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Court Clarifies When Facts Known by Junior Employees are to be Treated as ‘Known’ by the Employer

Businesses that entrust specific tasks to employees should make sure their policies, procedures and training require them to pass on health and safety-related facts they become aware of when carrying out those tasks to more senior managers. This is because any such facts will be treated as ‘known’ by the company as a whole if there is a workplace accident, the Court of Appeal has made clear.

A company bought tanks to hold hot liquids. The tanks contained thermolevel sensors which were supposed to switch the heater off if the liquid in the tanks fell below a certain level, to prevent the possibility of fire.

However, there were two fires in one of the tanks within a two-month period. Staff quickly put the fires out and there was little damage. On investigation, the company discovered the fires had been caused by failures in the sensor, so the company ordered an alternative device to fit to the tank. In the meantime, it changed its procedures so that the tanks were regularly checked manually, and were emptied and switched off when not being used.

Before the new device had been fitted there was a third fire in the same tank. This started while the tank was not being watched. This time the fire caused £20m of damage to the company’s premises.

The company took the supplier to court on grounds the sensor had been negligently designed and made; and that the supplier had breached its statutory duty to provide ‘safe’ equipment, under the electrical safety regulations.

One of the supplier’s arguments was that the fact that some of the company’s employees knew the sensor was unreliable meant that the company itself ‘knew’ it was. As the company had then introduced alternative procedures to work around the sensor’s unreliability, it was the failure of the company’s procedures that had caused the fire, and not the unreliable sensor.

The company argued that the knowledge of two relatively junior employees could not be treated as company knowledge.

The Court of Appeal agreed with the supplier. It found that the company’s board of directors had specifically given the job of operating the tank to specific employees. Because of this, the knowledge of those employees could be imputed to the company – even though none were directors, and some were not even managers.

Since the company ‘knew’ the thermolevel sensors were unreliable, and the company had changed its procedures accordingly to take this into account, the cause of the fire was not the unreliability of the sensors but the failure of the company’s alternative procedures. The supplier was not therefore negligent, and there had been no breach of statutory duty.

Operative date

• Now

Recommendation

• Businesses that entrust specific tasks to employees should make sure their policies, procedures and training require them to pass on health and safety risks they become aware of when carrying out those tasks to more senior managers, as any such facts will be treated as ‘known’ by the company as a whole if there is a workplace accident

Case ref: Howmet Ltd v Economy Devices Ltd [2016] EWCA Civ 847

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Jonathan Waters is the founder of Helix Law. Before qualifying as a Solicitor he worked in industry and in investment banking for over a decade. He was also the Partner in charge of Commercial Litigation, Employment Law and Property Litigation at Stephen Rimmer LLP. Jonathan has wide experience of helping and advising businesses to avoid or to deal with commercial disputes and in particular construction disputes.

This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of  this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice. 

Contact Helix Law on 01273 761 990 or email: [email protected]