U.K. Caught in U.S.-Style Lawsuit Craze? Hogwash, Say Trade Unions

July 28, 2005

The United Kingdom is not in the grips of a U.S.-style compensation culture, nine out of every 10 workers injured or made ill by their jobs never receive a penny, and the best way for employers to ensure they stay out of court and keep costs down is to make their workplaces safer, according to a report published by the TUC, an organization of labor unions.

TUC’s repoprt, “The Compensation Myth,” sets out to demolish what it says are 10 of the most commonly held myths put about by commentators who say that the cost of compensation paid out as a result of workplace accidents and injuries is spiralling out of control. On the contrary, says the report, the number of civil compensation cases involving claims against employers has fallen every year for the last five years.

The U.K. also pays out much less money in compensation cases, as a proportion of its GDP, than any other European country except Denmark, and the cost of compensation payouts has remained the same, in real terms, since 1999, says the report.

Dispelling the myth that U.K. workers are all too ready to whack in a compensation claim the second they get ill or are slightly injured, the report says that only 80,000 of the 850,000 plus people who are the victims of work-related accidents or injuries each year, ever receive any kind of payout from their employer or the state.

Myth three destroyed by the TUC is the one that says that compensation payments are too high. The six figure payouts that hit the headlines are extremely rare, with the average settlement around the £7,500 mark, and the vast majority receiving less than £5,000.

The report also rubbishes the notion that it is unfair that insurance companies should have to pay out for asbestos-related diseases when no-one knew of the risks years ago.The dangers of asbestos were first identified in the 19th century, there have been controls on its use since 1931, and the risks were well-known as long ago as the 1940s, according to the TUC. Yet employers continued to use the fatal fibre and expose workers to it right up until the 1970s meaning that some 2,000 people still die every year as a result.

TUC General Secretary Brendan Barber said: ‘All the time we hear that the U.K. is in the grip of a runaway compensation culture and that we are moving ever closer to a U.S.-style ‘sue-first-ask-questions later’ system. The harsh reality for thousands of ill and injured workers is very different with most getting little if anything when things go wrong at work as a result of their employers’ negligence.

‘If insurance premiums more closely reflected an employer’s health and safety record, with those happy to put their employees at risk paying more and those with safer workplaces paying less, we might start to see an improvement in the U.K.’s poor accident and illness statistics. Cutting our compensation bill is easy, but first U.K. bosses have to get serious about improving health and safety.”

The report also dispenses with the idea that employers liability insurance is just another burden on U.K. businesses by pointing out that the average cost is just 0.25 per cent of firms’ total payroll costs and is the lowest in Europe. It also says that because there is little difference in the premiums paid out by companies with good or bad safety records, there is no incentive for employers with dangerous workplaces to tidy up their acts.

The other claims dismissed by the TUC report as nonsense are the idea that a large number of claims in recent years has forced up the cost of insurance premiums for employers and that injury and illness cases wouldn’t get taken up if unions stopped encouraging their members to make frivolous claims.

It also knocks the notion that employers often have trouble getting insurance, noting that despite it being a legal requirement, seven per cent of small businesses don’t have cover because they want to cut costs.

“The Compensation Myth” sets out three ways that the U.K.’s compensation bill could be cut:

* Good health and safety practices should be rewarded, where companies with poor accident and injury records pay higher insurance premiums.
* When someone is made ill or injured at work, the priority should be to allow the individual access to proper rehabilitation, greatly increasing the chances that they will make a full or early recovery.
* Insurance companies should be more ready to admit liability earlier on to avoid running up costly medical and legal bills

Was this article valuable?

Here are more articles you may enjoy.