Parent companies need to be aware of their potential
duty of care to the employees of their subsidiaries. The Court of
Appeal has recently held that, in certain circumstances, a parent
company will have a duty of care to, or be assumed to have
responsibility for, the employees of its subsidiary and this
assumption can be made without needing to the lift the corporate
In Chandlerv Cape plc  two companies
based on the same site shared a group medical advisor. The employee
in question contracted an industrial illness from working for the
subsidiary but could neither claim against the subsidiary which had
employed him, as it had been dissolved, nor claim under the
employer’s liability insurance due to a specific
exclusion. The Court felt that it was appropriate in these
circumstances to impose upon the parent company a duty of care and
responsibility for the health and safety of its
The Court specified that the duty would be imposed on a parent
company where the business of parent and subsidiary companies are
the same in a relevant respect, the parent has or ought to have
superior health and safety knowledge in relation to the particular
industry, the subsidiary’s system of work is known to be
unsafe, and the parent knows or should foresee that the subsidiary
or its employees will rely on its superior knowledge for the
The Court was careful to highlight the fact that the duty of
care/assumption of responsibility cannot be imposed simply by
reason of a company being a parent company. The parent company must
take an active involvement in the subsidiary’s trading
operations to establish a direct duty to the subsidiary’s
employees and the duty is not, therefore, limited simply to health
and safety matters. Again, an opportunity for lawyers to contribute
and add value – Rawlison Butler is experienced in
advising on the employment and corporate issues arising in
circumstances such as those outlined here.
This document is provided for information purposes only and
does not constitute legal advice. Professional legal advice should
be obtained before taking or refraining from taking any action as a
result of the contents of this document.
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The recent case of Petroleo Brasiliero v E.N.E. Kos 1 Limited is a timely example of how the historical principles of bailment remain highly relevant today and how the law on bailment is still developing.
After three years of consultation, new Companies House registration requirements have now come into force and apply to charges created on or after 6 April 2013 by companies and limited liability partnerships registered in England and Wales.
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