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A PARENT COMPANY CAN BE HELD LIABLE FOR THE EMPLOYMENT LIABILITIES OF ITS SUBSIDIARIES

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The recent High Court case of Chandler v Cape Plc (2011), found that a parent company owed a duty of care directly to the employees of its subsidiary so that the court did not need to ‘pierce the veil’ to impose liability on the parent company.

The case involved a breach of health and safety law, resulting in an employee contracting asbestosis. The employee worked for the subsidiary but many health and safety matters were conducted and controlled by the parent company.
The employee could not sue the subsidiary for compensation as it had stopped trading and had no assets by the time she was diagnosed, or any relevant employee liability insurance cover. Therefore she attempted to obtain damages directly from the parent company.

The court held that the parent company had assumed responsibility for the health and safety operations of the subsidiary as it implemented the heath and safety policy for the group, employed group safety officers and could intervene in any safety matters. Therefore the necessary element of control was present for the parent company to be held directly liable.

This approach, if followed, could be useful in future situations where subsidiaries with no assets owe liabilities to their employees.

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Written by Andrew Hodges

May 31, 2011 at 9:39 pm

Posted in Comment, LinkedIn

Tagged with , ,

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