I think the idea is that the earth connection is acting as a sensor to determine electrically that a connector (or wires to a terminal strip) is plugged in mechanically.
Or something like that.
Back in the backplane days (80's-90's, VME, VXI, Multibus, etc.), this was a common technique for one board to tell if another board was plugged in, or for an I/O board to tell if a cable was connected. The problem is this part:
"which then switches on the live"
That sounds like a relay, SSR, or contactor between the mains ("the live") and the connection point. How ans where is that done?
ak