You've been hit with a damages claim... now what?


You've been hit with a damages claim... now what?

You’ve just received notice of a common law claim for damages. What should you do? Gaby Grammeno explains.

A work accident with catastrophic consequences for an employee can crash like a bomb through the usual workplace routine.

A death or terrible injury has a devastating effect on everyone concerned, as shock and disbelief turn into an urgent need to respond, and the awful duty of informing the family of the dead or maimed worker unleashes an avalanche of fury and finger-pointing.

The subsequent scrutiny by government safety inspectors, the massive damage to morale and reputation, and the mountains of paperwork can all be hugely stressful. To top it off, an employer may find they are being sued for negligence, and the worker is claiming damages. How should an employer respond?

Why claim damages under common law, rather than workers compensation?

The workers compensation system is a ‘no-fault’ one. This means that a worker is entitled to claim compensation regardless of who was at fault for their work injury or illness. The weekly compensation payments are intended to cover (or partly cover) their lost wages, as well as medical and rehabilitation expenses. In some cases, it may also include a lump sum payment for permanent impairment caused by the injury.

A common law claim, on the other hand, relies on the worker proving their injury or illness was caused by the negligence of another person. That other person is often the employer, but could also be the manufacturer of equipment, or a contractor at the worksite. An employer may also be held liable for the negligence of an employee. An injured worker who succeeds in a common law claim can be awarded a large sum in damages.

To prove someone was negligent in their duty of care, it needs to be established that the person had a duty of care, that the duty was breached, that the breach of that duty caused the injury or illness, and that the injured party sustained real damages and losses.

An injured worker may choose to make a common law claim because workers compensation payments, while they cover the basics, may not be enough to compensate them for their other losses, in particular, pain and suffering, loss of enjoyment of life, and current and future earning capacity.

How should an employer respond?

Any employer confronted with a serious work injury or illness should seek to understand why it happened, and what went wrong. Apart from providing medical attention to anyone injured, the site of a serious accident must not be disturbed until workplace safety inspectors have seen and examined it, but once this is completed, the incident requires a thorough, careful examination of the circumstances leading up to it.

An in-house investigation needs to be carried out with due regard for the many pitfalls to which investigations are prone. It can be challenging to get an impartial and accurate account of the various factors that contributed to the outcome, as most people will have only a partial perspective on the web of causation and some may seek to avoid blame and deflect responsibility elsewhere. Still others may give a skewed account, out of loyalty to their friends or hostility towards other colleagues.

A good investigation process must include careful planning, collection and analysis of evidence. It must make findings of fact in a way that adheres to fair procedures, assess the evidence against established policies, practices and individual responsibilities, and consider whether to make changes to avoid a recurrence of the problem or issues that led to the unfortunate serious outcome.

Ideally, an internal investigation will provide insight into the (usually) multiple behavioural, operational or interpersonal elements of the incident’s causes, enable the business to take appropriate steps to make sure it will not happen again, and feed into an official investigation by the regulator and legal personnel.

Potential defences

If an employer can successfully argue that it did everything reasonably practicable to prevent foreseeable harm, it will be in a better position than if there were notable flaws in its safety management system. In cases heard under the common law, the courts typically hold employers responsible for harm if they cannot demonstrate that they had safe premises, safe equipment and safe systems of work, and that they warned workers of the risks and provided adequate training and supervision.

While an employer may believe the injured person was to blame (that is, they are guilty of contributory negligence), it must be remembered that a court will not automatically accept a claim that an operator’s carelessness was the sole cause of the incident.

It must also be recognised that the process for dealing with common law claims for work injury damages differs from state to state – for example, the threshold for eligibility to make a common law claim is 15% whole person impairment in Western Australia, but 30% in Victoria – and strict time limits also apply to each stage of the process.

For these reasons and because of the many other perils, it is strongly recommended that employers facing a common law claim for damages seek legal advice as soon as possible.
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