In a landmark judgement handed down in the Court of Appeal, it was held that a parent company, in appropriate circumstances, owes a direct duty of care for the health and safety of its subsidiary’s employees.
In Chandler v Cape plc  EWCA Civ 525, the claimant contracted asbestosis through exposure to asbestos dust during the course of his employment with Cape Building Products Ltd. In considering the parent’s liability to the subsidiary’s employee, the Court held that the relevant question was whether the parent’s actions meant that it had taken on a direct duty to the subsidiary’s employees. In appropriate circumstances, the law might impose on a parent responsibility for the health and safety of its subsidiary’s employees. Those circumstances include where;
1) the business of the parent and subsidiary were in relevant respect the same;
2) the parent had, or ought to have had, superior knowledge on some relevant aspects of health and safety in the particular industry;
3) the subsidiary’s system of work was unsafe as the parent company knew, or ought to have known; and
4) the parent had known or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employee’s protection.
For the purposes of the final element, it is not necessary to show that the parent is in practice of intervening in the health and safety policies of the subsidiary, the relationship between the companies would be viewed more widely. However, if the parent company had a practice of intervening in the trading operations of the subsidiary, for example, production and funding issues, that may be enough to satisfy the final element.
The court emphasised that there would not be an assumption of responsibility simply by reason only that a company is the parent of another.