Proposed Changes Will Affect Industrial Injuries Insurance Act

Industrial Injuries Insurance Act
Proposed Amendment
Proposal for Separate Amendments

Proposals by the government to change the Danish Liability for Damages Act were outlined in Commission Proposes New Damage Awards. The proposed amendments, including an increase in the level of damages, have far-reaching implications since the Liability for Damages Act and the Industrial Injuries Insurance Act are closely connected.

Industrial Injuries Insurance Act

Under the Industrial Injuries Insurance Act damages and compensation cover health care costs, permanent injury, incapacity for work and loss of dependency (including transitional payment in the event of death). Under the Liability for Damages Act damages and compensation cover health care costs, other losses, permanent injury, incapacity for work, loss of dependency, loss of earnings, and pain and suffering.

If an injury is covered under the Industrial Injuries Insurance Act and the person causing the loss is liable under the Liability for Damages Act, the former act prevails. The claim against the individual liable for damages under the Liability for Damages Act is reduced to the extent that damages and/or compensation have been paid under the Industrial Injuries Insurance Act. Thus, claims may be raised under the Liability for Damages Act only if (i) the Industrial Injuries Insurance Act does not cover the claim (eg, damages for loss of earnings or compensation for pain and suffering) or (ii) the claim under the Liability for Damages Act exceeds that under the Industrial Injuries Insurance Act.

In the latter case the injured party may make a claim under the Liability for Damages Act against the person liable in damages only for the amount by which the claim under the act exceeds the corresponding claim under the Industrial Injuries Insurance Act.

For example, if an employee suffers loss of capacity for work due to an industrial injury that is covered under the Industrial Injuries Insurance Act and the employer is liable under the Liability for Damages Act, the employee must first raise his or her claim under the Industrial Injuries Insurance Act. However, if the employee's claim for damages for loss of capacity for work as computed under the Industrial Injuries Insurance Act proves to be less than his or her claim under the Liability for Damages Act, the employee may claim compensation for the excess amount under the Liability for Damages Act.

So far the level of damages under the two acts has been reasonably balanced and not many differential compensation claims have been raised. However, the enactment of the bill amending the Liability for Damages Act might lead to an increase in differential claims unless the level of damages under the Industrial Injuries Insurance Act is adjusted accordingly.

Proposed Amendment

The committee that drafted the White Paper (forming the basis for the proposed amendments to the Liability for Damages Act) was aware of the potential problem of differential claims. It recommended that the government make the necessary changes to the Industrial Injuries Insurance Act.

Concurrent with the reading of the bill amending the Liability for Damages Act, legislators considered the possibility of adapting the damages paid under the Liability for Damages Act to those paid under the Industrial Injuries Insurance Act. The outcome is a bill adapting the compensation for permanent injury under the Industrial Injuries Insurance Act to the proposed compensation for permanent injury under the Liability for Damages Act. However, due to international conventions, the legislators do not believe it practicable to adapt the compensation for loss of capacity for work and loss of dependency under the Industrial Injuries Insurance Act to the proposed amendments to the Liability for Damages Act.

If the level of damages for loss of capacity for work and loss of dependency under the Industrial Injuries Insurance Act is not adjusted - and if the bill amending the Liability for Damages Act is adopted in its present form - an increased number of differential compensation claims can be expected from injured parties who claim additional compensation from the employer under the Liability for Damages Act. Also, there is likely to be a further increase in the premiums for employer's general liability insurance.

Proposal for Separate Amendments

Independent of the work on the bill amending the Liability for Damages Act, the Ministry of Social Affairs set up a committee with the task of looking into the necessity of an industrial injuries reform and making a relevant proposal.

In particular, the committee examined the possibility of changing the definition of the 'accident' concept in the Industrial Injuries Insurance Act so that an increased number of injured parties would be entitled to compensation under that act for injuries sustained at work.

In April 2001 the committee presented its report. The minister of social affairs noted that the committee members had not concurred on the issues that they had been asked to consider. Therefore, the government will now work on industrial injuries reform.

According to the minister of social affairs, the government will consider the following:

• the definition of the 'accident' concept in the Industrial Injuries Insurance Act in order to make more injured parties eligible for compensation;

• the list of occupational diseases that entitle the injured party to damages and/or compensation; and

• the time spent by authorities on handling industrial injuries cases (with a view to reduction).

The government hopes to present a bill during Autumn 2001, amending the Industrial Injuries Insurance Act in several respects. Details of the bill will be drafted on the basis of various principles for an industrial injuries reform which the government will introduce this summer.

If the government's intention of making an increased number of injuries eligible for damages and/or compensation under the Industrial Injuries Insurance Act becomes reality, the industrial injuries insurance premiums that employers must take out are likely to increase.

For further information on this topic please contact David Rubin or Thomas Birch at Bech-Bruun Dragsted by telephone (+45 7733 7733) or by fax (+45 7733 7744) or by e-mail ([email protected] or [email protected]).