Your responsibilities under the Corporate Manslaughter Act

7 December 2009

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With workplace deaths increasing in the past few years - particularly in the construction and engineering sectors - it's vitally important that directors are aware of their responsibilities under the Corporate Manslaughter and Homicide Act 2007 and take steps to ensure their business complies with the relevant legislation. Recently, the Sentencing Advisory Panel, the body responsible for advising courts on sentencing under the Act, issued new guidelines that could mean fines will "seldom be below £500,000".

Earlier this year, the first charges were brought against a UK company under the Corporate Manslaughter and Homicide Act 2007, following the death of an employee. Cotswold Geotechnical Holdings Ltd, a company specialising in geological surveys, became the first company to be charged under the Act after a junior geologist was killed in 2008, when a pit excavated as part of a site survey collapsed on him whilst he was taking soil samples.

The company's director was also charged with gross negligence manslaughter and, if convicted, faces a maximum sentence of lifetime imprisonment, in theory.

The offence

The Corporate Manslaughter and Homicide Act 2007, which came into force in April 2008, sets out clear definitions of the offences faced by organisations and what is required from them in order to fulfil their duty of care.

Under the Act, an organisation is guilty of an offence if the way in which its activities are organised or managed by its senior management cause a person's death and this failure on its part amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.

A 'gross breach' is defined as conduct that falls far below what can reasonably be expected of the organisation in the circumstances.

The Act sets out certain factors which must be taken into account when considering whether an organisation is guilty of such an offence, including:

whether it is in breach of health and safety legislation;
how serious the management failure was; and
how much of a risk there was of death occurring.

The Act applies to all organisations operating in the UK, including companies and partnerships.

Penalties on conviction

If convicted, an organisation may incur significant penalties including:

Unlimited fines. The Sentencing Advisory Panel has launched a consultation on penalties for the new offence with a view to agreeing the methods for calculating a fine but it is unclear when sentencing guidelines will be published. Current thinking is that the fine is likely to fall somewhere between 2.5 to 10% of the offending organisation's average turnover.
Damage to reputation. The courts can force a company to publicise the conviction. Failure to comply with a court order is a criminal offence also punishable by an unlimited fine.

Directors' individual liability

Although the Act does not apply to individuals, directors and senior managers remain at risk of prosecution for the common law offence of manslaughter and numerous offences under health and safety legislation. If found guilty, a director could theoretically face life imprisonment.

Practical steps

Review the guidance on Corporate and Manslaughter and Homicide with a view to ensuring that the current health and safety leadership within the organisation meets those standards.
Review all safety management systems and consider whether an external audit of such systems and general health and safety compliance is required; and
Review current liability insurance to ensure that any recoverable legal costs incurred under the current legislation are covered.

Insurance

If a criminal prosecution is successful, insurance cover will not be available for any fine or costs against the organisation. If a defence is successful, there may be cover for the legal costs incurred. This should not prevent a company from being covered under its employers' or public liability policies in relation to civil claims arising from death.

Directors' and officers' insurance may be available to individuals for defence costs in the event of a defence being successful. Directors must also be aware that any indemnities given by a company will not cover any criminal fines or costs incurred by them in the defence of criminal proceedings where a director is found guilty.

About the author

This article was put together by the FPB's legal advisers, Mace & Jones Solicitors. For more information see www.maceandjones.co.uk.

How the FPB can help

Members of the FPB can take advantage of our comprehensive and cost-effective insurance services, including directors' and officers' insurance.

Plus, ensure your business is compliant with the latest health and safety regulations by subscribing to our practical Health & Safety Guide.