Insurance and Employment Law (Coursework Sample)

Introduction to Insurance Law
Insurance was defined in Lucena V Crawford as ‘ … a contract by which the one party in consideration of a price paid to him adequate to the risk becomes security to the other that he shall not suffer loss, damage or prejudice by the happening of the perils specified to certain things which may be exposed to them.’
For the contract of insurance to be enforceable, there must be:
1 Some element of uncertainty about the event causing the risk in question, then the contract is not one of insurance.
2 The insured must have had an insurable interest in the subject matter of the contract so that its loss or destruction results in direct loss suffered by him as opposed to loss by another person. Where there is no insurable interest, one cannot claim because the very basis of insurance is that one would suffer some loss or prejudice if the loss occurred. Insurable interest means a property right in something, and not merely some anxiety about a loss.
Types of insurance
* Indemnity insurance, under which an indemnity is provided against loss, the measure of loss being the quantum of payment which shall not exceed the sum insured.
* Contingent insurance, under which the sum assured is paid on a contingent event. The sum paid is not measured by the loss but is stated in the policy, e.g., in the case of life assurance. The insurer undertakes to pay the money on the happening of an event, which is certain to happen, but the time of its happening in unknown. Where the event fails to happen, e.g., if the person does not die within a specified period, the consideration fails and the premiums are recoverable.
Principles of insurance
* Insurable interest, Re: introductory note above. This is generally an actual and legal interest, financial or otherwise, in the subject matter of a contract which provides the person insured with the right to enforce the contract. A person for instance, has an insurable interest in his property and in his own life and that of his wife but not in the life or property of another: Macaura v Northern Assurance Macaura insured against fire some timber to be sold in his name. Later almost the timber was gutted by fire, and he claimed against the insurer. The court held that he was not the owner of the timber, the company was; and he did not have an insurable interest in the company.
* Good faith, i.e., uberrimae fidei.
The concept of uberrimae fidei means that a contract of insurance is based on utmost good faith. That is the insured is bound to disclose all material facts to an insurer. Material facts are those which have a bearing on the insurer’s decision on whether to offer insurance or not. Failure to disclose may render the contract voidable at the option of the insurer. It is immaterial that the insured does not appreciate the materiality of the facts in issue as long as the insurer requires their disclosure.
Lord Mansfield in Carter v Boehm [1766] stated that a contract of insurance is a contract upon speculation where the special facts upon which the contingent chance is to be computed lie generally in the knowledge of the assured only, so that good faith requires that he should not keep back anything which might influence the insurer in fixing the premium or in determining whether to take or reject the risk. Otherwise, concealment of material facts avoids the contract: House of Manji Ltd v Liverpool Marine Insurance Co Ltd where the plaintiffs failed to disclose to their insurers breach of a statutory requirement on the part of unlicensed transporters employed by the plaintiffs, a fact of which they were aware, entitled the insurers in principle to repudiate the policy in principle. (It was, however, on the insurers to prove that such employment increased the risk substantially which the insurers failed to establish, thus the court refused to allow them to repudiate the policy.) This principle serves to promote good faith and to prevent fraud. The test of disclosure is both objective and subjective: Lambert v Co-operative Insurance Society Ltd where Mr Justice McKenna stated the possible extent of the duty; it is to disclose such facts -[[1964] EA 693]
1 Only as the particular assured believes to be material;
2 As a reasonable man would believe to be material;
3 As the particular insurer would regard as material;
4 As a reasonable or prudent insurer might have treated as material.
An insured is not under any obligation to disclose:
1 What the underwriter knows or ought to know;
2 What he takes upon himself knowledge of;
3 What he waives being informed of.
* Subrogation.
The rule of subrogation provides the means and entitles the insurer to recover moneys compensated to an insured from a third party as long as the third party is the first and foremost liable to the insured for the loss in question. The insurer is allowed to ‘step into the shoes’ of and stands in the place of the insured and is subrogated to his rights. Subrogation is the substitution of one person for another so that the person substituted succeeds to and assumes the rights of another. If the insured renounces or compromises any right of action he has against a 3d party he is in fundamental breach of the contract of insurance and must repay the insurers.
Employment Contracts
At common law, the contract of employment was a contract like any other: it was assumed to have been entered into on the basis of mutual agreement, and was between two parties with equal bargaining power. However, with changes in the economic structure of many countries, the rise of the huge, impersonal company with massive bargaining power over individual employees and technological advances have seen governments intervening at both legislative and policy levels to address this imbalance.
The chief source of employment law is the Employment Act 2007 which was passed to strengthen these protections. The Act is the central statute governing contracts of employment. The Act is concerned with contracts of service; therefore, independent contractors are not caught within the ambit of the Act. The contract of employment is therefore a highly regulated contract with terms either imposed or implied by Parliament: S26 of the Act clearly stipulates that the Act’s provisions are minimum conditions that are implied in each and every contract of employment.[Under the law, there is a difference between a ‘contract of service’ and a ‘contract for service’. This is more difficult to define than to illustrate; thus, a chauffeur is an employee and employed under a contract of service but a taxi driver is an independent contractor who is employed under a contract for service. The approach used by the courts to distinguish between these two concepts is that an employee is under the direction of his employer while an independent contractor is told what but not how to do it. To this extent, an employer of an independent contractor is protected from vicarious liability.]
The rights and duties set out in the Act are as follows:
1 Under S27; each employee is entitled to at least one rest day in a period of seven days. This section similarly binds employers not to depart from its provisions notwithstanding an employer’s right to fix an employee’s working hours.
2 Under S28; each employee is entitled to at least 21 days annual leave with full pay for every twelve months of service. Where this leave is broken, at least fourteen days must be taken at once. Where employment is terminated after two or more months of service, an employee is entitled to at least one and three quarter days of leave with full pay for each month worked.
3 Under S29; the principle of non – discrimination in respect of women is explicit. The Act increases the maternity leave period from two to three months under the old Act. Similarly, maternity leave is in addition to annual leave as opposed to in lieu of annual leave as under the old Act. A woman is however required to give at least seven days notice in writing before taking such leave. Two weeks paternity leave for men is also provided for.
4 Under S30; employees are entitled to sick leave of at least seven days with full pay after two consecutive months of service, and thereafter seven days sick leave with half pay. The employee can only exercise such rights if he has taken steps to inform his employer of his indisposition.
5 Under S31; an employer is required to provide employees with housing near his place of work, or pay such sum of money as will enable the employee obtain housing. The Minister may exclude this provision for any category of employees.
6 Under S32; the employer is required to provide water for the use of his employees at the place of work and accommodation provided by the employer.
7 Under S33; an employer shall, where agreed in the contract of employment, provide food and ensure the employee is well fed at his expense.
8 Under S34; an employer is required to provide his employees with proper medicine during illness and medical attendance during illness. However, the section puts the onus on the employer to be notified of an employee’s illness. This section however will not apply where: an employee was absent from his place of work without lawful excuse, or where the injury is self – inflicted or where there is any insurance scheme established under any law, or where the Government provides free health services.