Health and Safety legislation has no bearing on this situation. She is not at work. The council could only be concerned because of their duty of care to 'other road users'. The HSE has been very forthright recently to refute that everything is their fault. If it's not at work - its not them.
However we do have a problem with insurance companies paying out on third party claims against councils without contesting the issue because they don't want legal precedent established. It's then the insurance industry which is advising councils what they can and can not allow in order to reduce these payments. These claims have become so common that it is time to make a stand. Councils (collectively) need to say 'if you think we are negligent in our duty of care, take us to court and let a court decide'. If the law then allows what 'the people' decide are ridiculous claims, our representatives can change the law. But that has to be better than the present situation being dictated by insurance companies, scared inadequate public employees and predatory claims companies.
But this is a British problem. We need to stop blaming Europe or the US for this disease. It is Britain that 'gold plates' any European legislation, such as trying to make the 'Working at Height Directive' cover teaching mountaineering, and anyone who has seen 'American Chopper' on TV will know that their cavalier attitude to building motorbikes with uncovered drive chains and 'spiky' handlebars couldn't possibly exist in our namby pamby world.
It's our problem. We need to sort it out.