Statutory Liability Update…
Welcome to our to our March 2019 newsletter & an update on the recent developments & issues facing us all as we reach the end of the first quarter of 2019. I have monitored with interest the ongoing changes in the statutory liability area with a great deal if interest over recent years.
Paying reparations to victims has been a routine part of sentencing in health & safety cases for many years. The payments help compensate the victim for the emotional harm resulting from a work accident as well as any further losses arising as a consequence of any emotional or physical harm.
Reparations awarded for emotional harm have been steadily rising. It is now common to see payments of $150,000 ~ $250,000 or more ordered if a person is killed at work. Ten years ago, this figure was likely to be around $50,000 ~ $60,000. But it is the orders of reparations for consequential losses that have led to the most significant increases over recent years.
The increases can be traced back to the Sentencing Amendment Act 2014 [I have written on this topic at least twice previously] which allowed the Courts to order reparations to “top up” the 20% of a person’s earnings not covered by ACC income compensation payments.
In 2017, in the first case of its kind, the Court ordered in favour of a 27-year old victim who sustained tetraplegia from a work accident, be compensated for the 20% shortfall in his ACC compensation up until he was 65 years old. The reparations amounted to $226,300 &, along with reparations for emotional harm of $110,000, the victim was awarded $336,300 in total.
A few months later, a 52-year-old victim who sustained severe & permanent spinal injuries in a fall at work, was awarded reparations of $76,940 to bridge the 20% ACC income gap until he retired. In addition, $100,000 was ordered for emotional harm.
The highest payment to victims to date came in 2018 when Oceana Gold (New Zealand) Ltd paid over $1 million to the family of a deceased worker, including voluntary payments of $660,000 to compensate for lost future earnings not covered by ACC.
Where does this leave businesses? Health & safety reparations are fully insurable. Businesses need to make sure they have adequate limits of indemnity to cover what may be very large reparation orders as well as fees for legal representation & orders for regulator costs.
If several or many people can be injured in one event like an explosion or structure collapse, the limit will need to factor in the potential for multiple reparation orders. In a nutshell, businesses need to ensure their coverage really is “comprehensive” & extends beyond indemnifying for minor cuts & nasty scrapes only.
Should you have any enquiries regarding these changes & developments, or just simply wish to check adequacy of your existing levels of indemnity, then please call us. We look forward to speaking with you all again soon.
With my best wishes & kind thoughts,