The new Corporate Manslaughter and Corporate Homicide Act 2007 ("the Act") introduces a new offence in the UK, enabling companies to be prosecuted where there has been a failure in health and safety management, resulting in death. The Act came into force on 6 April 2008 and a summary of the effects are below.
The Need for Change
The Act has been brought in because of the difficulty perceived under the old law of prosecuting companies who cause deaths. Currently, under the old law, a controlling director must be found to have been responsible for the death in his capacity as the "will and mind" of the company. The result under the old law has been that only smaller companies with hands-on directors have been convicted. There have only been seven convictions to date.
An understanding of the new regime is critical for companies, their directors particularly and also their public and employer liability insurers who might be asked to provide legal expenses support in the event of investigations / prosecutions.
The New Offence
The Act is intended to make it easier to successfully prosecute larger companies where a corporate management failing has fatal consequences. The new legislation will apply to all companies and corporate bodies, including non-UK companies and both public and private sector, operating in the UK. In Scotland, the offence will be known as corporate homicide.
Under the Act, a company will be guilty of corporate manslaughter if the way in which its activities are managed or organised causes a person's death, and amounts to a gross breach of a relevant duty of care to the deceased (Section 1(1)). Companies will owe a relevant duty in most situations, for example as an employer, occupier, or supplier of goods or services. For the company's conduct to amount to a gross breach it must fall far below what could reasonably have been expected of the company in the circumstances (Section 1(4)(b)). The contribution of the senior management must be regarded by the jury as a substantial element in the corporate causation of the breach of duty (Section 1(3)).
The New Test
The Act introduces a new test: that of a substantial senior management contribution to the company's breach of duty. A key difference with the old law is that senior management will have their aggregated conduct examined to see if corporate managerial or organisational failings contributed substantially to the company’s breach of its duty of care. The Act does not require blame to be attributed to an individual, which was identified as a factor in the small number of convictions under the old regime.
In addition, the defences available under the old law: ex turpi causa non oritor actio (an action may not be founded on illegality); and volenti non fit injuria (if someone willingly places themselves in a position where harm may result, knowing that some harm may result, they cannot sue if harm does in fact happen),will no longer be available to companies (Section 2(6)).
Penalties
The new penalties available under the Act include an unlimited fine payable by the company (Section 1(6)), a remedial order requiring steps to be taken to rectify the breach and other matters arising out of it (Section 9), or a publicity order, requiring companies to publicise details of their conviction and of the fine imposed (Section 10). A breach of either a remedial order or publicity order is an indictable offence in itself and also subject to a fine (Sections 9(5) and 10(4) respectively).
Fines imposed under the Act will without doubt significantly exceed existing health and safety penalties. However, in cases where a public body is involved, the adverse publicity arising from a publicity order is likely to have a greater stigma than a fine alone, and therefore a greater impact.
Individual Liability
There is no individual liability for corporate manslaughter under the Act (Section 18). However the focus on senior management could increase pressure for parallel health and safety charges to be brought against individual directors and managers under existing health and safety legislation. Such action against individuals could result in fines and possibly disqualification as company directors. Company directors are often indemnified in a company's Articles for legal costs incurred on company business, which may result in the company being liable to pay.
Commercial Impact
The Act does not have retrospective effect. However, companies will now need to be careful to take all practicable measures to reduce the risk of being implicated in a fatality and becoming a target for the government’s first prosecution.
The Act also does not introduce a new system of health and safety regulation but companies will be found guilty of causing death within the existing health and safety legislation framework and on the basis of the new tests.
In addition to carrying out risk assessments as prescribed by the existing relevant health and safety legislation before undertaking any potential hazardous activities, management should undertake a fresh assessment of areas of business operations with the potential to cause serious injury and death (to employees and anyone else whom the company may owe a duty of care to under the Act). Companies may also consider it prudent to commission an independent audit and review of their safety management systems and "culture". It will be important to gauge what, if any, improvements can be made in procedures for reducing risks of injury to death and ensuring hazardous activities are properly resourced and planned before being undertaken.
Conclusion
Companies who already comply with existing relevant health and safety legislation will continue to limit the chance of a fatality occurring. Should such an incident occur, such companies should be in a position to show they had discharged all duties owed to the deceased and therefore avoid prosecution. In addition, senior management should also look at the leadership action list contained in the Health and Safety Commission's 'Leading Health and Safety at Work'. Other companies who may be less confident in their safety systems should review them.
All companies should consider coverage with their insurers relating to legal expenses for investigations or prosecutions under the Act.
Legal representation is advisable if there has been a fatality in addition to a health and safety offence. Involvement in the interview stages and in any inquest is also advisable.
Finally, all companies should keep court proceedings in the back of their minds and examine whether the health and safety culture prevalent in their organisation would stand public scrutiny in court, and also whether employees or there representatives would be willing to speak favourably regarding the managements attitude to safety issues.
With thanks to Rachel Butlin, Holman Fenwick & Willan, for preparing this article.
