Liability of a parent company for the employees of a subsidiary

In the 2012 case of Chandler v Cape plc, the Court of Appeal held that a parent company owed a direct duty of care to an employee of a subsidiary who contracted asbestosis through exposure to asbestos dust. This was the first reported case to reach the superior courts of a parent company being held liable to an employee of a subsidiary on tort law principles. How widely that decision would be applied remained to be seen, however, with parent companies, particularly in high-risk industries such as the manufacturing of heavy machinery, on notice that they may be imposed with a duty of care to advise their subsidiaries on steps that need to be taken to safeguard their employees’ safety.

A second case addressing this question has now been answered by the Court of Appeal.

In this case, Mr Thompson had been employed by two companies that were acquired by a subsidiary of the defendant. Mr Thompson developed pleural thickening as a result of his exposure to asbestos dust. As his employer did not carry liability insurance and would be unable to meet any award of damages, he instituted proceedings against the defendant. At first instance, the court held that the parent, by appointing a director of the subsidiary employer with responsibility for managing health and safety at the depot where Mr Thompson worked, had assumed a duty of care to the employees of the subsidiary. The parent appealed…

Click on the link below to read the rest of the Walker Morris briefing.

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