Director not liable for company’s failure to insure employee

The Supreme Court has ruled that a director could not be held personally liable for his company’s failure to provide adequate insurance for its employees.

The case involved a director who was responsible for the day-to-day operation of the company. In June 2006, an employee suffered an injury while working with an electric circular saw.

The company’s insurance excluded claims arising from the use of woodworking machinery powered by electricity. It therefore excluded any claim arising out of the employee’s accident.

The company’s failure to have in place appropriate insurance was a breach of its obligations under the Employers’ Liability (Compulsory Insurance) Act 1969 s.1 (1).

It went into liquidation in 2009 and so the employee sought to hold the director personably liable in damages for the failure to provide adequate insurance cover. The question was whether civil liability attached to the director for that failure.

The case went all the way to the Supreme Court, which ruled in favour of the director. It held that the law did not impose a duty to insure on a director or other officer as such, let alone any civil liability for failure to do so. The duty rested on the corporate employer.

Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of employment law.