Employer Lacuna or Hakuna Matata?

If you run a business and employ staff then read on as you may not be aware of a potential gap or "lacuna" which could mean that your business may face claims in the future for which it is not insured. It is a situation which can be easily remedied by taking precautions now.

You may or may not be aware of the common law concept of vicarious liability. According to this principle employers can be responsible for negligent acts or omissions by their employees in the course of their employment.

Often businesses permit employees to use their own vehicles in the course of their employment. However, if this is the policy of your business it is absolutely essential to establish whether the employee has his or her own motor insurance which, importantly, includes cover for using the vehicle in the course of their employment. If the employee does not have such cover, then this raises the possibility of a claim against the business. If, for example, your employee has an accident whilst driving his or her vehicle in the course of employment and they did not have any insurance or the insurance did not cover business use, a third party may be able to bring a claim directly against your business for injuries, loss and damage. As you will no doubt be aware these claims can be very expensive.

It is possible to manage the risk of this happening. Kelvin Farmaner, Head of Insurance Litigation at Trethowans Solicitors in Southampton suggests that any employees using their own vehicles for business purposes be asked to produce evidence that their vehicle is properly MOT'd, taxed and insured to include cover for business use. Some businesses require copies of these important documents on file as a prerequisite for employees claiming expenses for business mileage.

So if you are getting this right then rather than falling into the potential lacuna for employers you can say "Hakuna Matata", or literally "there are no worries" as translated from Swahili and used in the renowned Lion King song!