Loss Events and Compensatory Schemes Available for Employers

Loss Events in Terms of Failure in the Duty of Care to Protect the Worker and Compensatory Schemes Available for an Employer

If a worker has a work-related incident at the workplace or comes in contact with a disease as a result of work he is undertaking, it may result in a loss that may include pain, suffering as well as loss of future income. This incident or ill-health may lead to the death of the worker, which will result in the worker's dependents suffering a major financial setback. 

Over the passage of time, there are various mechanisms that have evolved to compensate the injured workers in case of an accident or provide financial aid to the dependents of the worker if the worker loses a life. 

The mechanism is to compensate the victim but this system is divided into sub-categories listed below;

1. Compensatory Scheme

• No-Fault Compensation Scheme
• Fault Compensation Scheme

Compensatory Scheme

The main purpose of this mechanism is to compensate the victim. The mechanism can be divided into two schemes where it is;

• Not Necessary to prove that the employer was  at fault
• Has to Prove that the defendant (employer) was at fault

In both methods, the victim gets compensation. The working method of both methods is different but the purpose is the same. 

Method 1: No-Fault Compensation Scheme

There is no need to prove the fault of the employer/ defendant but it is to establish that the harm was caused as a result of the person's employment. Usually, No-Fault Compensation Schemes fall into one of the two main categories;

1. Employer provides benefits - The employer gets his employees insured, pays a premium to the insurance company, who in case of incident and harm to worker pays compensation to the victim. 
2. The Government or Government Agencies provide the benefits. The system consists of social insurance operated by the government or an agency of the government. 

The fact remains that under both models, the worker is liable to report his injury or illness to his respective employer. Many countries require the worker to claim within a specified time, and the time is extended in many cases of occupational diseases. 

Scheme 1: Employer's Scheme

Here the employer is liable to provide benefits to the worker. The scheme is operated by the Insurance Companies. An employer who hires workers to work on his behalf pays Premium to the insurance companies. Many countries through their legislation, require that the workers should be insured. 

In case of any accident or illness, the claim is made by the worker and the insurance company pays compensation to the claimant on behalf of the employer. In other words, it is the return of the premium, employer-paid as insurance money to the insurance company. 

Scheme 2: Social Insurance Scheme

These schemes are administrated by the government and funded by compulsory contributions made by the employer, worker, both with possible further contributions made from general taxation. These contributions may be at a fixed rate or maybe earnings-related. 

If a claim is made by the injured worker, a medical examination is done to establish the nature of the harm or loss whether any recovery is likely. If the disability is permanent, then a pension is paid, instead of a lump-sum amount by the government department. 

An example of such a scheme is the British Industrial Disablement Benefits Scheme which is funded by the employees, employers, and taxation. The benefit is paid to someone who has suffered the loss of faculty due to an accident at work or has a prescribed industrial disease associated with the person's occupation. The Compensation is paid to employees only, not to self-employed ones. 

Method 2: Fault Compensation Scheme

Most jurisdictions make an employer liable for injury or illness to a worker as a result of their occupation. This requires the injured worker to file a case in the civil court of that country against the employer and the need to establish fault on the part of the employer, or one of his/her workers. 

In simple words, the claimant has to prove that the harm was caused by the negligence of the employer or one of his employees or that there has been a breach of health and safety legislation. 

The liability of the employer may come about in two ways;

1. The employer is responsible for his or her own acts of negligence and it is called Primary Liability.
2. The employer may be Vicariously Liable for the negligence of his/her workers who committed the wrongful act in their course of employement. 

A claimant will be presented under both headings (negligence and breach) of statutory duty at the same time, although success under both results in only one award of compensation. The claimant is liable to prove that the employer not only breached the statutory duty but also showed negligence. The court can punish the employer as well for not complying with the law.