The area of personal injury law and the role of claims management
companies needs to be examined as part of a package of measures to help
clarify health and safety responsibilities for small organisations.
This is the conclusion of the Risk and Regulation Advisory Council, the latest body to publish a report on what action could be taken to encourage greater compliance with the law among small businesses, while at the same time reducing the regulatory burden.
Building on previous reports by the Work and Pensions Select Committee, the Better Regulation Executive, and Sarah Anderson, the Council found that many small organisations are confused about health and safety. Three key causes of this uncertainty are the multiplicity of different messages that small organisations receive from diverse sources; ‘risk-mongers’, who inflate small businesses’ perception of risks, often for self-interest; and small firms’ own lack of confidence in understanding and managing risks.
According to the report, improving the confidence of small organisations in their health and safety practices could save these businesses between £70m and £140m a year in unnecessary consultancy fees. Small firms could also see a reduction in their management costs of around £50m a year.
Among its recommendations, the Council has urged the Ministry of Justice to examine how far personal-injury litigation is being used to extend health and safety law beyond the boundaries of the Health and Safety at Work, etc. Act 1974.
The RRAC points out that complying with the HSWA does not mean that a firm cannot be sued for personal injury, if a court finds that the employer was directly or vicariously liable for an accident or causing ill health or injury. It also highlights that court judgements in this area can seem inconsistent and that the lengthy appeals process can add to uncertainty, causing employers confusion about the scope of health and safety law.
The Council also identifies the role of no-win, no-fee lawyers in undermining confidence in the law and creating excessively risk-averse behaviour, by them giving the impression that anyone who suffers from an accident is able to sue someone for substantial damages.
The Ministry of Justice is currently consulting on the activities of claims management companies and, in light of this, the report suggests that bodies such as the Law Society and the Association of Personal Injury Lawyers should consider whether non-regulatory action could stop no-win, no-fee lawyers from abusing the system. If this is not possible, says the report, the MoJ should look at statutory regulations.
Competent advice is identified as a further area for improvement, and the report backs the efforts currently under way to setting up an accreditation system of health and safety consultants. It also calls on the HSE to work with bodies like the Confederation of British Industry, the Institute of Directors, the Federation of Small Businesses, etc, to ensure that small organisations have access to more effective training to build their own competence.
In supporting the Government’s acceptance of a dedicated ‘insured advice’ line — a proposal put forward by the Anderson review — the RRAC warns of the danger of small businesses becoming solely reliant on it rather than exercising their own responsibility. It also points out that an obstacle to take-up of the service could be its association with government, “as it may be viewed as a potential path to enforcement activity”.
Action is also recommended on the part of the insurance industry, with the RRAC asking the HSE to work Association of British Insurers and the British Insurance Brokers Association to jointly examine whether insurers are providing guidance to their customers that leads to greater confusion about their health and safety requirements. The Council also believes the HSE should work with both bodies to try to find a cost-effective way of providing lower insurance premiums for low-risk small organisations.
Phil Orford, chief executive of the Forum of Private Businesses (FPB), praised the report and said many of its findings were in line with the results of its ‘Referendum’ research in June, which calculated that SMEs face an annual overall bill of £2 billion in time and money spent on complying with health and safety guidelines.
He told SHP: “While we would argue that much of the confusion felt by smaller businesses towards health and safety law is brought about by the legislation itself, we do accept that a certain amount of scaremongering and exaggeration goes on.
“I think, inevitably, the ambulance-chasing law firms have added a considerable burden to the health and safety worries faced by small firms and perhaps some unscrupulous consultants have played on those worries in order to create work for themselves.”
IOSH president-elect, John Holden, commented: “IOSH was pleased to work with the RRAC and have called in our ‘manifesto’ for improved support for small businesses in a number of areas, so they’re better able to manage health and safety sensibly — protecting workers and the public and ensuring business continuity.
He added: “The report also recognises that while many health and safety consultants have a positive influence, unfortunately, some do not. We’re pleased that RRAC supports the IOSH call for accreditation and we’re currently working on a feasibility study on this with CIEH and other health and safety stakeholders for HSE. We believe that accreditation would be a positive step in helping firms ensure they’re getting good quality health and safety advice and value for money.”
Welcoming the report, Judith Hackitt, HSE chair, said: “Small businesses are the backbone of the British economy and HSE wants to play its part in helping to reduce the confusion that the RRAC has identified.
“We already have a huge amount of work under way to improve advice available to employers — making our official publications free to download, debunking misleading myths, and exploring ways of ensuring that advice is available from accredited, competent sources. We have also begun dialogue with insurers.”
The report, Health and Safety in Small Organisations, is at www.berr.gov.uk/files/file52340.pdf
