Whether you have a small, medium or large business, a personal injury claim can place serious pressure on cash flow. Indeed, for some small businesses a large personal injury claim could have serious repercussions for the long-term viability of the business. In reality it is virtually impossible to negate the chance of injuries as a consequence of accidents in the workplace. However, as the owner a small business, if you can prove you took reasonable steps to protect your employees and customers from injury then you may be able to avoid a personal injury claim..
We will now take a look at some of the issues you should consider in relation to personal injury claims for a small business.
Property Insurance
As a general rule of thumb, the majority of property insurance policies will have an element of general liability cover. This means that in the event of an accident on business premises you may well be covered by your policy. In some instances there may be cases where the employer has been negligent which could prompt a challenge by the insurance companies but on the whole you should have a general level of liability cover. However, it is sensible to check the situation with your insurance company and the level of cover in place.
Public Liability Insurance
There is a general assumption that public liability insurance is a legal obligation for businesses in the UK but this is not the case. However, those who choose not to take out public liability insurance may be exposing themselves to potentially enormous injury compensation payments in the future!
From a legal standpoint public liability is best described as:-
“Insurance to cover the cost of legal action and compensation claims made against your business if a third party is injured or their property suffers damage. This will cover claims relating to damage on business premises, work in a customer’s home, office or business property.”
While it will depend upon the size and type of business as to the degree of exposure you may have to personal injury claims, it makes sense to at least consider public liability insurance. We’ve also seen instances where false claims have been made against small businesses and the legal cost defending such claims has placed great pressure on the business.
Employer’s Liability Insurance
On the whole, employer’s liability insurance is a legal obligation for any employer operating in the UK. There are certain exemptions such as businesses which employ family members as long the business is not incorporated as a limited company. In general, the minimum liability cover employers are obliged to have in place is £5 million or face potential fines of up to £2,500 per day.
Many business owners might automatically assume that when an employee leaves the company this will remove any legal obligation regarding personal injury claims. Unfortunately for many small businesses this has not always been the case. Employer’s liability insurance covers not only current employees but also ex-employees who may bring claims against the business in relation to an injury or illness.
Over the years we have seen some significant personal injury claim actions in areas such as repetitive strain injury, vibration white finger and asbestos related illnesses to name but a few. Even if insurance cover is no longer in place, or the business is no longer trading, as long as it was in place when the injuries/illnesses occurred then the courts will likely rule that the cover was valid. As a consequence, there is every chance that personal injury claim compensation awards will be honoured by the insurance company.
Building Inspections
The vast majority of small businesses are likely to have limited buildings within their operations and as a consequence the cost of building inspections should not be excessive. While some may suggest that the cost of regular building inspections is money they can save, it should be seen as investment in the security of the business. A simple and relatively quick annual building inspection should flag any structural issues, practical issues such as problems with the electricity supply and any other health and safety concerns. This is where the legal obligation of the small business owner can start to expand.
As a matter of course, all building inspection reports should be retained and any recommendations regarding repairs and maintenance carried out as quickly as possible. If further down the line it was proven that an employer failed to act on these recommendations, resulting in an employee injury/illness, then not only might there be personal injury claims liability but potential legal action from the Health and Safety Executive. It is therefore imperative that any health and safety recommendations are recorded and carried out in a swift manner.
Consequently, if health and safety recommendations were carried out by an employer and an employee suffered a related injury/illness then it may be possible to prove that the employer took the appropriate reasonable action. In some cases the courts might reduce any potential compensation payments or even rule in favour of the employer.
Employee Training
Whether you are a small, medium or large size business, employee training is an integral part of business life. While it will obviously depend on the type of business, and the role of individual employees, as to the specific type of employee training, health and safety training is compulsory.
In years gone by many business assumed that initial induction/training courses for new employees would cover their legal obligations. Over recent years the situation has changed dramatically, not only are induction/training courses required for new employees but regular updates are now part of the working calendar. All employees must be made aware of changes to health and safety regulations, employment laws as well as training specific to their individual roles.
From a practical point of view, it is essential that all employees and employers are “singing from the same hymn book”. Therefore this type of formal training environment ensures full focus on training which will ultimately benefit employees, employers and customers.
Investment In Equipment
As we touched on above, annual building inspections will highlight structural and health and safety issues in the workplace. There is also the issue of investment in equipment to consider as well including:-
- Safety clothing
- Industrial equipment
- Business vehicles
- Safety equipment
- Safety signage
As well as annual building inspections it is also sensible to carry out an annual inspection of all equipment used in relation to the business. For some small businesses any replacement costs can have a significant impact on short-term cash flow. However, this may be but a drop in the ocean if injuries/illnesses were to occur as a consequence of faulty equipment.
This has to be one of the main challenges for small business owners, knowing the optimum moment to invest in new equipment while ensuring they are fully protected in the event of employee injuries/illness. In theory it does make sense to err on the side of caution but in reality it can prove extremely challenging for the cash flow of a small business.
Employee Handbook
The employee handbook is different from the training obligations which employers have towards their employees. The employer handbook should be a reference guide to:-
- Employment laws
- Employee rights
- Health and safety
- Reference guide to working practices
As long as each employee is provided with an employee handbook this ensures minimum misunderstandings and should enhance health and safety in the workplace. It is also vital that employee handbooks are updated on a regular basis to reflect changes in the regulations, working practices, etc.
We have seen personal injury claims in the past relating to a lack of employee support in relation to workplace bullying and other similar issues. The general assumption that personal injury claims relate to physical/traditional illnesses is outdated. From a legal standpoint, physical injuries, traditional illnesses and mental health issues are all treated in the same manner. As a consequence, where the actions or inactions of an employer have resulted in any of the above they may be liable to pay compensation.
Summary
Whether you own a small, medium or large size business, the legal obligations with regards to health and safety and potential personal injury claims are the same. This article highlights the often unique issues facing smaller companies where cash flow may be tighter and a personal injury claim could have serious consequences for the future of the business. While employee training and health and safety inspections are in effect non-negotiable, knowing when to invest in new equipment can prompt a difficult conundrum.
In this instance it is probably best to look at this from two angles, if the equipment is dangerous then this will increase the potential for injury compensation claims. Looking at this from a business angle, if the equipment is “past its best” then surely the reduced efficiency will impact overall business efficiency. So, investment in new equipment should not only reduce potential compensation claims going forward but also help to improve overall business efficiency?
Health and safety, training and the protection of employees is obviously vital for any business but for many small businesses this can lead to cash flow issues. While legal and moral obligations must obviously come first, optimising the timing of investment in new equipment is not easy.
