2 May 2016

Municipalities cannot take out insurance covering volunteers - yes

The Ministry of Social Affairs and the Interior has put a - temporary - stop to the question whether municipalities can take out collective accident and liability insurance covering volunteers. The answer is no, but the Ministry is considering introducing legislation in the area.

In December 2014, the State Administration decided whether municipalities could take out collective accident and liability insurance covering persons performing volunteer work for the municipality. It was the State Administration's opinion that municipalities can only take out insurance if covering the municipality's responsibility as an employer, and that municipalities can therefore generally not take out insurance covering damage inflicted on volunteers or which volunteers inflict on others in connection with the voluntary work.

Subsequently, the Ministry considered the question, but at the same time, it stated that the municipalities that had already taken out such insurance were not obligated to cancel them, while the question was being considered. The municipalities were given the hope that the Ministry would perhaps come to another result than the State Administration.

THE LEGAL BASIS OF TAKING OUT INSURANCE COVERING VOLUNTEERS

The Ministry has now decided on the question. First of all, the Ministry states that there is no authority in the Social Services Act, the Act on Industrial Injuries or other legislation for the municipalities to take out the insurance in question.

The Ministry has therefore decided on the question based on the unwritten rules on local government mandate.

According to these rules, there is a general prohibition against  favouritism of individuals. The municipalities may, however, provide support to individuals in special situations where there is a legitimate municipal purpose of the support.

Whether municipalities may take out insurance covering volunteers therefore depends on a specific balancing of the municipality's interest in insuring volunteers performing voluntary work for the municipality, for instance the utility value for the citizens, improvement of how municipal tasks are solved, etc. and the consideration behind the prohibition against support of individuals.

Based on an aggregate balancing of these considerations, the Ministry stated that there is no authority in the rules on local government mandate to take out insurance in question. The Ministry stated:

"The Ministry has attached importance to the fact that the insurance in question implies that the municipality favours individuals with a service, which the municipality is not legally obligated to provide.

By virtue of the lack of power of management and instruction in relation to the volunteer, the municipality does not have the same opportunity to minimize to a certain extent the risk of industrial injuries and damaging acts as the municipality has in relation to its own staff."

It is the therefore the Ministry's opinion that the rules on local government mandate does not give the municipalities the possibility of taking out collective accident and liability insurance covering persons performing volunteer work for the municipality.

Municipalities may still take out accident and liability insurance covering volunteers for whom the municipality has employer's liability under the Act on Industrial Injuries or 3-19-2 of the Danish Law of King Christian V. It should be specifically assessed in each individual situation whether the employer is an association to which the volunteer is connected, or whether this role is held by the municipality.

THE PROBLEM IS FOR THE LEGISLATOR TO DECIDE

The Ministry notes that, subsequently, it is for the legislator to provide the statutory authority with the effect that the municipalities can provide collective accident and liability insurance to volunteers. On this basis, the Ministry will consider whether there is a need for amending legislation.

WHAT SHOULD MUNICIPALITIES DO IF THEY HAVE TAKEN OUT INSURANCE COVERING VOLUNTEERS?

Municipalities that have already taken out collective accident and liability insurance covering volunteers must terminate the insurance no later than 1 July 2017. This means that termination must be made no later than on this date - if not, a notice of termination will apply according to the insurance terms. In some situations, the insurance may be non-terminable in the contract term, and in this case, the municipality must not become subject to breach by terminating the insurance.

Please note that the municipalities are not obligated to terminate the insurance if statutory authority has been provided prior to 1 July 2017 entitling the municipalities to take out collective accident and liability insurance covering volunteers.

Until a statutory framework has been established, the municipalities may not take out new collective accident and liability insurance covering volunteers.

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