The Corporate Manslaughter and Corporate Homicide Act 2007 is finally with us after more than 10 years of fuss, but has it been worth the wait and will it actually save lives, wonders Michael Appleby.
Under the old law to convict an organisation of manslaughter following a work-related death, it had to be proved that someone senior in the organisation, often referred to as the directing mind, was also guilty of manslaughter. This made prosecuting large organisations difficult.
The new offence,1 which comes into effect on 6 April,2 and only applies to incidents that occur after that date, does away with this requirement. In the future an organisation will be guilty of corporate manslaughter if death is caused by a gross breach of its relevant duty of care that is substantially due to the way in which its activities are managed or organised by senior management. This means that the failures of a number of senior managers can now be added together.
Senior managers are those who play a significant role in the decision-making or management of the organisation. Following the line of reasoning in El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 (concerning the definition of a ‘directing mind’) it is possible a person may be deemed a senior manager for only part of their job function.
Organisations that can commit the offence include:
– Corporations;
– Partnerships;
– Trades unions;
– Employers’ bodies;
– Police forces;3 and
– Certain government bodies.
Duty of care
The relevant duty of care for the purposes of the Act is effectively any duty owed under the law of negligence. It includes:
– A duty owed by an organisation to its employees or others working for the organisation (e.g. contractors);
– A duty owed by an occupier of premises to visitors; and
– Duties owed in connection with various business activities, such as construction or maintenance work, supply of goods or services, and any other activity carried out for commercial purposes.
It will be for the judge to determine whether there is a duty of care, not the jury. (As it is an indictable-only offence it will be tried in the Crown Court.) The Police will investigate the incident with the technical support of the Health and Safety Executive. Investigations will be subject to Work-related deaths: A protocol for liaison.4
Causation
The breach of duty does not have to be the only cause, or, indeed, the major cause of death — just one of the causes. It is unclear whether it has to be a substantial cause, as is the case under the old law, or just a cause. As Mr Justice Scott-Baker (now Lord Justice Scott-Baker), sitting in the Court of Appeal, observed in the health and safety case R v Howe & Son [1999] 2 Cr App R(S) 37, “it is often a matter of chance whether death or serious injury results from even a serious breach”.
Gross breach
This is defined in section 1 of the Act as conduct amounting to a breach of duty that “falls far below what can reasonably be expected of the organisation in the circumstances”. A jury will be asked to consider how serious the organisation’s failure was, and how much of a risk of death it posed. The jury may also take into account the “attitudes, policies, systems or accepted practices” of the organisation relevant to the failure (in other words ‘safety culture’) and relevant health and safety guidance (see section 8 of the Act).
Individual liability
Mistakenly, people believe the new law means there will be no prosecutions of directors or senior managers. Section 18 says there will be no secondary liability, e.g. aiding and abetting, but this does not prevent a director or senior manager from being prosecuted either for gross negligence manslaughter and/or a breach of section 37 of the Health and Safety at Work, etc. Act 1974.
As the Police will need to prove the organisation’s gross breach was substantially due to senior management failure, there are practical reasons why they might prosecute senior individuals in their own right. In the criminal proceedings following the Hatfield train derailment, which came to court in 2005, of the 12 individuals originally prosecuted, six faced only HSWA charges, and not all of those prosecuted for manslaughter were alleged to be ‘directing minds’ for their respective companies.
Although the mechanism of conviction is very different there is a clear overlap between the new Act and the HSWA 1974. Organisations are likely to face prosecutions under both, arising from the same incident, and heard at the same trial.
Sentencing
If an organisation is convicted of corporate manslaughter nobody will be going to jail (but individuals convicted can be imprisoned — see below).
An unlimited fine can be imposed. Recent years have seen large fines handed down in HSWA cases — for example, the £15m fine Transco was ordered to pay in 2005 for an explosion that killed a family of four in Scotland, and Balfour Beatty’s £10m fine (later reduced on appeal to £7.5m) in relation to the Hatfield derailment.
The Sentencing Advisory Panel is recommending that fines should be based on an organisation’s turnover: a band of 2.5 per cent to 10 per cent for corporate manslaughter, and a band of 1 per cent to 7.5 per cent for breaches of the HSWA. Irrespective of whether this approach is eventually adopted,5 it is apparent there will be clear blue water between fines imposed under the respective Acts.
The Courts will, in due course, also have the power to make remedial orders (a power that exists under the HSWA but is rarely used) and, in due course, to require an organisation to publicise its conviction — though, in reality, people will already know of the conviction from the press.
Directors and senior managers convicted of gross negligence manslaughter can expect a term of imprisonment between 18 months and three years (although more, if there is an element of ‘profit before safety’), which is unlikely to be suspended. If convicted under section 37 HSWA, a defendant can only be fined. In 2006, a director was fined £75,000 for a breach of section 37 and ordered to pay costs of £103,500. This year the Court of Appeal ruled that this fine was not excessive. Convicted individuals can also face disqualification from holding directorships.
Where companies often fail
The Act does not impose any new health and safety duties on organisations, so if they are complying with the HSWA they will be complying with the new Act. The following are failures that would make an organisation vulnerable:
– Poor training of front-line workers, particularly those in safety-critical positions;
– Procedures not properly followed by front-line workers and junior management;
– Poor management at operational level;
– An organisation believing it had the ability to contract out the risk to another company;
– Inadequate definition of contractor’s role;
– Poor communication with workforce/ contractor;
– Inadequate management, audit and review of safety systems/contractors — consider whether KPIs adequately manage the risk;
– Inadequate attention to ‘near misses’;
– Middle managers telling senior managers what they want to hear;
– Senior management making decisions on incomplete/wrong information — consider in particular budget decisions that affect safety.
What should companies be doing?
Apart from reviewing its safety management, a company should also consider how it would deal with an investigation. As a minimum, the following should be addressed:
Insurance
Organisations should be checking their insurance policies — Employers’ (EL) and Public Liability (PL) — as their cover may not be as comprehensive as they think. For example, some old policies only cover proceedings in the Magistrates’ Court. Others only apply when a prosecution starts, not before. It is better to know what the cover is before facing an investigation, when something can be done about it.
Consideration also ought to be given to how the legal costs of investigated individuals may be met. It may be a matter of looking beyond the Directors’ and Officers’ policy (known as D & O policies). Some organisations are now taking out legal expenses insurance to cover their workforce in such circumstances.
It is worth noting that a policy-holder has the right to choose his/her own solicitor under regulation 6(1) of the Insurance Companies (Legal Expenses Insurance) Regulations 1990. This is irrespective of the wording of the policy; it covers any policy that, as part of its cover, provides legal expenses (so it includes EL and PL policies). As a matter of public policy, fines cannot be met by insurance.
Plan for dealing with investigations
Many companies, as part of their disaster and emergency planning, have a business continuity plan. But few have any arrangements to cover the eventuality of being investigated for manslaughter. Such an investigation will be traumatic and time-consuming to the business. A plan will need to cover:
– Putting a team together to deal with the investigation, which ought to include legal advisors. Tactical decisions made at early stages can impact upon the eventual outcome;
– Potential conflicts of interest between the company and those that work for the company. Only in a few cases will it be possible for an organisation’s lawyers to represent individuals (see the Law Society Guidance Employer’s solicitors attending HSE interviews with employees6) and this equally applies to manslaughter investigations;
– Communications with the media, stakeholders, and the organisation’s workforce internally.
Plea considerations
Care in the future will need to be taken by organisations when agreeing a basis of a guilty plea. It might seem attractive — in order to avoid a contested hearing — to agree a basis with a prosecutor that may not truly reflect the circumstances of the offence. However, once agreed, it cannot be argued at a later date that the circumstances of the incident were different because it now causes difficulties in a later prosecution.
This is now an issue under the ‘bad character’ provisions of section 98 of the Criminal Justice Act 2003, which allows the prosecutor to adduce “evidence of, or of a disposition towards, misconduct on” the defendant’s part other than evidence relating to the current charge. It can easily be envisaged how a prosecutor might try to use a previous HSWA conviction as part of his/her case against a company for manslaughter.
Closing thoughts
The advent of the Corporate Manslaughter and Corporate Homicide Act 2007 has certainly pushed health and safety up the agenda of many companies. But, as Lord Justice Scott-Baker has observed, it is a matter of chance whether death occurs from a failure. The vast majority of workplace accidents happen not because of a bad act by an organisation but because of an omission that it did not appreciate could happen. Thus the Act is unlikely to save lives.
The Government has said it does not expect a significant increase in the number of manslaughter prosecutions of organisations. However, what can be predicted, certainly in the early years, is an increase in the number of investigations, which will include more arrests of those in senior management.
With the proposal for large fines in health and safety cases, as well as the use of the bad character provisions, expect more contested health and safety cases. This is likely to have consequences for the stretched resources of the HSE.
What organisations fear most from the Act is not so much the potential huge fines but the detrimental effect a conviction will have on their reputation and thus their ability to tender for work in and outside the UK. Anecdotal evidence suggests some large companies are considering whether to continue to do business in the UK. The actual impact on jobs and investment remains to be seen.
References
1 The offence will be known as ‘corporate manslaughter’ under the law of England and Wales or Northern Ireland, and ‘corporate homicide’ under Scottish law
2 The Act’s application to ‘deaths in custody’ is unlikely to come into effect for a further three years
3 However, there are limitations on the duty of care owed by the Police e.g. operations involving terrorism are not covered. It would therefore not have been possible to prosecute the Metropolitan Police under the Act if it had been in force for the shooting of Jean Charles de Menezes, which was the subject of a conviction under section 3(1) HSWA
4 http://www.hse.gov.uk/pubns/misc491.pdf
5 The Sentencing Advisory Panel’s consultation on sentencing for the new offence closed on 7 February, and it is currently working on drawing up its advice, which is likely to be submitted towards the end of the summer
6 Download from www.lawsociety.org.uk
http://www.opsi.gov.uk/Acts/acts2007/ukpga_20070019_en_1
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