Employment and pensions
Corporate manslaughter: the new rules for business
Ensuring that you are protected against potential health and safety litigation is a necessary part of managing your business. However, this obligation now carries even greater significance following changes to the law on corporate manslaughter.
Under the Corporate Manslaughter and Corporate Homicide Act 2007, which came into force on 6 April 2008, organisations may incur 'severe penalties' for fatal accidents that occur as a result of defective management practices.
The regulations are intended to make it easier to convict organisations in breach of the law by addressing the perceived flaws inherent in previous legislation. Formerly, a single individual, identifiable as the directing mind of the company, had to be found personally guilty of gross negligence manslaughter before the organisation could be convicted. However, the rules under the 2007 Act enable prosecutions to be brought against the organisation itself rather than specific individuals.
The test for corporate manslaughter
So how will manslaughter be decided? In determining liability a jury will consider how the fatal activity was managed or organised throughout the business, including any systems, processes and practices that were in place for managing safety. The law also states that a substantial part of the failure within the organisation must have occurred at a 'senior level'. The law defines 'senior level' as persons who 'make significant decisions about the organisation or substantial parts of it'. This includes both centralised, headquarters functions as well as those in operational management roles.
The jury will also need to ascertain whether a 'gross breach' occurred: the organisation's conduct must have fallen far below what could have been reasonably expected. Juries will have to take into account any health and safety breaches by the organisation - and how serious and dangerous those failures were.
And finally, to secure a conviction a duty of care must be found to exist. This may, for example, relate to the systems of work and equipment used by employees, the condition of worksites and other premises occupied by an organisation and in relation to products or services supplied to customers. The Act does not create new duties - they are already owed in the civil law of negligence and the new offence is based on these.
The offence does not apply to certain public and Government functions whose management involve wider questions of public policy and are already subject to other forms of accountability. For example, it does not pertain to strategic decisions about the spending of public money or military operations. Other functions, such as policing, the response of the emergency services, child protection and statutory inspection are also exempt, other than where organisations owe responsibilities to employees or for the premises they occupy.
The implications for business
The law will undoubtedly bring further scrutiny to businesses across all sectors. Indeed, with negligent firms facing heavy penalties, workplace healthy and safety should be made a priority to avoid potential litigation.
Those businesses deemed liable may incur an unlimited finebased on a percentage of their annual turnover, along with a possible publicity order which will compel them to publicise details of the offence to the wider public. A court may also instruct a negligent organisation to make changes to remedy the failures behind the death. A business that fails to address these issues thus risks compromising its reputation which may, in turn, have a negative impact on customer retention and recruitment. Perhaps as significant however will be the power of courts to compel organisations to publicise the fact that they have been convicted of corporate manslaughter and what the penalty was that they received.
What action should be taken?
All employers must already comply with health and safety legislation and the Act is intended to complement, not replace, these other forms of accountability. Businesses with sound policies and procedures should therefore have nothing to fear from the rules. However, it always worthwhile reviewing management practices and re-assessing employees' workplace welfare at regular intervals to ensure high standards are constantly maintained. Detailed below are some basic actions every employer should consider.
Review your insurance cover
Businesses are advised to re-assess their indemnity to ensure they have sufficient legal protection in the event of criminal charges for corporate manslaughter, particularly as the legislation encompasses areas where liability may not have previously been considered. For example, a company may be negligent if it fails to ensure its employees' cars are kept in a roadworthy condition when being used in the course of their employment, even in cases where an individual is using their own vehicle.
While prosecutions under the Corporate Manslaughter and Corporate Homicide Act 2007 will brought against the organisation itself, directors may still face personal prosecution for gross negligence at common law, providing there is sufficient evidence to support such a case. Businesses should therefore consider taking out a Directors' and Officers' (D&O) insurance policy to provide cover for a senior member of the team facing prosecution. However, it will not cover the costs of the company's defence of such an allegation and the wider stigma of being associated with a negligent individual.
Create a safe working environment
Prevention is better than cure, so re-assess existing policies and procedures to help minimise the risk of litigation. This may involve:
- Identifying potential areas for risk and address them immediately
- Checking all health and safety policies are up-to-date, robust and are regularly reviewed
- Revisiting your disaster management plan and ensure there is a protocol for dealing with the authorities and working with legal advisers if a fatality occurs
For further help and advice on creating and operating a health and safety policy, please contact us.
Familiarise yourself with the Act
It is vital that you are aware of finer details of the Corporate Manslaughter Act 2007 and understand the implications for your businesses. The full text of the Act is available to view on the following website: http://www.legislation.gov.uk. You should always seek professional advice before acting.
Create a culture of awareness
While successful health and safety requires sound leadership, workers also have a responsibility to take care of their own welfare and that of those who may be affected by their actions. Creating a safe working environment thus demands co-operation from staff members at all levels. In view of this, businesses should brief all employees on the new rules and endeavour to promote a safety-conscious ethos throughout the firm. Electing an individual to respond to any questions staff may have, will help ensure relevant information is communicated effectively.
Ensure staff are fully trained
Consider who constitutes a 'senior manager' and ensure they have appropriate training for their role. However, the law dictates that employees at all levels should receive basic health and safety training and clear instruction on their duties. Why not take this opportunity to provide staff with up-to-date refresher training? All tuition given should take place within working hours and the details recorded for future reference. The Health and Safety Executive have made it clear that they will not regard "human error" as a sufficient defence to a charge of corporate manslaughter, and so organisations do need to take steps to ensure that staff are trained and that they implement that training on a day to day basis.
How we can help
Our experienced advisers are able to offer advice covering all aspects of health and safety legislation. We can also provide further guidance on the Corporate Manslaughter and Homicide Act 2007. Please contact us for assistance.
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.