Injuries, compensations, myths and realities

Is increased compensation under the South African Workmen’s Compensation System a myth or reality?

When an employee is injured in the course of employment, in theory two sources of compensation may exist. Firstly the employee could be entitled to worker’s compensation benefits and secondly, if the employer’s wrongful and negligent conduct caused the injury, the employee could have a civil action against the employer – in South Africa referred to as a delictual action.

The employer would normally take out employer’s liability insurance to cover the second action. Thus, from an insurance perspective the employer would need two types of cover; worker’s compensation and employer’s liability. In South Africa it was decided that the legislation would deal with both (in theory at least) rendering the purchase of employer’s liability insurance by the employer unnecessary.

Employer’s liability cover, is provided in terms of Section 56 of the Compensation for Occupational Injuries and Diseases Act 130 of 1993, and is discussed in this article.

In terms of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (herein referred to as the “Act” or COIDA) a worker injured in the course of employment could qualify for two types of compensation from the Compensation Fund.

The first is called normal compensation and is payable by virtue of provisions of Section 22 of the Act. This type of compensation is based on the no-fault or strict liability principle, in terms of which benefits are paid regardless of fault on the part of the employer or employee. It is by nature compensation provided by a personal accident insurance policy. Negligence is not a requirement for the payment of compensation under Section 22. Even negligence by the injured employee, does not defeat a claim for normal compensation.

Only in exceptional circumstances can an employee be disqualified from benefiting under Section 22, for example, where the injured employee engages in serious and willful misconduct.

Requirements for normal compensation to be paid are also fairly simple. All that an employee needs to show is: that there was an accident, which occurred in the course of employment, and which resulted in disablement or death of the employee. In practice proving a claim for normal compensation is a simple and straightforward process, which is aided by the liberal language used in the Act and even more liberal interpretation applied by the courts.

The second type of compensation an injured employee could claim under COIDA is increased compensation, payable in terms of Section 56 of the Act. Increased compensation is payable in addition to normal compensation under certain circumstances, most notably where the injury to an employee is attributable to negligence on the part of persons specified in the Act, or where patent defects on premises, works, plant or machinery used by employees in the business of the employer, are involved in the accident.

For increased compensation claims to be paid, it is necessary to prove negligence on the part of any of the following persons: the employer; an employee charged with the management or control of the employer’s business or any branch or department thereof; an employee who has the right to hire and fire employees on behalf of the employer; an engineer appointed to be in charge of machinery or a person appointed to assist such engineer in terms of any regulation made under the Minerals Act of 1991; or a person appointed to be in charge of machinery in terms of any regulation made under the Occupational Health and safety Act of 1993.

Only these specified persons can trigger payment under Section 56. The employer cannot be the company for purposes of Section 56. Increased compensation is based on the personal negligence of the employer as well as a limited form of vicarious liability which is extended to vice employers as defined. Section 56 does not impose general vicarious liability. Therefore a company cannot be negligent, since the only way a company can be negligent is through vicarious liability.

Additionally, because workmen’s compensation is only concerned with payment of compensation not damages, non-pecuniary losses (such as pain and suffering) cannot be recovered as part of both normal and increased compensation and are excluded as part of the claim for increased compensation.

For increased compensation to become payable, negligence on the part of the specified persons or patent defect must be the proximate cause of the accident causing the injury to the employee. In this respect increased compensation differs from normal compensation payable under Section 22 where negligence or any other forms of blame is immaterial.

Because negligence is a requirement for increased compensation, contributory negligence by the injured employee has a terminal effect on his or her claim and would defeat a claim for increased compensation in its entirety. Consequently, even the Apportionment of Damages Act 34 of 1956 does not apply to a claim for increased compensation under Section 56 of COIDA. Claims for increased compensation are, therefore, dealt with in accordance with the old common law principle on contributory negligence that it is a defence which holds that any degree of negligence by an injured party, absolves the defendant from all liability associated with that claim.

The Apportionment of Damages Act applies to most civil claims but not to claims under Section 56 which is a statutory claim. Section 56 claims are thus an exception to the norm. Section 56 compensation was introduced to mitigate the harsh effects of what was called the “unholy trinity of defences” namely common employment, voluntary assumption of risk and contributory negligence – which were major stumbling blocks to the recovery of compensation by injured employees in the past. This was a worldwide phenomenon across common law jurisdictions.

Given the remedial character of Section 56, courts interpret provisions of this section liberally in order to extend the scope of the remedy as wide as possible and thus enable as many people as possible to benefit under it. This was the view expressed by the court in Looyen v Simmer & Jack Mines 1952 (4) SA 547 a case involving a claim for increased compensation under the now repealed Workmen’s Compensation Act of 1941.

Application for increased compensation is made to the Compensation Commissioner. In view of the remedial nature of Section 56 one would have expected to see a meaningful number of increased compensation claims lodged succeed. However, a quick look at the Compensation Fund’s annual reports shows that this is hardly the case historically.

This raises several important questions. Why are there so few successful claims for increased compensation under the South African compensation system relative to the total number of claims lodged under Section 56? In view of the remedial objective of Section 56, is this statutory provision serving its intended purpose? Could it be that few claims are paid under this section because employers and vice employers are simply not negligent in the majority of cases where industrial accidents occur?

To the extent that claims for increased compensation, under Section 56 of COIDA, are premised on proof of negligence on the part of the employer and vice employers, it is hardly surprising that few claims brought under this section succeed if one looks back in history.

The history of compensation for occupational injuries is full of examples, drawn from many common law jurisdictions, on the failure of negligence-based rules in this area. Historically it has been proven that many injured workers tend to go uncompensated under negligence-based compensation rules.

Accidents at work can be grouped into three broad categories: accidents which occur due to the fault or negligence of employers; accidents which occur due to the fault of employees; and accidents which are attributed to the process of production – These accidents are neither due to the fault of employers nor of employees but are attributed to a phenomenon called trade risk or the inherent dangers of the industry itself.

Because negligence-based liability relies on attribution of fault to a particular party it means that for accidents caused by trade risk, negligence-based liability rules provide no remedy. As far back as the 1890s, various studies in Europe and the United States concluded that by far the majority of workplace accidents were attributed to inherent risks of the industry and could not be blamed on either employers or employees. It is not surprising, therefore, to see so few claims for increased compensation succeed under COIDA.

Whether or not Section 56 is serving its intended purpose is a question likely to elicit a subjective answer depending on who is asked. However, if it is accepted that the section is remedial in character and is intended to allow as many people as possible to benefit from the remedy it provides, then it is difficult to see, in the face of current evidence, how the section can be said to meet this objective.

On paper the section is a very attractive feature of the South African workmen’s compensation system but its practical results appear much more limited.

Legally Speaking is a regular column by Albert Mushai and Hugh-David Hutcheson, both in the school of Economics and Business Sciences, University of the Witwatersrand. Albert holds a master’s degree from the City University, London, and was the head of the insurance department at the National University of Science and Technology in Zimbabwe before joining Wits University as a lecturer in insurance. Hugh-David holds a PhD from Wits and is a lecturer in insurance.