The Serious Harm Test for Companies

The serious harm test is the single biggest change the Defamation (Amendment) Act 2026 made to claims by businesses. Since 1 March 2026 a company that has been defamed in a review, a post, a trade forum or a newspaper has to clear a hurdle that did not exist before, and it has to clear it with evidence. The test does not apply to individuals, which produces the most important practical consequence for a small business: the owner named alongside the company may have the stronger claim. This guide sets out what section 12 says, what the evidence of serious financial loss looks like, how non-profit bodies are treated, and how injurious falsehood sits beside it.

1. What the Serious Harm Test in Section 12 Says

Section 12 of the Defamation Act 2009, as inserted by the 2026 Act, provides that a statement about a body corporate is not defamatory unless it has caused or is likely to cause serious harm to its reputation. For a body corporate trading for profit, serious harm means serious financial loss. That is the whole of the test. It attaches to the definition of defamation itself, so a statement about a company that does not meet it is not defamatory at all, rather than defamatory but with reduced damages. Every other element of the tort in section 6 still has to be shown as well: a statement that tends to injure reputation in the eyes of reasonable members of society, published to at least one person other than the plaintiff, that identifies the plaintiff. The serious harm test is an additional requirement for a body corporate, not a replacement for those. The wider changes are in the Defamation (Amendment) Act 2026, explained.

2. “Has Caused or Is Likely to Cause”

The section is written in two tenses. A company that can show loss that has already arrived meets the test on evidence of what happened. A company that cannot yet show loss may still meet it by showing that loss is likely, which is the position in the first weeks after a damaging statement, when the enquiries have slowed but the accounts have not yet caught up. The word is “likely”, not “possible”, so the company needs to be able to say why loss is probable: the nature of the allegation, the audience it reached, and the kind of customer that audience contains. An allegation that a care provider is unsafe, published to the parents who use it, carries its likelihood on its face. An allegation in a forum nobody in the trade reads does not.

3. What Serious Financial Loss Evidence Looks Like

The test is met with records, and the records the court will want are the ones a well-run business already keeps. The categories that do the work are these.

• Lost contracts and cancelled bookings: a cancellation email, a withdrawn purchase order, a tender lost with the statement cited in the debrief, a client who terminated after the post appeared.
• A decline in enquiries or sales: the website, phone and booking figures for the months before the statement against the months after, with nothing else that explains the fall.
• A customer’s stated reason: the message that says “I saw the review and went elsewhere”, which is the most direct evidence there is and should be kept exactly as received.
• Supplier, lender or insurer reaction: changed credit terms, a withdrawn facility or a declined renewal that refers to the statement.

The figures need to be the company’s own, not an estimate. “Serious” is measured against the business, so a loss that would be minor to a national chain may be serious to a two-person firm. The records are gathered before the solicitor’s letter is sent, because a letter that sets out the loss is a different letter from one that asserts it.

4. No Test for Individuals: The Owner or Director

Section 12 applies to bodies corporate only. There is no serious harm test for individuals, so a sole trader, a partner, a director, a franchisee or a named employee sues under section 6 in the ordinary way and does not have to prove financial loss. That matters because most statements about a small business are also statements about the person who runs it. A review that says “the owner is a crook”, a post that names the director, a comment that says “ask Mary what happened to the deposits” identifies an individual as plainly as it identifies the company. Where the company cannot show serious financial loss, or cannot show it yet, the individual’s claim is often the one that is run, through the same letter and, if needed, the same proceedings. The reverse is also true: a statement only about the company’s product or service, with no reflection on any person, gives the individual no claim and leaves the company to meet section 12 on its own.

5. Non-Profit Bodies

The section draws its line at trading for profit. Every body corporate must show that the statement has caused or is likely to cause serious harm to its reputation; the further requirement that the harm be serious financial loss is stated for a body trading for profit. An incorporated charity, a company limited by guarantee, a club that has incorporated or an owners’ management company is a body corporate, so it must show serious harm to its reputation, but it is not confined to proving financial loss in doing so. Lost funding, withdrawn members, a sponsor who stepped back or a regulator’s inquiry prompted by the statement are the kinds of evidence that fit. The committee members, trustees and officers identified by the statement face no serious harm test at all.

6. Injurious Falsehood Distinguished

A business that cannot meet section 12 sometimes asks whether there is another claim. Injurious falsehood, also called malicious falsehood, is a separate tort: a false statement about a person’s goods or business, published maliciously, causing actual financial loss. Unlike defamation it does not require injury to reputation, and the loss must be proved. It is not a shortcut around the serious harm test, because it requires proof of malice and of actual loss, neither of which section 12 asks of a company. Which claim is the right one depends on what the statement says and what evidence of malice and loss exists, and that is a question for the consultation rather than a page.

7. Where the Test Bites: Reviews, Posts and Letters

The test is met most often in the fake review, because the review sits on the listing every customer reads and the drop in bookings follows it in the figures. The sequence for that claim, from the records that prove no transaction to the platform notice and the letter, is in a fake Google review is damaging my business. The test also changes what a solicitor’s letter from a company must contain. A letter that quotes the words and asserts that they are defamatory, without saying what the company has lost or is likely to lose, is a letter that has not made out a claim, and the recipient’s solicitor will say so. Our page on defamation of a business or company sets out the full sequence from the first screenshot to the section 28 order.

8. The Remedies and the Clock

Once the test is met, the remedies are the same as for any claimant. The Circuit Court, with its €75,000 jurisdiction in defamation, can grant a declaratory order under section 28 that the statement was false and defamatory, on a summary application and without damages; a correction order under section 30; a prohibition order under section 33 against further publication; and damages assessed under section 31, where the evidence of financial loss gathered for section 12 feeds directly into the extent of the harm. Court proceedings carry a risk of being ordered to pay the other side’s costs if the claim fails, and most Circuit Court defamation claims settle before hearing. Section 38 gives one year from the date of first publication, extendable to a maximum of two years only where the interests of justice require it, applied strictly, and the time spent gathering the financial evidence counts against that year. The Defamation Claim Checker asks whether the claimant is a company and tests the serious harm question alongside the elements of section 6.

Two closing points. Where the statement comes from inside the company, from a shareholder, a co-director or a departing partner, the defamation claim usually sits inside a wider dispute about control of the business, and that side is handled by our colleagues at Company Solicitor. And a company that receives a letter from another business gets the same analysis from the other side: whether the words identify the company, whether serious financial loss has been shown, and whether honest opinion or truth applies. We act for businesses that have been defamed and for people accused of defaming them, never for both sides of the same dispute.