Health and safety is at the forefront of corporate responsibility, especially with an increasingly hard line being taken in relation to health and safety cases.

And with the sentencing guidelines for H&S manslaughter offences revised in 2016, how has the environment changed for construction companies and what are the implications for their insurance arrangements?

Increased Sentencing Powers

Sentencing Guidelines for Health & Safety and Corporate Manslaughter offences were revised in February 2016, directing much higher levels of punishment in many cases, focussing for the first time on size of the offenders turnover, as well as the level of risk and culpability regarding the offence.

In another near miss case, Wates Construction was fined £640,000 for the escape of carbon monoxide in a block of flats. Fortunately the leak was detected before any residents suffered serious ill-health effects, but the potential for significant damage or injury was reflected in the fine.

One such case saw a supervisor at IS Europe Ltd found guilty of gross negligence manslaughter and sentenced to 12 months imprisonment, after a stack of windows fell from height and collapsed upon a passing lawyer. In the same case, the site manager, was sentenced to six months imprisonment, suspended for two years, for failing to take reasonable steps to ensure health and safety whilst at work.

The first year of the updated Guidelines saw 19 fines of £1m or more. By contrast, there were only three fines of £1m or more in 2015, and none at all in 2014. Similarly, there has been an increase in the number of prison sentences received. Under the Guidelines, individuals can face penalties ranging from fines up to a maximum of 2 years imprisonment.

The Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) was intended to make it easier to secure a manslaughter conviction against larger organizations. However, in practice, prosecutors in those cases still face the difficulty of proving the intricacies of corporate structure and decision-making processes in establishing negligence sufficiently grave to trigger the Act. As a result, corporate manslaughter convictions under the Act have tended to be against SMEs with relatively straightforward management structures, say with only one or a small number of individuals at senior management level, easily identifiable and with a hands-on role. So far there have been 25 convictions under CMCHA.

Further proposed sentencing review

On 10 October 2017 the Sentencing Council closed its 14-week consultation into sentencing guidelines for manslaughter offences. For gross negligence, manslaughter the Sentencing Council concluded that it would be appropriate for sentences to increase in certain cases. An example is given of cases where an employer has had a long standing, utter disregard for the safety of employees and is motivated by cost cutting.

It has been suggested that the majority of cases would fall into a proposed culpability category C (medium). For this category the proposed sentencing range would be 3-7 years custody with a starting point of 4 years. For very high culpability the range would be 10-18 years with a starting point of 12 years custody.

Beyond Sentencing

For corporate manslaughter offences the courts can impose publicity orders pursuant to Section 10 CMCHA. Such orders direct an organisation to publicise in a specified manner, e.g. in a local newspaper or notice on its own website, details of the conviction and any sentence imposed. This will not only lead to reputational damage, which is difficult to measure, but is likely to impact on existing or future contracts with clients at the tender stage.

Issues to Consider

Against this background, commonly recurring questions we see being raised include:

• How robust are your risk assessment, management and training procedures?
• What are your procedures for selecting and monitoring the competence of sub-contractors? Are these rigorous enough to withstand examination by the HSE?
• How effective is your record keeping system?
• What procedure do you have in place to address the unwelcome event of an adverse incident? Do you understand the concept of privilege over documentation and its significance? How would you ensure privilege in protected documents is not inadvertently waived?
• How would you respond to an investigation by the police, HSE or other regulator? Which individual or individuals would take responsibility for managing the fast moving, dynamic process of an investigation, and what are your plans for this to be best managed? How would you interact with the media, or with those injured, their families and/or colleagues?
• What impact would an adverse event have on corporate reputation and/or share value? How would you manage this?

Original article posted by AIG Insurance.

This guide is for information purposes and based on sources we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.