Employers' right to transfer of costs

In certain circumstances, this can create unfairness and undermine accountability. To avoid such a scenario and ensure fairness and responsibility amongst all employers, workers’ compensation legislation in many jurisdictions, including Alberta, Manitoba and Ontario, permits the employer to request that its costs of a claim be transferred to another employer whose negligence is believed to have caused or contributed to the accident or injury giving rise to the claim in question. 

So, what constitutes negligence?

Common law
The common law defines negligence as: “the omission to do something which a reasonable [person] guided upon those considerations which ordinarily regulate the conduct of human affairs would do, or something which a prudent and reasonable [person] would not do.”

The measure of what is considered reasonable is circumstantial and depends on the facts of each case. It includes the likelihood of a known or foreseeable harm, the gravity of that harm and the burden or cost, which would be incurred to prevent the injury.

Courts also look to external indicators of reasonable conduct, such as custom, industry practice and statutory or regulatory standards.

Board policy and jurisprudence
Many board decisions have concluded that the concept of “negligence” for the purpose of a transfer of costs should be given the same interpretation as developed in the common law of tort. 

Boards generally rely upon the following test for determining negligence:
a) There must be a relationship between the parties (i.e. between the injured worker and the second employer) creating a duty to exercise reasonable care;
b) The duty must be breached. That is, the conduct of the second employer must have fallen below the required standard of care;
c) The worker must have suffered damage (i.e. physical injury);
d) The damage must have been caused by the second employer’s failure to conform to the standard of care; and,
e) The damage must not be too remote in law.

The test to determine if there is a duty of care between two parties is whether “there is a sufficiently close relationship between the parties… so that, in the reasonable contemplation of [one party], carelessness on its part might cause damage to the [other party].”

It should be noted that negligence is to be determined by examining both the facts and law. The standard of proof is on a balance of probabilities.

OHS legislation 
A decision-maker may rely on regulatory standards to determine what is reasonable in a particular set of circumstances. Accordingly, several board decisions have confirmed that a health and safety breach, although not a confirmation of negligence, provides useful evidence as to the required standard of care in case of occupational accidents. Therefore, even though a breach of health and safety legislation is not definitive proof of negligence, it is considered an important evidence when deciding the issue of negligence in the context of a transfer of costs application.

Although it is true that, on occasion, a workers’ compensation board may apportion costs to another employer at its own volition, this is rarely the case. Therefore, employers should be diligent in identifying other employers that may have either caused or contributed to the accident giving rise to the claim. If such is the case, an application for a transfer of costs should be considered and may result in significant savings to the employer seeking relief.

On the hand, employers should also seek legal advice if they find themselves on the receiving end of a transfer of costs application. On multi-employer sites, an application may involve more than two employers and represent a greater challenge for all parties requiring appropriate counsel.