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Compensation for health and safety breaches depends on actual harm, Court of Appeal confirms

Out-Law News | 29 Apr 2016 | 5:24 pm | 5 min. read

Employees must be able to prove that they have suffered actual harm as a result of breaches of health and safety law by an employer in order to claim compensation, the Court of Appeal has confirmed.

It upheld the High Court's original judgment against five individuals, who had sued employer Johnson Matthey Plc after they each became 'sensitised' to platinum salts because their workplace had not been properly cleaned. Platinum sensitisation is a symptomless condition that does not affect day to day activities; however each of the employees had to be removed from factory work to prevent the risk of further exposure.

Lord Justice Sales, giving the judgment of the court, agreed with the trial judge that the condition was not an "actionable injury" for which the individuals could claim damages. Instead, their claims were for "pure economic loss" and could only be successful if they had the right to make this sort of claim, he said.

"The financial loss arose because, to safeguard [the employees'] health and protect them from suffering the physical injury which would have arisen if they had become allergic to platinum, they were removed from their higher paying jobs working in an environment with platinum salts and would be prevented from working in such an environment elsewhere," the appeal court judge said in his judgment.

"If someone contracted the allergy while working (which it is agreed would amount to suffering a relevant physical injury) – for example, because there was a failure to carry out [certain screening tests agreed with a trade union] regularly - and then ceased work to prevent it getting worse, damages might then be recoverable in respect of their loss of earnings as the lost opportunity cost incurred by taking reasonable steps to mitigate their loss. But in my view one cannot extend this reasoning so as to apply it in the present case, where no physical injury has been suffered and none will be," he said.

A second claim, for breach of their contracts of employment, which had not been presented by the individuals at the original trial, was also rejected by the Court of Appeal. Johnson Matthey's duties to its employees were "focused on protection of the employee from physical injury, not protection from economic harm", and no such duties could or should be implied into the employment contract, the judge said.

"This judgment confirms the longstanding position that compensation for personal injury is predicated on actual harm, whether that is physical injury or harm to mental health," said health and safety law expert Kevin Bridges of Pinsent Masons, the law firm behind Out-Law.com. "There is no automatic right to compensation for breach of duty by an employer in the absence of an actionable harm, even where that breach causes a loss of earnings."

"The same is not the case, however, for the parallel criminal liability that can arise from an employer's breach of duty. Actual harm is not a requirement for there to be a prosecution. All that is required is a material risk of some harm, whether or not that harm actually manifests itself. If convicted, the employer can expect a hefty fine proportionate to its turnover," he said.

The employees in the case worked for Johnson Matthey at its chemical plants in Royston and in Enfield, where they were involved in the manufacturing process for catalytic converters. During the course of their respective employments, each of them was exposed to platinum salts to a greater extent than they should have been, which Johnson Matthey admitted was because the factories were not properly cleaned in breach of its duties under the relevant health and safety regulations.

Thanks to a collective agreement negotiated by the employees' trade union with the company, their overexposure to platinum salts was caught at an early stage through Johnson Matthey's regular patch testing programme. Each of them had become sensitised to the substance, but had not yet developed a full-blown platinum salts allergy. The trial judge was told that the only effect of the sensitisation on the employees was that they "must involve circumstances in which they are exposed to platinum salts", which are only ever encountered in "certain specialist workplace environments".

Johnson Matthey's employment contracts provided that any employees who developed a platinum sensitivity should either be deployed, or else dismissed with compensation. In addition, those who worked in the parts of the factory where they could be exposed to platinum salts were paid  at a higher rate. Of the five employees involved in this case, four of them could not be redeployed and received the contractual compensation payment, while the other remained employed on the standard salary.

In their respective judgments, the trial judge and Court of Appeal referred to the various asbestos cases which turned on the difference between pneumoconiosis, a physical injury; and asymptomatic pleural plaques which had been caused by exposure to asbestos but were themselves harmless. The House of Lords, as the UK's highest court at the time, held that the presence of pleural plaques were not themselves an actionable injury, "by contrast with the lung scarring evidencing pneumoconiosis" in the other case.

"On the medical evidence, platinum sensitisation is not harmful in itself in any relevant sense," Lord Justice Sales said in the Court of Appeal's judgment. "It is a physiological change analogous to the development of pleural plaques in the lungs ... and hence does not constitute actionable damage or injury."

Moving on to look at the arguments in relation to breach of contract, the appeal court pointed out that the terms of the collective agreement negotiated by the trade union "made provision for the protection of the employee's economic interests in relation to possible sensitisation to platinum in the course of their employment".

"Johnson Matthey paid the appellants a higher rate for working in factory areas where they might be exposed to platinum salts," the judge said. "The collective agreement obliged Johnson Matthey to attempt to redeploy an employee who developed platinum sensitisation, failing which he was entitled to be paid a special termination payment, as a sort of enhanced redundancy amount to compensate him for loss of employment."

"In my view, these aspects of the contractual arrangements between Johnson Matthey and the appellants make it particularly difficult to interpret the appellants' employment contracts as including a duty to hold them harmless in respect of the financial consequences of their loss of employment beyond the provision expressly made in those contracts in respect of that type of risk. I do not think it is fair, just or reasonable in these circumstances to hold Johnson Matthey liable in relation to such financial consequences," he said.

"The employer did the right thing by its employees in undertaking regular testing and health surveillance to identify potential problems before actual injury was caused," said health and safety law expert Kevin Bridges. "Notwithstanding its accepted failings in keeping the workplace clean, the employer did ultimately recognise and act on its primary duty to protect employees from harm and removed them from further potential exposure. It is unfortunate that the employees suffered any exposure at all and also had to face personally a loss of earnings as a result, but the law does not recognise pure economic loss as actionable in the absence of actual harm."

"The response of the employer was the correct one to take once it was on notice of the potential allergy that could arise from continued exposure. However, the employer should have pro-actively identified and discharged its duties regarding workplace cleaning through a risk assessment, which would have prevented - or at least mitigated - the risk of the employees becoming sensitised in the first place," he said.