“The Recent Corporate Manslaughter Decision and Board Protections” – a legal briefing with Teresa Hitchcock (Partner) and Noy Trounson (Barrister), DLA Piper at One London Wall.
Teresa is UK Head of Safety Health & Environment (SHE) within the Regulatory and Government affairs group. She has a background in regulation herself, so it was with a great deal of confidence and expertise that she delivered a thought provoking presentation. She noted that there were three areas of potential liability that a company faces in relation to fatalities affecting an organisation’s operation:
- Prosecution against a business under the Corporate Manslaughter Act 2007
- Prosecution for breaches of the Health and Safety Act 1974
- Prosecution against individuals for criminal negligence
The recent corporate manslaughter decision
In February this year Cotswold Geotechnical Holdings were charged under the Corporate Manslaughter and Corporate Homicide Act 2007, which came into force in April 2008. The company was found guilty of killing a junior geologist who was crushed to death when a trench collapsed at a site near Stroud in September 2008. A police investigation found that the company had a ‘cavalier attitude’ to health and safety and was accordingly fined £385,000. The fine was substantial but it should be noted that the Sentencing Guidelines Council recommend a minimum of £500,000 for convictions. The company was owned by a single Managing Director who oversaw the business and all aspects of its operations.
Issues in prosecution
Teresa delved straight into the risks businesses face and how they should be addressed. Under this comparatively new piece of legislation, it is important for a company to clearly define and think about who is classified as a senior manager. Specifically, in explaining the responsibilities of the corporate board in comparison to the operations management team, Teresa was quick to make the point that regardless of responsibilities pertaining to the day-to-day running of a business, anyone on the “senior management team” can be held to account in relation to workplace accidents & fatalities, not only board members. Responsibility doesn’t just pertain to the organisation as one entity, but can also be levied against individuals within a company.
“There is a tendency in this industry for people not to pay enough attention to health and safety which means they’re completely unprepared for how harrowing a situation can be if something goes wrong”
Noy, a professional support lawyer at DLA Piper, used a number of “real life” examples to highlight the importance of planning and recognition of responsibility of boards in relation to Health & Safety. He stressed that under the new laws corporations bear more of the burden to prove they’re proactively adhering to all H&S laws and procedures, rather than just proving they’re not avoiding them.
Giving some examples of actions that boards and companies must take into consideration, Teresa also handed out advice on how best to protect both the company and the individual managers. Pointing out that it’s not always necessary to have realms of paper trails proving a company’s adherence to all aspects of H&S regulation, it is important to be able prove that a company is consistently focused on “continuous improvement”.
Senior managers must address the way in which the organisation’s activities are managed & organised (especially in the way in which those activities are managed and organised by senior management themselves)
“Activities which are in control of senior managers must be looked at especially”
Often it is employees within an organisation who are best placed to carry out regular and enforceable risk assessments. They are those employees who see and experience the risks on a daily basis and it is in their best interest to ensure their own safety. Teresa also made the point that in some cases bringing in outside or third party assessors can lead to a feeling of discontent within a business. This in turn can result in a misplaced quote to a H&S executive or a feeling of malcontent in the ranks when things go wrong. Employees must have faith that the senior management team walk-the-walk as well as talk-the-talk.
Internal investigations and compliance reviews should be an intrinsic part of every day life within an organisation. The term “continuous improvement” needs to be synonymous with every aspect of a company’s health & safety mantra.
There needs too to be a place on the P&L account for health & safety planning and management. The financial planning process of a company should always entail an element of planning for the health & safety of its employees. Near misses should also be accounted for. Employees should automatically report “almost accidents” as freely as they do actual ones. This will help the management team recognise potential dangers and correct them before an issue occurs.
“Remember: organisations can be investigated and prosecuted without an incident or accident having ever occurred. There need only be the realistic threat of a danger for the authorities to step in”
At the end of the presentation there were some key points raised.
What is involved in good risk management, and what are legal risk management reviews?
Legal risk management reviews involve three main steps, those being understanding the business; interviews with employees and GAP Analysis. The benefits of this process include the results being legally privileged; benchmarking a company’s profile; compliance tool for moving a company forward and provides defence material should the need ever arise.
Teresa explained that there are 12 principles of Risk Management
1. Organisational context
2. Management of risk approach
3. Organisational objectives
5. Roles & Responsibilities
6. Support structure
7. Supportive culture
8. Overcoming barriers to the management of risk
9. Early warning indicators
10. Stakeholder involvement
11. Review cycle
12. Continual improvement