Collective responsibility – business under the new Corporate Manslaughter Act
IT'S taken 11 years, but the new look Corporate Manslaughter Act is finally here.
Although its introduction has been over shadowed by more controversial amendments to the Sexual Discrimination Act, its impact is set to be no less significant.
UK firms responsible for rail crashes, ferry disasters and work related deaths, which have previously escaped prosecution, could now face a criminal record and unlimited fines if their health and safety strategies are found to be lacking.
It's the change from individual to a collective gross breach of relevant duty that campaigners, including families of victims killed or injured in major disasters such as the sinking of the The Herald of Free Enterprise ferry, and Paddington, Great Heck, and Hatfield rail crashes, hope will bring about more prosecutions.
Convictions under the former legal framework proved almost impossible as companies could only be convicted if the “controlling mind” or senior individual could be identified and found guilty for gross failings leading to the death. Since 1992, there have only been seven successful convictions. Yet according to the Health and Safety Executive (HSE), some 241 people were fatally injured in the workplace in 2006/7.
But assigning blame on one senior individual, particularly when prosecuting large companies, has been problematic as the “controlling mind” is invariably at some distance from the company's activities. As a result, all of the seven successful convictions have been small to medium sized enteprises (SMEs).
Under the new law, prosecutions are likely to prove more successful as the court can consider the wider corporate picture by looking collectively at the actions of senior management.
A gross breach means conduct which falls far below what can reasonably be expected of the company or organisation. A relevant duty of care is degined as certain types of duty of care owed under the law of negligence. However, the offence is not limited to health and safety breaches as it includes duty of care owed to employees, property owned, goods supplied, construction and maintenance.
As Kevin Elliott, partner in Eversheds's regulatory team in Leeds, explains – prosecutions will be all about how a firm is managed rather than an inviduals' actions.
“The focus will be on an operational level,” he says.
“Senior managers will have accountability as they will be the ones making strategic decisions.They will have to look at what systems are in place for managing health and safety in all parts of the business.”
Risk assessment and management is also be key according to Elliott in achieving best practice. Failure could result in financial ruin – particularly for SMEs.
“Because of their size, SMEs have always been more exposed to prosecution under the Corporate Manslaughter Act. The new Act makes it a more level playing field, but doesn't take away any of the risk,” he warns.
“Although there is still consultation on financial penalities if found guilty, the Sentancing Advisory Panel has recommended fines between 2.5% to 10% of their turnover. For a small firm that could mean bankruptcy.”
Neither does the new Act protect individual directors. They can still be sued through health and safety civil suits whether the corporate prosecution is successful or not – even more reason for managing the business responsibly.
“For the majority of firms this piece of legislation shouldn't prove a problem as compliance with health and safety rules are already practiced.
“However, it does require managers to run create and run through a check list to ensure relevant duty of care in regards to their operation.”
According to risk advisor and insurance broker Aon, firms should be reviewing the following to ensure compliance with the new Corporate Manslaughter Act.
