they will ever receive proper compensation for their loss. Yet they have all lost a loved one—a loved one who, regardless of the question of fault or negligence, died in the service of his employer. No disaster fund was set up and there were no visits from dignitaries such as the Prime Minister. The dependants of those 44 crew members have had to cope with the trauma of the loss of a loved one without adequate compensation to help them adjust to their new circumstances. That is a scandal in anyone's terms.

I am a firm believer in a "no fault" liability scheme. However, time and again this Government have made it clear that they are not prepared to consider such a scheme, which operates extremely well in Canada, Australia and New Zealand.

My Bill is a modest attempt to introduce some equity and justice into the very haphazard system of compensation for injury and death which our legal system has created. For the present I am restricting its operation to cases in which there is a death resulting from an accident or illness at work. The motivation for the Bill arises out of my involvement in pursuing compensation claims as a solicitor in Scotland and also out of my involvement in the aftermath of the Piper Alpha disaster, which affected so many of my constituents.

On the Piper Alpha I discovered that of the 167 men who died 31 were employed by the operators, Occidental. Those men were covered by an insurance scheme that provided their relatives with an immediate payment of £100,000 in the event of the men's death in employment. 726 The relatives of the other 136 victims have had to go through the normal channels of instructing solicitors to pursue their claims, with all the uncertainty that that involves. To their credit, Occidental and their lawyers have done what they could to speed up the process of agreeing compensation claims and in most cases agreement has been reached, although payment has not yet been made.

However, even this does not overcome the major problems for those who have lost a loved one. The time of most stress is immediately after the death. The survivors have to cope not only with the emotional stress of the loss, but, in most cases, with the financial loss. In the case of a young family, for example, where the loss of the main breadwinner can cause particularly serious financial problems, the difficulties are most acute.

We had a useful opportunity to discuss compensation and the anomalies involved earlier in the year when my hon. Friend the Member for Leigh (Mr. Cunliffe) introduced his Citizens' Compensation Bill. That Bill met with considerable hostility from the Government and I regret that the opportunity to deal with the real problems caused by the present system was missed.

It is not good enough to say to those families that they may have a legal right of action against an employer when that involves months, possibly years, of legal argument, financial outlay, considerably increased stress and no guarantee of success at the end of the day.

My Bill attempts to deal with those problems in a novel way. In the first place, it would oblige employers to carry compulsory insurance to provide an immediate payment to the representatives of an employee who died as a result of an accident or illness at work. There would be no requirement for proof of negligence and the payments would be ignored when the court was considering any subsequent compensation claim. There would be criminal penalties for any employer who failed to carry full insurance cover, and the court would be empowered to make an order for the full amount required to be paid under the insurance.

The Bill provides that the amount of cover per employee should be determined by regulation. That is to allow for upgrading in future. At the moment, my view is that £25,000 of cover per employee would be appropriate. That figure is reasonable, it is not excessive compared with current awards by the courts and it would be relatively cheap from the employer's point of view.

It would be open to employers to choose to provide a higher level of benefit. Many choose to do so already. One set of figures that I have seen suggests that over 20 per cent. of the work force is covered by such a scheme on a voluntary basis.

More than 22.5 million people in employment in the United Kingdom would be covered by the scheme proposed in the Bill. According to the latest annual report of the Health and Safety Commission, there were, on provisional figures, 340 fatal injuries at work in the United Kingdom last year. Since 1981 there have been 2,895 cases. In our legal system, it is likely that the majority of those 2,895 cases, where there are grounds for compensation claims, will still be unresolved.

In the absence of a no-fault scheme, the problems of delay in the legal system will continue. My Bill will provide some immediate financial assistance for those in greatest need at a time when it is most needed.

I have described the Bill as a modest measure, and indeed it is. There will be no cost to the Government or the 727 public purse. The cost to the employers will be extremely small and, in most cases, negligible in their total employment costs. However, to those families who lose a loved one through a work-related cause it will be of the most enormous significance at a time of great stress and most need. I commend the Bill to the House.