The difference between Workmen Compensation and Employer’s Liability explained

Considering that Workmen Compensation insurance is compulsory in Lebanon, most employers, especially in high risk industries, are well familiar with it. On the other hand, Lebanon is not what one would call a litigious country. As a result, the concept of Employer’s Liability and the difference between the two are less obvious to them. They may even confuse between them sometimes.

So what does each policy actually cover?

A.     Workmen Compensation:

Injuries to employees are governed by Decree Law Nb. 136 dated 16/09/1983. In summary:

  1. The law deals with work-related injuries sustained while employees are carrying out their duties as per their contract of employment
  2. Injury is defined as sudden (i.e. accidental), and caused by external means. Occupational diseases are not covered.
  3. The law states that the employer will have to cover all resulting medical expenses for as long as needed, regardless who is at fault. It also contains provisions for the calculation of other amounts to be paid in case of death or disablement of the employee for example.
  4. Workmen Compensation insurance covers such costs.
  5. It’s a no-fault cover. It will cover the costs without having to prove the negligence of the employer.
  6. However, the right of recovery exists if it later turns out that a third party is liable for the injury.
  7. By law, Workmen Compensation is compulsory in Lebanon
  8. Example of an injury covered by a Workmen Compensation policy:

“Karl falls and sustains an injury while installing a fixed glass at a business center. He is immediately taken to the hospital. By law, his employers must cover all the costs related to the treatment, even though they may not be at fault.” The insurance policy will pay these costs.

B.     Employer’s Liability:

  1. Whenever we say liability, it has to be a liability at law. This is in direct contrast to the no-fault nature of cover provided by Workmen Compensation. This means that the injured employee must prove that the employer was legally liable for the harm caused.
  2. If the employer is proven liable, the employee may demand damages for things like loss of future earnings, depression, distress….
  3. The court will decide the indemnity amount, should the employee decide to sue. The parties can also reach an out-of-court settlement.
  4. Employer’s Liability insurance will pay such costs.
  5. Liability can attach for accidental injuries and occupational diseases.
  6. It is usually attributed to negligence or failure to comply with Health & Safety regulations.
  7. Liability can arise many years into the future and not necessarily immediately or while the employee still works at the company. As a result, Employer’s Liability policies are usually, and, sometimes legally in countries where they are compulsory, losses-occurring policies.
  8. Employer’s Liability Insurance is not compulsory in Lebanon
  9. Example of a claim under an Employer’s Liability policy:

“Robert used to work for a company producing chemical products. He retired nine years ago. In 2020, he was diagnosed with cancer. He was able to prove that his employers were negligent in following Health and Safety regulations to protect the employees, and that this is what caused his cancer. He sued for damages. The Employer’s Liability policy that was in force when he worked at that company will have to respond. This is what a losses-occurring trigger means.

C.     How are these policies sold in Lebanon?

Usually, a Workmen Compensation policy is issued as per Decree Law 136. It can be extended, upon the request of the insured, to include an Employer’s Liability cover, up to a certain limit. A rider shall be attached to the policy stating the conditions of the Employer’s Liability cover.

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