No-Fault Compensation Scheme: How It Can Go Wrong
Hard lessons can be more easily learned—and at a lesser cost—when taking the examples of others to heart. Such is the case with the director of a construction company in Alberta, Canada. This director being held personally liable for a workplace accident is tragic, but one that we can all avoid with the right protections in place.
Here is a story of what can happen when a no-fault compensation scheme fails.
What Is a No-Fault Compensation Scheme?
To better understand the following case, it may help to go over the definition of a no-fault compensation scheme. This term in Alberta, Canada, refers to the principle that injured persons are entitled to receive compensation for their injuries, regardless of fault. This law is designed to reduce legal delays so that treatment and benefits can be provided to injured victims as quickly as possible.
Examples of a no-fault compensation scheme include auto insurance (in many places) and workers’ compensation. Some people argue that medical injuries or medical negligence cases are also good candidates for no-fault compensation, but currently, they are not.
A Court Case Gone Wrong
A 2019 case fought in The Alberta Court of Appeal (ABCA) reminds companies who have a Board of Directors that directors may be held personally liable for accidents in the workplace.
As reported in Canadian HR Reporter, the director of a subcontractor construction company participated in and supervised the installation of a staircase that had been prefabricated offsite by a supplier company that had later collapsed on some of the employees he was working with from another subcontractor company.
Under the workers’ compensation system in Alberta, directors must purchase additional personal workers’ compensation coverage to provide themselves adequate protection. Unfortunately, this director had not purchased this personal coverage. Since WCB cannot sue an employer to recover the amount paid to the injured claimants, they filed a lawsuit against the unprotected director instead.
The Court reviewed the case and, while recognizing the separation between the corporation and the personal liability, also acknowledged that this separation could be misused. Thus, they declared it important to hold directors personally liable when appropriate. The deciding factor was that the harm done was physical, rather than purely economical.
In the end, the director was held responsible for the personal injuries caused to the claimants. He was deemed personally negligent, even though his involvement was part of the business of his company. The company enjoyed immunity, while the director did not.
Workplace Safety Solutions to Prevent This From Happening to You
Studying this unfortunate case is important, as it’s a reminder that workplace accidents can have far-reaching consequences even to those who think their position acting for their employer will protect them.
How can your business not only protect itself but its employees—including directors—from workplace accidents and potential lawsuits? An extensive health and safety management program takes a proactive approach to health and safety issues, meets established policies and procedures, creates a safer work environment, drives lower incident rates, and protects your greatest assets.
Such a proactive approach should include:
Regularly reviewed manuals and training
Third-party safety audits
High accountability for injury and illness prevention
Measured safety practices
Real-time reporting and analysis
While this approach is somewhat straightforward and easily accomplished through your in-house health and safety management program, it’s still not enough. The truth is, your business and your workers may be vulnerable to legal action even when your vendor, supplier, or subcontractor is the one at fault. This court case was not simplified by the presence of the subcontractor.
The only way to gain comprehensive protection is by vetting every company you partner with to verify that their standards of safety and quality are as high as yours. This must be done through regular supplier prequalification, audits, insurance verification, and worker management. Only then can you rest easy knowing you are safe from personal liability.