Funding changes and personal injury claims

In April 2012, the Legal Aid, Sentencing and Punishment of Offenders Act (LASPOA) became law, although a number of its provisions came into effect in April 2013. This Act makes it much harder for workers to fund court actions for personal injury resulting from work accidents, illness or disease. The TUC estimates that as many as 25% of injury claims will no longer be brought as a result of these changes.

The Act replaced a system of funding that was largely based on “no win, no fee” arrangements. Under these arrangements the legal representatives of successful claimants were able to fund the overall costs and risks of “no win, no fee” litigation by charging a “success fee” payable by the losing employer. That system was itself introduced after the government withdrew legal aid for personal injury.

Under the new Act, the losing employer can no longer be required to pay a “success fee”. Instead, workers must face deductions from their own compensation of as much as 25% to fund the litigation. As a consequence, the TUC anticipates that many people will no longer be able to obtain representation at all.

The problem will be particularly acute for “low value” or complex cases. As Hugh Robertson, TUC senior health and safety policy officer, points out: “Although a claim of £3,000 or £4,000 may be considered to be low value by the government, it is not low value to a cleaner who earns £6 an hour and which represents four months’ wages.”

The government justified the changes by arguing that Britain is in the grip of a “compensation culture”. The reality is very different. Government statistics from the Compensation Recovery Unit of the DWP show that the number of personal injury claims for employers’ negligence has plummeted by a staggering 63% over the past 10 years.

Public services union UNISON provides sound advice in this area: “It is better to negotiate a good stress policy with your employer rather than seek redress in the law so that stress can be prevented rather than compensated for once it has occurred.”