In this months’ health and safety review, an English Court of Appeal’s decision (Chandler v Cape plc: England and Wales Court of Appeal Civil Division: April 2012) that a parent company may be responsible for the health and safety policies of it’s subsidiary is certainly going to be of interest to practitioners.
The court held that the parent company was liable to compensate an employee of a subsidiary who contracted asbestos while working for the subsidiary over 50 years earlier. The employee was exposed to dust from a factory on a site at which asbestos board was manufactured. In 2007 it was discovered that he was suffering from asbestosis caused by exposure to dust. In the late 1950’s it was known that exposure to asbestos was life threatening and the parent company was aware of the dangers. The court determined that the “principal issue is whether Cape owed a direct duty of care to the employees of its subsidiary to advise on, or ensure a safe system of work for them”. The judge also stated that the question is simply “whether what the parent did amounted to taking on a direct duty to the subsidiary’s employees”?
Accepting that the parent was not responsible for the actual implementation of health and safety measures on the subsidiary, the judge stated that there was an omission to advise the subsidiary on the precautionary measures to be taken and in the circumstances the parent company owed a direct duty of care to the employees of the subsidiary. The court concluded that the law may impose on a parent company responsibility for the health and safety of its subsidiary employees and the circumstances where this might arise are:
1. The business of the parent and the subsidiary are in a relevant respect the same.
2. The parent has or ought to have superior knowledge of health and safety in the particular industry.
3. The parent knew or ought to have known that the subsidiary’s system of work was unsafe.
4. The parent knew or ought to have foreseen that the subsidiary and its employees would rely on it using sueperior knowledge for the employee’s protection. It is not necessary to show that the parent company was in the practice of intervening in the health and safety policies of the subsidiary but it would be enough to show that the parent company intervened in trading operations.
Although this is an English and Wales Court of Appeal decision, it is certainly of persuasive authority in the courts here. The key test is whether a parent company owes a duty of care to the employees of a subsidiary in respect of advising or ensuring a safe system of work.