Sally Roff, Partner, Beachcroft LLP discusses how the recent inaugural case under the Corporate Manslaughter and Homicide Act 2007 may impact on Zurich Municipal customers.
On 14 February 2011, Cotswold Geotechnical Holdings Ltd became the first organisation to be convicted under the Corporate Manslaughter and Corporate Homicide Act 2007, which came into force in April 2008.
The new law allows an organisation to be prosecuted where there is evidence of a gross failing by Senior Management resulting in a death. Whereas in the past it has always been necessary to find an individual who was the ‘controlling mind’ of the organisation who was themselves responsible for a gross failing, under the new Act, the Crown Prosecution Service can now look more widely at the ‘way in which activities are managed or organised’ and consider whether it has been grossly negligent.
How does the Act affect public sector organisations?
A number of Zurich Municipal customers may have previously been immune from prosecution under the Health and Safety at Work etc Act 1974 and other health and safety legislation. Government departments as well as armed services, police authorities, Crown bodies and partnerships are now subject to the risk of a prosecution under the Corporate Manslaughter and Corporate Homicide Act 2007.
All types of organisations including public services, charities, registered social housing providers and educational institutions need to heed the risks of an investigation and potential prosecution under the Corporate Manslaughter Act if any individual (employee, contractor or member of the public) dies in a situation connected to their undertaking. This could potentially include road accidents, construction projects, deaths in public housing, or death in service (e.g. social workers killed by a service user).
Organisations should be aware that even where they have contracted out the provision of public services to a third party (e.g. a Local Authority contracting out the provision of housing to a registered social housing provider) they may well still owe a duty of care to individuals including employees and members of the public under the Act which could result in an investigation by the police (and therefore immediately a risk of negative publicity) and potentially a prosecution under the Act.
It is crucial that those within an organisation involved in procurement or the overseeing of contracted out services are made aware of these obligations and identify any continuing duties of the organisation in order to ensure compliance. It is important for organisations to consider whether the wording of contractual terms and responsibilities used in the commissioning of services makes clear the health and safety responsibilities of the various parties in order to minimise risk or exposure under the Act and other health and safety legislation. It would be sensible for advice to be sought from legal advisers when doing so.
Exemptions under the Act
There are a number of limited exemptions to situations where the Act will apply to organisations which otherwise could face the risk of prosecution. These are:
• Public policy decisions, exclusive public function and statutory inspections – where decisions are made exclusively for public policy reasons (e.g. the decision to not to provide particularly expensive drug treatments by an NHS trust). In addition, a public body carrying out a statutory inspection (e.g. the HSE) may be exempt in certain circumstances.
• Military activities – military operations including hazardous training exercises which is required will likely fall outside the Act
• Policing and Law Enforcement – as with military activities, hazardous training exercises required and certain policing operations will fall outside the Act. Such operations that fall outside include those dealing with terrorism, civil unrest or serious disorder and officers come under attack but this is by no means a blanket exemption for policing operations.
• Emergencies – This exemption applies to Fire and Rescue authorities, NHS bodies (including arranged ambulance services) Armed Forces, Organ Donor or Blood transportation, any other rescue services (including lifeboat rescue) and any other emergency response service other than commercial response. An exempt emergency circumstance will be where circumstances are ‘present and imminent’ and are causing (or likely to cause) serious harm, worsening harm or death to a person. The exemption also covers ‘believed emergencies’.
• Child Protection and Probation – Child protection and probation services are exempt under the Act unless the death is of an employee or the death is caused as a result of some failure by an organisation in its duties as occupier of premises (e.g. lift failure in a premises owned by the organisation). There will in due course be a duty towards a detained patient, person held in secure accommodation, person held in custody or some other kind of detention or person being transported as a prison escort (including immigration arrangements) but this part of the Act is not yet in force.
It should be noted that these exemptions are yet to be tested but that significant discussion in the House of Commons and the Lords prior to the Act having been passed means that some useful guidance should be available to organisations wishing to explore the adequacy of policies and procedures to protect it against investigation or prosecution under the Act.
The first prosecution
Alex Wright, a geologist employed by Cotswold Geotechnical Holdings Limited, died from asphyxiation when an unsupported three-metre trench in which he was working collapsed. The jury found that the company had been in gross breach of its duty in failing to comply with health and safety guidance to support any trench over 1.2m deep (something which its principal director had previously been warned about by the HSE).
Mr Justice Field, in passing sentence accepted that the company was in a ‘parlous’ financial state but still fined £385,000 payable over 10 years. He did not make any additional order for payment of prosecution's costs of £140,000 although indicated that this would have been ordered had the company’s financial picture been different. The judge noted the level of fine was such that it was inevitably going to put the company into immediate liquidation and result in job losses but considered that such a fine was necessary to both mark the gravity of the offence and to act as a deterrent to employers generally.
No Publicity Order was made in this case although the Sentencing Guidelines suggest that sentences will generally include such orders as part of the penalty. Such an Order can be for an organisation to publicise in whatever way the Court feels fit (e.g. an advertisement in a national newspaper) the fact of a conviction, specified details of the offence, the amount of the fine imposed and the terms of any remedial order made. This poses a real risk of serious damage to the reputation of any organisation convicted under the Act.
In addition, future cases are likely to see fines in excess of £500,000 where impecuniosity cannot be argued to the extent of this case. In the case of public bodies, real evidence will need to be provided to the Court about the impact of such a fine on their ability to provide public services and, consequently the punitive impact on the taxpayer, in order to reduce that starting point level of fine.
Avoiding a prosecution and planning for an incident
To reduce the risk of such an investigation or prosecution, organisations should ensure their health and safety policies and procedures are in place and importantly that these are properly communicated and enforced to ensure the organisation is reducing risk of injury or death to the lowest practicable level.
Guidance from the Institute of Directors Leading Health and Safety at Work and HSG65 Successful Health and Safety Management along with other specific health and safety guidance (available on the HSE website) are good starting points. This advice will assist senior management in evaluating whether their organisation is meeting all health and safety requirements. It will also provide reassurance against risk of a personal prosecution as a result of any existing failures within the organisation.
Organisations should ensure they have adequate insurance cover in the event of an incident for legal defence costs (likely to be a six figure sum) and to provide cover for individual senior managers and directors as well as the organisation itself. For advice on your insurance cover and risk management, speak to your risk and insurance consultant or email: info@zurichmunicipal.com.
Useful information
www.hse.gov.uk
www.iod.com
sroff@beachcroft.com
info@zurichmunicipal.com
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