As a Director should I be worried about Corporate Manslaughter?
The short answer to the question is basically yes! Recently there have been some large fines and custodial sentences imposed by the courts.
You may or may not be already aware that Corporate Manslaughter (known as Corporate Homicide in Scotland) is an offence committed by a Company where the business owes a duty of care to an individual (such as an employee or member of the public) and falls far short of the standard that can reasonably be expected, resulting in the death of the individual. In order for a business to be prosecuted, a substantial element of the breach of the duty of care has to be due to the way undertakings are managed or organised by the senior management of the business.
The offence carries a penalty of an unlimited fine, and Courts have the power to make a publicity order requiring details of the offence to be publicised. Courts can also order remedial action.
The Sentencing Guidelines Council issued a revised Guideline which came into effect on the 1st February 2016, on fines for these offences in which, for larger businesses, with a high level of culpability, indicate that a fine in the range of £4.8m to £20m with a typical starting point of £7.5m would be appropriate, irrespective of whether the offence took place prior to the 1st February.
Individual Directors and Managers cannot be prosecuted under the Corporate Manslaughter and Corporate Homicide Act 2007, as it only introduces a corporate offence.
However, what you should be aware of is that the common law offence of manslaughter still exists and directors or managers can and have been prosecuted personally for manslaughter where their gross negligence has led to a workplace death. In addition, offences under health and safety legislation can be tried alongside manslaughter offences and, therefore, directors and managers responsible for the corporate failure could be prosecuted personally under health and safety legislation for their consent, connivance or negligence in relation to the businesses corporate offences, resulting in custodial sentences.
It is not possible to insure against a criminal penalty, however, it is possible for the organization to insure against the legal costs of defending actions.
Ensuring that your business has sufficient and adequate policies and procedures are important to ensure your business activities and actions are carried out with all consideration for the safety of your employees and anyone else that may be affected by your undertakings or premises under your control.
However, although you may have adequate policies and procedures in place, without carrying out rigorous monitoring and consistent application, policies and procedures themselves will not be sufficient. One of the items that a Jury can consider when a case is tried is whether there were attitudes, policies, systems or accepted practices within the business that were likely to have encouraged the failure or to have produced tolerance of it. Therefore, your health and safety culture and leadership in your business is critical to ensure good health and safety practice.
Directors can achieve a good safety culture and provide commitment by ensuring that the business has,
- a clear policy, a documented safety management system and clear and effective monitoring supported by employee and management training
- ensures that all accidents and near misses are documented and reviewed and ensure corrective measures are taken so that lessons are learnt, communicated and implemented
- ensure there is formal documented review of health and safety standards at Board level
- ensure a rigorous system of independent health and safety audit, and follow through on any actions identified in a timely and efficient manner
- ensure that significant risks associated with your undertakings have been recorded, communicated to those at risk, reviewed and any necessary corrective action is taken
- ensure that each member of the Board has been adequately trained in their legal responsibilities for health and safety
- ensure that management performance measures include health and safety requirements and there is a clear Board expectation of managers to meet Health and Safety Standards
- ensure that the Board and the Company or Business have access to competent and qualified health and safety advice whether this be provided internally or external
- ensure that where efforts are being made to create a positive health and safety culture within the workplace that these are documented