UK: Fee For Intervention: What Will It Cost?

Today sees the introduction of the HSE's Fee for Intervention Scheme (the "Scheme") extending the regulator's cost recovery powers. Whilst this change has been the subject of minimal publicity from the HSE, its potential consequences are perhaps wider than anticipated and should certainly receive due consideration from businesses likely to be affected. This article sets out the key provisions of the newly issued guidance and provides some food for thought for businesses looking to identify how they can respond to this new regime.

What does the Scheme do?

The Scheme shifts the financial burden of investigating material breaches of health and safety law from the tax payer on to the errant duty holder. Launching the FFI scheme on 28 September 2012, the HSE's Chief Executive Geoffrey Podger said:

"The most basic safety mistakes in the workplace can devastate lives and result in real costs to industry. It is right that those who fail to meet their legal obligations should pay HSE's costs rather than the public purse having to do so."

The Scheme will impose a positive duty upon the HSE to recover the costs of any intervention that leads to the identification of a contravention of health and safety law by a duty holder. For further details, please see our previous update, "Fees for intervention: guidance released 20 June 2012".

Does the Scheme apply to my business?

The Scheme applies to all HSE enforced businesses. Whilst the HSE will concentrate proactive inspection time on the construction, waste and recycling and manufacturing industries, the reality is that the Scheme will apply to any business that it inspects or investigates and finds to be in material breach of the law.

The Scheme does not apply to those in sectors enforced by other regulators (e.g. local authorities), nor does it apply to the self-employed who only put themselves at risk or to individual employees.

What is a material breach?

The Scheme will be engaged when, "in the opinion of the...inspector, there is or has been a contravention of health and safety law that requires them to issue notice in writing of that opinion to the duty holder". Inspectors will continue to use the well established principles of the Enforcement Management Model when reaching decisions, albeit the Guidance accompanying the Scheme provides some illustration of, "what a material breach might look like in practice". This loyalty to the current method of decision making promises a targeted and proportionate approach.

What will I pay for?

In principle, fees will be payable to cover the costs the HSE reasonably incurs in relation to a material breach. This will include the work needed to identify the breach initially (even if this is not immediate), together with the work required to ensure the compliance gap is closed and the breach remedied. The HSE view is that, in order to make "appropriate judgments" about required enforcement action, the Inspector needs that time to assess the duty holder's ability to effectively manage the risks and achieve compliance.

Importantly, the Scheme, "also includes any investigation or enforcement action, up to the point where HSE's intervention...has been concluded or a prosecution is started". As such, whilst it initially appeared that fixing the breach would bring an intervention to a conclusion, the reality is that the clock will continue to tick for much longer where formal enforcement action is to follow. The HSE's Guidance to Inspectors confirms that, "cost recovery stops when the regulatory activity stops, not when the material breach is rectified".

How much will it cost?

Costs will be charged at a blended hourly rate of £124, which is based upon not just the gross salaries of the Inspectors, but also the HSE's corporate services and overheads, capital charges and general administrative expenditure. Cases investigated and prosecuted before 1 October 2012 saw the HSE charge £63 per hour for Inspectors' investigation time. The impact of this new rate is therefore clear: it is almost double its predecessor.

Specialist input (such as from the Health and Safety Laboratory) will be charged at the actual cost to the HSE. Where several material breaches are identified, several experts may be required.

When will I have to pay?

Invoices will be rendered every two months and will fall due for payment within 30 days. The HSE has published an estimated invoice dispatch timetable, which confirms that charges under the Scheme will be billed en masse during specific weeks of the year.

What if I don't agree?

Disputes will initially be referred to a senior HSE manager (independent of the intervention), following which, if the issue remains contentious, a disputes panel will be convened. The panel will comprise an independent HSE Inspector, a representative of HSE Policy and Procurement and one independent person drawn from a list of industry and trade union representatives.

It is not possible to dispute the principle that the HSE should recover its costs, albeit a duty holder can make representations as to whether in fact it was in material breach and also the reasonableness of the costs incurred.

What should I do?

The Scheme is triggered by the existence of a material breach. Businesses would therefore be wise to review their health and safety policy and procedures to ensure they are sufficiently robust and to identify and remedy any potential breaches. This is of course good practice in any event but the onset of the Scheme may provide an impetus for such work.

Duty holders also need to be familiar with the Scheme and how it will operate, as any HSE inspection (whether following an accident or not) has the potential to result in substantial costs.

Companies should consider how they will deal with an intervention under the Scheme and what provisions will be required in order to minimise possible costs exposure.

What should I consider?

The HSE has not widely publicised the introduction of the Scheme. It is understood that the changes will simply be brought to the attention of a duty holder at the time an intervention occurs. The HSE's original proposals and consultation documentation suggested that the industry focussed nature of the Scheme would see it applying to just 1% of commercial enterprises.

However, there are real concerns as to the practical, legal and financial effects of the Scheme. Consider:-

  • Whether businesses will shy away from proactively seeking advice from the regulator for fear that invoices pursuant to the Scheme will follow
  • The impact upon a business that may be prosecuted following an intervention. Presently, the HSE recover their investigatory work at approximately £63 per hour. The Scheme allows almost double that figure to be billed. With invoices under the Scheme being rendered every two months and falling due for payment in 30 days, will a business under investigation be able to afford to fund the investigation before any enforcement decision is made? Whilst the Scheme envisages repaying sums to defendants ultimately acquitted, will such reimbursement come too late for some?
  • The financial effect upon a business that is investigated with prosecution being contemplated. The HSE's Guidance to Inspectors confirms that even where a prosecution is not launched, fees under the Scheme would be recoverable because, "a decision not to prosecute does not necessarily mean that a material breach has not occurred"
  • How can the potential scope for charges under the Scheme be quickly assessed during a HSE visit with a view to forming a strategy for dealing with the regulator thereafter? Although apparently "material" is the alleged breach sufficiently minor that the business can expect a letter or is the issue more likely to lead to prosecution? Analysis of this spectrum will be vital to appropriately dealing with the Inspector
  • Will paying an invoice under the Scheme amount to an admission of liability for criminal or civil purposes? In either case, does such an admission trigger insurance notification requirements and/or increase the business' risk rating for insurance purposes, pushing premiums ever skywards?
  • Equally, will an unchallenged invoice under the Scheme amount to potential bad character evidence in the case of future enforcement action?
  • How will potential liabilities under the Scheme be dealt with as a matter of contractual relations between parties to projects of any size? The fees payable under the Scheme are specifically stated to be civil debts, as such enforceable indemnities may become a feature of pre-contract negotiations. This may become a concern for a smaller outfit, in need of the work and ready to run the risk of accepting the fee liability of a larger employer to secure the contract
  • What provisions are needed to manage situations in which multiple duty holders may be in material breach?

The objects of the Scheme are twofold: first, to encourage better health and safety performance and secondly, to shift the financial burden of breaking the law from the tax payer to the duty holder. Any initiatives that promote improved health and safety performance are of course to be welcomed. However, as presently drafted, the Scheme provides no mechanism by which the means of a business can be assessed and its ability to pay the fees considered. It is to be hoped that an unintended consequence of the Scheme is not that businesses will either be forced into insolvency or have significantly less finance available to spend on health and safety improvements.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.