Government review of CICS could cost security providers £1 million

The Labour Government - In the shape of Fiona Mactaggart, Home Office minister and MP for Slough - has just published an extensive consultation paper outlining a possible review of the Criminal Injuries Compensation Scheme (CICS). The underlying aim of ‘Rebuilding Lives: Supporting the Victims of Crime' is to provide more effective support to the victims of violent crime. However, one of the proposals being laid before Parliament is that payments to victims injured at work should no longer be made by the Criminal Injury Compensation Authority (CICA), the suggestion being that such victims would - in future - be compensated by their employer.

At a rough estimate, if pushed through this decision could cost the UK's private security industry upwards of £1 million per annum.

The provisions made in the paper relating to CICA payments will be of interest to all employers and their liability insurers. However, as employers in a sector where employees are particularly vulnerable to the possibility of suffering criminal injury, it is particularly important that private sector security companies are fully aware of the Government's proposals - and their likely impact on business.

In truth, there is no single, clear proposed amendment to the current process. Rather, the Government's view on matters must be inferred from two paragraphs on page 22 of the paper.

First, having notified that the scheme pays compensation to workers injured as a result of violent crime, it goes on to state: "We would welcome views as to whether this is appropriate in all cases of injury at work, or whether there are violent crimes that cannot be guarded against by employers, and for which society as a whole should continue to provide compensation."

Here, the implication would seem to be that society - for which read the CICA - should not, under any circumstances, pay compensation to employees injured by violent crime that an employer could have guarded against.

However, what if a given employer did take steps to safeguard employees, but those measures were somehow circumvented by the criminal? In this case, who's to say which violent crimes can be protected against and which cannot? Would such a judgement involve considerations of cost and reasonability? The current paper offers no evidence that such issues have been considered at all.

Further, the Government's proposition raises the possibility of withdrawing CICA payments even in cases of violent crime that an employer could not have guarded against (why else consider the question?) Is the duty on the employer to guard against criminal violence therefore to be an absolute one imposing strict liability? How can that work if there's a situation wherein even the Government cannot guarantee to protect its citizens from harm?

Is the Duty of Care on employers?

While in certain circumstances employers do have a duty to protect their employees from criminal activity, this is surely to take an employer's duties too far (indeed, into the realms of the police service and Government security agencies)? It could also be construed as an abdication of responsibility on the part of the Government and the CICS.

The paper expands upon the proposition by stating that: "There is a real debate to be had about whether the CICS should cover these kinds of cases. There is an argument for saying that employers are best placed to protect their employees and minimise the risk to them (and should, through their insurance or otherwise, bear the risk and cost of compensating them for injuries if they fail to do so."

The answer to this ‘argument' must be that employers certainly are well placed to protect their employees from a wide range of occupational risks, and are required to take appropriate protective steps by a whole host of Parliamentary Acts, Regulations, Statutory Instruments and the like. What's more, they can already be held to account if an employee is injured as a result of their failure to take the required steps, with the employee claiming compensation that is, in turn, met by the supplier of compulsory employers' liability insurance.

However, it is a complete non sequitur to suggest that, because an employer can be held liable for breaches of its legal duties to protect employees that result in their injury, the employer may also be held liable for the criminal acts of a third party from which any injury to employees results.

From where, exactly, would such liability spring? It has no existing source, and would surely require primary legislation to be enacted?

Bearing the cost through insurance

A second, related difficulty with the ‘argument' is the suggestion that employers could bear the cost of compensation through their insurance. Employers' liability insurance only provides cover in respect of a legal liability for damages. In other words, it will not pay out when such liability does not exist. The Government's paper does not specify how compensation might be met if not by insurance, but the only viable option would seem to be for the employer to bear the cost.

Of course, there are instances under the present system where an employee is the victim of criminal violence at work and so receives a CICA payment, and then the employer is also found to be legally liable for the actions - or failure to act - that allowed the criminal violence to occur in the first instance. That said, in those cases the compensating insurer is required to refund to the CICA the money they've paid out.

How can it be right to change the burden so as to make an employer financially responsible for an injury for which they are no more legally liable than any third party unconnected to the incident?

In other words, it is already the case that where the employer is legally liable for the injury to its employee, the CICA will not have to pay a penny. The CICA only funds those cases where the employer is not liable.

How can it be right to change that burden so as to make an employer financially responsible for an injury for which they are no more legally liable than any third party totally unconnected to the incident?

The rationale behind the proposed changes is said to be the fact that the scheme was originally intended as compensation for violent crime deliberately inflicted on the victim, and was never intended to be a substitute for employers' insurance (or to pay for compensation on anything other than violent crime). In fact, despite what is implied by the proposal to offload an element of victims' compensation onto employers, this is still the case (or is at least as much the case for employees as any other class of victim).

The CICA does not act as a substitute for insurance since, in all cases where the CICA and insurance overlap, the insurer is required to refund the CICA. Whether victims are at work or not in no way affects the categories of injury for which compensation is currently paid. If the CICA is paying for injuries suffered for reasons other than violent crime, it is doing so to employees and non-employees alike.

Difficulties with the proposals

The paper fails to identify either how victims' compensation might be funded outside of the CICA - beyond referring to "insurance or otherwise" - or how a revised system would ensure that victims' needs were met by the employer (were they to be identified as the appropriate compensator).

Without a legal liability on employers to pay, the appropriate compensation of victims would rely on employers voluntarily funding payments. The inevitable consequence of such a system would be that many victims will not receive the compensation they are due. Conscientious employers would take the financial strain while less responsible - or simply more impecunious - employers escaped their new responsibilities.

At present, the CICA compensates all victims of violent crime, regardless of where or when the crime took place. Were the system revised to exclude people injured while at work there would be a new layer of qualification arguments added to the process surrounding the issues of who is an employee (are the self-employed, subcontractors and loaned employees included?) and what constitutes being at work or in the course of employment?

You only have to look at the amount of time and legal argument that has been expended on these two issues in civil litigation over the years (and in which arena the law is forever being updated) to see that introducing these complications into the payment of victims' compensation would drastically increase the time and cost involved in delivering it.

Potential scale of change

Appendix 3 of the Government's consultation paper includes a Regulatory Impact Assessment which provides some figures to flesh out the scale of CICA-funded injuries at work.

These figures show that, each year, there are - on average - 320 awards made to private sector security officers in respect of injuries suffered while at work (totalling around £1 million). If the paper's proposals were adopted in full, the cost of meeting that compensation could well fall on the shoulders of security contractors.

While £1 million is a considerable amount of money, it would be spread over the whole security industry. The Government is committed to carrying out an impact assessment of the full costs and benefits - with particular reference to smaller services providers - before deciding whether or not to make any changes.

However, the sum of £1 million ignores the (no doubt) considerable extra cost that would be incurred by employers in effectively running the compensation scheme themselves. It must also be remembered that, under the new proposals, the revised scheme would be more complex than the existing one by virtue of the issues concerning the definition of an employee and the course of employment (as discussed). n