This case supports the notion that they are liable.
Chandler v Cape plc [2012] EWCA Civ 525 anyone?
The court had to decide if the parent company had taken on a direct duty of care to the employees of its subsidiary and was therefore responsible for their health and safety. In this case the parent company’s knowledge of the dangers of activities operated by its subsidiary resulted in the finding of liability. Such knowledge can be acquired from the parent company’s direct interaction with the subsidiary’s operations on site, or by its control of the subsidiary itself. The court created a test to assist future cases. A parent company could be found liable for the acts of its subsidiary if:
- The parent and subsidiary share the same business;
- The parent knew or ought to have had ‘superior’ knowledge of the dangers of certain practices;
- The parent knew or ought to have known the subsidiary’s practices were unsafe;
- The parent knew or ought to have foreseen that the subsidiary or its employees would rely on that ‘superior’ knowledge to protect the employees.
Separate legal entities may not therefore be as separate as envisaged and parent companies should be aware of the extent to which they interact or control their subsidiaries.