The stragglers among the stranded volcano victims may be arriving home but we are not out of the ash cloud yet. Indeed — from a legal perspective — the crisis has barely started. As people dust themselves down and turn to the paperwork, we start to get a glimmer of what lies ahead.

And like the volcanic ash itself, the issues arising will drift across the legal landscape from airlines to regulators, insurance companies to ordinary employers who have only a remote interest in the airline business.

Caroline May, a health and safety partner with Norton Rose, who had a longer than expected break in the Canaries, emphasises the duty of care that employers have towards their staff. That was why the firm sent its clients a briefing note — Crisis Management and Employers’ Duties: Volcano Eruptions and Other “Acts of God” — which reminded them of their obligations.

“Where an organisation’s employees are either stranded abroad, in transit or anticipating disruption to imminent travel plans, then the organisation will need to be vigilant and comply with relevant statutory health and safety duties,” the note said. “Failure to comply may result in both criminal and civil liability.”

Of course, Norton Rose itself was very well organised but one of the many possible repercussions from the Eyjafjallajökull eruption could be an explosion in the number of claims from employees who feel their bosses had not done enough to support them or get them home. And there could even be, May says, further claims by their colleagues back at base who are disgruntled at the amount of extra work they had to shoulder during the stranded travellers’ absence.

But all of this is just the pinnacle at the head of the massive plume of cases likely to get off the ground.

Perhaps the most contentious area will be the issue of travellers’ compensation. Although Michael O’Leary’s characteristic shoot-from-the–hip assertion that Ryanair had no such obligation brought a hostile response in the media, it won grudging support from other airlines and from aviation lawyers. What is more, says Julian Copeman, of Herbert Smith, the Ryanair CEO may have something of a point.

Highlighting the difference in the regulation between “compensation” and “assistance”, Copeman says, “European Commission regulation provides that airlines do not have to pay compensation where there are extraordinary circumstances. Under Regulation 261/2004 airlines can deny compensation if cancellation was ‘caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken’ by the airline to avoid delay or cancellation.”

Whatever the immediate outcome of this issue, it is likely that the European authorities are likely to come under pressure, says Robin Springthorpe, of Bird & Bird, to change — or clarify — the regulations. “Airlines have just been lumbered with this,” he says. “In effect, they are being forced to insure passengers where insurance companies and governments don’t. The airline industry has gone through a very tough time and this will set them back in their recovery by up to three years. You really have to ask what’s reasonable in the circumstances.”

Paul Holland, asset finance partner at Denton Wilde Sapte, agrees. “Everyone seems to make money from the airlines business except airlines themselves. Some of these claims could end up bankrupting companies.”

That none of the delay was caused by the airlines themselves adds moral weight to the view that change is necessary. “This is going to be a catalyst for a challenge by the airline industry,” Holland says. Moreover, airlines are also starting to look seriously at action against the regulators — not least because it appears that for the past three years the International Airways Volcano Watch Operations Group, a division of the International Civil Aviation Organisation, has been lobbying for a new set of rules.

“There have to be questions asked of the regulators and especially at the preparedness of the Civil Aviation Authority and NATS [air traffic control],” says Springthorpe. “It is not as if volcanic eruptions are unknown. They should have had proper thresholds in place. Yes, flying through the plume of a volcanic eruption can be dangerous. But when you are hundreds of miles away it must be a different matter. Safety has to be paramount but you also have to weigh up the interests of travellers.”

So while there may have been sensible, precautionary reasons for the initial flight ban its protracted length may be a matter of litigation. As Paul Wordley, head of insurance/reinsurance at Holman Fenwick Willan, observes: “Some airlines are champing at the bit to have a go at the regulators. The way they reacted will now come under immense scrutiny. I think it could end up in the European Court of Justice.”

For the time being though, says Wordley, there will be many companies — especially those in the just-in-time supply business, looking in minute detail at their insurance policies. “For big contracts every policy is different. If they are well crafted then there should be triggers to cover these eventualities.” And if not, well, learn from experience and Resurgit.

More comments from legal experts on the volcano

* Out-of-pocket travellers stranded elsewhere in Europe and unable to return to the UK while the world’s skies were closed to aircraft may be able to claim financial compensation through a key piece of European legislation, says Paul Griffiths, senior partner and commercial litigation specialist at the Midlands law firm Challinors.

“The worry for many of the estimated160,000 British travellers is whether and from whom they will obtain compensation. The answer lies in a piece of European legislation that came into effect in 2004 with the aim of forcing airlines to compensate passengers for delayed or cancelled flights,” Griffiths explains.

“It was regarded as necessary in order to curb the then growing tendency for airlines to overbook flights, leaving passengers bereft. The European Parliament passed Regulation 261/2004 to provide such passengers with a guaranteed right to compensation. This legislation forms part of our domestic law and will apply to most travellers whose journeys have been disrupted by the volcanic cloud.”

Griffiths said: “This European regulation applies to passengers who were due to depart from an EU airport or to return to an EU airport on board an EU airline. Unfortunately, this means that anyone travelling back from outside the EU such as the US, Australia or the Far East, will not qualify, unless they were booked on an airline based in the EU, but this still represents a potential lifeline for many stranded travellers who are now seeking reimbursement for their out-of-pocket expenses.”

* Nick Ralph, a partner at the specialist employment city law firm Archon Solicitors LLP, said: “There is an accepted legal principle that an employer is not liable to pay an employee who does not work. Thus, even though the employee will say that it is not his or her fault, an employer would generally be within its rights to dock pay for any days that an employee does not work because of an enforced extension to a holiday.

“There are a few refinements on this:

- In practice, employers may not want to face the employee relations backlash of docking pay for employees who have basically just had bad luck.

- Employers may agree that the extra time away is treated as part of the employees’ paid annual holiday entitlement.

- Employees may be saying, “I am happy to work here on the beach, I have my laptop and mobile phone”. Where employees are “ready, willing and able” to work, it is more of a moot point as to whether pay can be docked.

- Employees may also ask, “Will you pay my expenses for the taxi to get me home from here?”. Strictly, this would not normally be considered to be a business expense under most employers’ expenses policies. However, some employers may be willing to bend the rules a bit to assist employees if it is particularly urgent for the employee to be back at work promptly.

- In theory, an employee who made no effort to try to get home by alternative means to the direct flight might be subject to disciplinary action. But an employer contemplating this would be well advised to make sure that the employee understood that he or she could face this consequence by failing to make the effort.”

* Guy Lamb, an employment partner at DLA Piper, agreed. “As with the issues caused by the snow earlier in the year, employers are not bound to pay employees who don’t turn up for work, even if they have been grounded by the flight restrictions.

“However, it is likely employers will use their discretion and not deduct pay from employees in this situation, and while failure to turn up to work is technically a disciplinary office, it would probably be unfair for an employer to take such action if the employee has taken all reasonable measures to get back to the UK.”

* Quick Question and Answer

What rights do I have if staff are absent from work because of the flight ban – do I have to pay them? Is it a disciplinary offence?

If staff are absent from work there is no obligation to pay them, even if they are prevented by unavoidable travel problems. Some employers will use their discretion and not deduct pay if employees have made attempts to get to work, and of course these days many employees can work remotely, but the employee has no right to be paid unless they actually work. Technically, yes, failure to turn up to work is a disciplinary offence but in cases of international travel problems beyond the control of employees it would probably be unfair for the employer to take disciplinary action if the employee has either attempted to get to get back to the UK and taken all reasonable steps to try and do so.

What if staff are late – is this strictly a disciplinary offence?

Strictly, yes, but again it would be likely to be unfair for the employer to take action if the employee has tried to get to work.

Can I make staff do work for colleagues who can‘t get in because of the travel problems?

It depends on the contract of employment and whether it is reasonable for the employer to ask the employee to do the colleague’s work – for example, has he or she been trained to do it. Employers also need to bear in mind health and safety duties and working time regulations regarding rest breaks and maximum working time when asking employees to cover for colleagues.

Can I ask trapped staff to work from overseas?

Again, this depends on the contract and whether it is reasonable. However, an employee who can reasonably work while stuck overseas and chooses not to would usually either not be paid or required to take it as annual leave and it could be a disciplinary offence.

Source : Business Times

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