Originally Published 11st March 2009
Alan Davies, Defendant Insurance Director at Pitmans, reviews ground breaking Health and Safety legislation and highlights the implications to businesses.
All business and senior management need to be aware of two Acts that could have very significant consequences for the business itself and for individuals.
CORPORATE MANSLAUGHTER AND CORPORATE HOMICIDE ACT 2007
What is it?
The Act applies to offences committed from 6 April 2008 and creates a new corporate criminal offence, based on the common law offence of "gross negligence." The offence can be committed, not only by Corporations, but Partnerships, LLPs, Employers, Associations, Trade Unions, Government Departments and the Police Force. There are exemptions covering operations such as the emergency services but none that apply to commercial operations. The Act applies to UK subsidiaries of foreign companies and targets organisations that take unjustifiable risks with the public's safety.
The Sentencing Guideline Secretariat (www.sentencing-guidelines.gov.uk) has indicated that guidelines to support the corporate manslaughter offence under the Act are likely to be published in a few months time. This will re-focus the public's attention and that of senior management on this landmark legislation, which was the culmination of 10 years worth of campaigning from unions and other groups. There has been much speculation that fines imposed on conviction could be as much as 10% of company turnover.
The Offence
The wording of the offence suggests that an organisation will be guilty of an offence, if the way in which its activities are managed or organised by senior management with the following consequences:
- causes a persons death and
- amounts to a gross breach of a relevant duty of care, owed by the organisation to the deceased.
How could it affect you?
An organisation is only guilty if the way in which its activities are managed or organised by its senior management is a substantial element in the breach.
Senior management implies individuals who play a significant role in the decision making; this would include how the whole or a substantial part of the activities are managed and the way in which the organisation operates.
The new offence only applies in circumstances where an organisation owes a duty of care in the law of negligence to the victim – a person for whose safety the organisation is responsible.
Under Section 2 (1) the offence will only apply where an organisation owes a duty of care:
- to its employees or other persons working for the organisation
- as an occupier of premises
- when the organisation is supplying goods or services
- when constructing or maintaining buildings, infrastructure or vehicles or using plant or vehicles etc.
- when carrying out other activities on a commercial basis.
Imprisonment
Under the Act, individuals including Directors or Managers cannot be prosecuted and therefore no prison sentence prescribed. However, if there is evidence that a fatality has been caused by gross negligence of individuals, they can still be prosecuted and jailed for manslaughter under common law.
Fines
Under Section 1 (6) of the Act, an organisation that is guilty of corporate manslaughter is liable, on conviction on indictment in the Crown Court, to a fine. The maximum penalty is an unlimited fine, although the long-awaited sentencing guidelines will clarify this in the near future; commentators consider it is likely that companies may have to pay between 2.5% and 10% of annual turnover.
The Home Office paper which went with the original Bill stated that the offence would be targeted at the worst case of management failure causing death. If this is the case, then fines on conviction will be set at a higher level, probably in excess of record fines under the Health and Safety at Work Act 1974 ("HSWA"), which have amounted to several hundred thousand of pounds.
HEALTH & SAFETY (OFFENCES) ACT 2008
What is it?
The Health & Safety Offences Act 2008 came into force on 16 January 2009 and applies to offences committed from that date. Whilst the Act doesn't impose additional health and safety duties upon individuals or businesses, it does increase the penalties for breaches of existing health and safety legislation.
How could it affect you?
The Act increases the maximum penalties that can be imposed for breach of health and safety legislation and extends the range of offences for which an individual can be imprisoned:
- The maximum fine which may be imposed in the Magistrates Court has been increased from £5,000 to £20,000 for the majority of health and safety offences. DWP Minister Lord McKenzie said that this should result in a "faster, less costly and more efficient justice."
- There are unlimited fines in the Crown Court.
- Imprisonment is a sentencing option for individuals prosecuted for health and safety offences in both the lower and higher courts - up to 12 months in a Magistrates Court and 2 years in a Crown Court.
- Specified offences, which are currently triable only in the lower courts, will be triable in either the lower or higher courts.
Directors and senior managers could previously be convicted if it was proven that the company failing occurred as a result of their consent, connivance or neglect, under Section 37 of the Health & Safety at Work Act 1974. Additionally, under Section 7, a director was potentially culpable for a failure to take reasonable care for the safety of others or himself.
The 2008 Act now suggests that for both Section 7 and 37 offences, one could receive a sentence of up to two years' imprisonment and a fine if committed to the Crown Court. "Jail sentences for particularly blameworthy health and safety offences committed by individuals can now be imposed reflecting the severity of such crimes" Lord McKenzie.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
