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Liability for injury of Workers: Who’s more liable?

Reading time: 8 mins

Injuries in the workplace are unfortunate events that can occur but can be prevented with proper precautions and measures. When it comes to determining liability for worker injuries, a crucial question arises: who bears the greater responsibility – the host employer or the labor hire company?

This article delves into this complex issue by exploring a detailed case study to shed light on the key factors that influence liability in such situations. We determine the cause of work injuries by examining the responsibilities of the employer and labor hire company.

The employer and labor hire company are accountable for certain aspects related to work injuries. By assessing their responsibilities, we can identify who is at fault for the injuries. Proper precautions can prevent injuries at work.

Case discussion

A worker (let’s call her ‘Kelly’) injures herself at work. Who is most liable – the host employer (which we will refer to as “Host”) or the labour-hire company (which we will refer to as “Employer”)?

So – here’s the thing; the host employer and the labour-hire company are, in most cases, both on the hook to contribute towards the loss Kelly has suffered as a result of her personal injury. The cost of Kelly’s injury may vary depending on the state or territory.

The outcome will be determined by the agreement between the host employer and the labour-hire company. It will also be influenced by the laws and insurance policies of both companies.

Firstly, the labour-hire company is the literal “employer” of Kelly; it has a contract of employment with Kelly, pays her superannuation, her wages, annual leave and other entitlements, etc. Under Australian law (no matter which State and Territory we’re looking at), the labour-hire company must obtain a policy of workers’ compensation insurance in respect of Kelly.

On the other hand, the Host is not Kelly’s employer. The Host needs Kelly’s help for a specific time or task and pays the labor-hire company for it.

Kelly can make a claim:

  1. under the respective workers’ compensation acts against her Employer, including a Common Law claim for damages; or
  2. against the Host under the relevant personal injury/civil liability acts.
labour hire

Case 1: Worker versus labour-hire employer

Kelly’s Employer covers her with workers’ compensation insurance because they have an employment relationship. Kelly makes a claim under this policy.

The workers’ compensation insurer, in order to protect its own interests and those of the insured Employer, seeks indemnity from the Host.

Here’s where it gets interesting.

Q: Can the Host enforce its contractual indemnity against the Employer in relation to the claim for indemnity made against it by the worker’s compensation insurer? Note: the contractual indemnity requires the Employer to indemnify the Host for loss caused by the Host’s own negligence.

A: At least in Queensland and Victoria, the answer is NO.

In Queensland and Victoria, the workers’ compensation acts make any contractual indemnity from the Employer to the Host unenforceable. This change was prompted by a court decision in Queensland that led to WorkCover Queensland having to indemnify an employer due to a contractual indemnity for losses from the host’s negligence.

This case was significant because the host was not the insured under the policy (by virtue of the fact it was not the employer) but was able to recover its loss under the policy because of the contractual indemnity.

Q: If the Host has a policy of public liability insurance, it may have to pay an additional excess because the claim relates to personal injury. In these circumstances, the Host may be more willing to pursue the Employer. But can it, if the workers’ compensation act prohibits enforcement of a contractual indemnity?

A: Yes, the Host can still enforce the contractual indemnity, but this sits outside the workers’ compensation framework. The Host can still go after the Employer for breaking the contract.

The Host can still pursue legal action against the Employer for breaching the contract. However, if the financial loss is minimal and the Employer’s assurances are reliable, it may not be advisable to do so. This is because the expenses involved in recovering the money could exceed the actual loss incurred.

In either case, both the Host’s and the Employer’s insurance premiums go up.

Case 2: Worker versus host employer

The Host’s workers’ compensation insurance does not cover Kelly because they do not have an employment relationship. However, as she has injured herself on the Host’s premises, she is likely to be covered by the Host’s public liability policy of insurance.

Kelly makes a claim against the Host under the relevant personal injury / civil liability act. Under those acts, the Host is only liable for loss to the extent it caused or contributed to it (i.e. proportionate liability applies).

Because proportionate liability applies and:

  1. Kelly is unlikely to accept the risk that she may only be able to recover less than the full amount of her loss . For example, if the Host is found to be only 70% liable, Kelly can only recover 70% of her loss from the Host; and
  2. the Host will want to shift as much of its liability to someone else . For example, arguing that it is in fact only 50% liable,

 

Kelly can sue the Employer. The Host can also join the lawsuit against the Employer. The Host is being sued for contributing to the loss.

Online Legal Advice

Frequently Asked Questions

How can Host Employers and Labour Hire Companies Reduce Liability for Worker Injuries?

Both a Host and an Employer can use strategies to shift liability onto each other within the boundaries of the law. Visit Contact Prosper Law, a boutique commercial law firm today to find out how.

Lawyers for workplace injury provide essential support to injured workers by offering legal representation and expert advice. They assist injured individuals with legal matters, ensuring their rights are protected and helping them navigate workers’ compensation or injury cases. These lawyers negotiate with insurance companies and employers to get fair compensation for injured workers. They also collect evidence to support the compensation case.

Work injury lawyers help clients in court, fighting for their rights and aiming for positive results in legal cases. These lawyers assist injured workers with legal problems and ensure they receive fair compensation for injuries sustained at work.

About the Author

Farrah Motley
Director of Prosper Law. Farrah founded Prosper online law firm in 2021. She wanted to create a better way of doing legal work and a better experience for customers of legal services.

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