Nearly 10 years after the introduction of The Corporate Manslaughter and Corporate Homicide Act 2007 was introduced on 6 April 2008, it’s possible to reflect and measure the impact on the management liability landscape.
HSE figures show that in the year to 31 March 2016, 46 company directors and senior managers were prosecuted for health and safety offences. That’s a 300%+ increase on the previous year, which sounds like a lot, but the risk is still fairly low, given there were 3,593,602 companies on the effective register at Companies House at the end of December 2016. The chance of conviction is high, at 74%, albeit this is slightly lower than is generally the level for health and safety cases (at around 95%). This is doubtless a reflection of the fact both that individuals prosecuted for health and safety offences are more likely to defend them (whereas the majority of companies plead guilty) and that juries are likely to be less inclined to convict an individual than a company.
A conundrum for directors lies in one of the potential consequences of this, in that a director could be in breach of a duty to the company if they are acting in their own best interests, not those of the company. If liquidation of the company followed a fine that was imposed, this could have other consequences for the directors.
In 70% of prosecutions, parallel proceedings were also brought for Gross Negligence Manslaughter and/or Health and Safety offences.
In 70% of prosecutions, parallel proceedings were also brought for Gross Negligence Manslaughter and/or Health and Safety offences. There’s also possibly something of a paradox here. Fewer prosecutions might mean there are fewer deaths, which might lead to the conclusion that the imposition of the Act has had the intended consequences. There is no doubt that the law raised the profile of the offence and of failure to comply and new sentencing guidelines for fines introduced in February 2016 continue to emphasise the punishing consequences for organisations of Health and Safety breaches.
The case of Monavon Construction in June 2016 gives some indication of the courts approach to fines. The judge fined the company £250,000 for each of the corporate manslaughter offences (2 pedestrians fell in a 3.7m well on a construction project), plus an additional £50,000 for the Health and Safety at Work Act breach. The judge also imposed a publicity order on the company, and awarded costs of around £23,000 against it. The level of the fine was based on the fact that Monavon was a “micro organisation” with a turnover of much less than £2 million.
Affirmative cover now exists in policies and it is typical to provide up to a £1 million defence costs cover for claims against the entity for corporate manslaughter. This is in addition to defence costs cover for claims against individuals as a result of criminal proceedings for manslaughter. The policies also provide cover for costs associated with Health and Safety investigations against the organisation.
Original article posted by MPR Underwriting.
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.