Paul Taverner assesses the issues for insurers caused by passive smoking in the workplace

' After Cuba, the spiritual home of the cigar, banned smoking in public what issues does passive smoking throw up for insurers in the UK? The most problematic is no doubt employers' liability.

Have we yet reached a stage where employees who are exposed to second hand smoke at work can claim compensation?

At present there is no specific legislation dealing with passive smoking at work, although it is doubtless caught by an employer's general duty to provide a safe place of work under the Health and Safety at Work Act (1974).

But, the government recently announced its intention to ban smoking in most workplaces by 2007, with restaurants and most pubs to be included in 2008. Private clubs and pubs that do not serve food will be exempt.

The partial nature of the ban leaves a gap which could cause problems for insurers who provide cover to the hospitality trade.

Bar workers are heavily exposed to passive smoking at work, but in many cases their workplaces will not be covered by the ban. Is there a danger that an expensive long-tail insurance risk could be growing here?

As with all industrial disease cases, employees would first have to show that they had become ill as a result of inhaling second-hand smoke at work. They would then need to prove that the exposure took place at a time when their employer knew (or should have known) that it could be harmful. This is the concept of "guilty knowledge" which is common to most types of industrial disease claims.

The potential dangers of passive smoking were first highlighted in the early 1980s, but medical knowledge started to really gather steam in the late 1990s. In 1998 the scientific committee on tobacco and health (Scoth) report to the government concluded that passive smoking increased the risk of lung cancer by 24%, and of heart disease by 25%.

The report recommended that "wherever possible smoking should not be permitted in the workplace". Scoth reported again in November 2004 confirming that its original figures for increased risk were accurate, and concluded that "no adult should be exposed to second hand smoke".

Is this enough evidence to amount to "guilty knowledge" on the part of employers? The anti-smoking campaign ASH certainly think so. It obtained an opinion from John Melville-Williams QC in 1998 which concluded that, even at that stage, the state of medical knowledge on passive smoking was such that employers should have been aware of the risks.

ASH increased the temperature in January 2004 by writing to all main employers in the hospitality industry. Its letter summarised the medical research linking passive smoking to ill health, and underlined ASH's view that the date of employers' "guilty knowledge" had passed.

ASH has now set up a dedicated telephone helpline in conjunction with law firm Thompsons, with the latter giving free initial legal advice to employees.

To date, there have been no reported decisions in the UK where a successful claim has been brought for passive smoking-related injury. There have been a number of successful cases in foreign jurisdictions. The first was brought by a barmaid in Australia, who was awarded $450,000 in 2001 after developing throat cancer.

There have however been an increasing number of out-of-court settlements in the UK recently, and it seems inevitable that there will now be an upsurge in passive smoking claims. It is understood that Thompsons has a number of active claims on its books, two of which are due to go to trial in May.

It is not all doom and gloom for insurers, however. Claimants may face difficulties in establishing causation, given that most of the illnesses which can apparently be caused by passive smoking also occur naturally. Although the concept of material contribution will assist some claimants, even ASH has conceded that establishing causation "can be difficult".

Even if claimants clear the hurdle of causation, they will still have to show that the relevant exposure took place after the employer's date of "guilty knowledge". On paper, there is a reasonable argument that this date has now been reached - but it could also be argued that the relevant date is as recent as the second Scoth report in late 2004.

Minimise risk
It should also be borne in mind that this is not an area where strict liability applies. Employers will be expected to have taken reasonably practical steps to minimise the risks to employees. This would be relatively easy in an office-based environment, where most employers already prohibit smoking in communal work places.

The most problematic area will again be the hospitality industry, particular bar staff, where smoke is generated by members of the public rather than by other employees.

The Scoth report has singled out bar staff as a group who are particularly at risk.

Health Secretary John Reid admitted in February that the partial nature of his proposed smoking ban could lead to up to a fifth of pubs escaping it. But his rationale for allowing this throws up arguments that could be used to defend employers' liability claims.

He thought that many bar staff would be smokers who would be happy to work in a smoky environment - and that those who were not would be protected to some extent by ventilation systems and non-smoking areas around bars.

Pubs and clubs which install ventilation systems have banned smoking at the bar (or better still have designated smoking areas well away from the bar). They also have rotated staff around different areas of the premises to limit their exposure to smoke. With these safeguards they, can probably show they have taken reasonably practical steps to minimise the risk.

But already some studies are suggesting that ventilation systems in bars are not effective.

Passive smoking is an area where the goal posts are likely to keep moving for some considerable time. IT

' Paul Taverner is a partner at Bevan Brittan