It is part of a series of guides on Health and safety and corporate manslaughter.
Health and safety is a highly regulated area and should be a priority for the board. Putting employees, customers and others at risk by not following the rules can amount to a criminal offence, with the potential for substantial (possibly multi-million pound) fines for the company, and fines and/or imprisonment for individual directors and employees.
The approach to health and safety must be rigorous. It’s important that both internal and external risks are identified and actively managed. This will mean working with contractors and suppliers to eliminate bad practice: weak links in the supply chain leave you vulnerable and increase your risk of prosecution.
Significant changes to the framework of health and safety legislation have been made in the past few years, increasing further the challenges faced by companies and their directors.
A company's duties
Every company has a general duty to ensure the health, safety and welfare of its employees, customers, contractors and anyone else who may be affected by its activities. But there’s an important qualification to this duty: it applies only ‘so far as is reasonably practicable’. The law is interested only in material risks to health and safety that any reasonable person would appreciate and take steps to guard against. Fanciful or hypothetical risks can be ignored. (See: R v Chargot Limited, below.)
This limitation on the general duty to guard against material risk – ‘so far as is reasonably practicable’ – allows a business to weigh a particular risk against the cost of preventative action in terms of time, money and effort. If that cost would be grossly disproportionate to the reduction in risk achieved, a decision not to take the action will be justified, and there will be no breach of the general duty.
It’s important to emphasise that, although prosecutions are frequently brought as a result of an accident in which someone has been hurt, a company can be liable where no personal injury has occurred. All the prosecution need prove is that a state of affairs existed that posed a real risk to the health or safety of employees or others. It is the risk of harm that is key, not that actual harm has been caused.
As well as this general duty to ensure the health, safety and welfare of employees and others, there are other more specific duties that will apply to many businesses, depending on the particular hazards and risks associated with each. Some of the areas covered are listed below.
These more detailed regulations often impose absolute obligations to put a specific safety measure in place or to avoid a particular hazard. In contrast with the general duty described above, doing everything reasonably practical to comply may not be sufficient.
In addition, every employer is required to implement a management system for identifying and managing risks. In practice, that means ensuring that:
- risk assessments are made;
- employers have access to competent health and safety advice;
- employees are provided with relevant information and training;
- risks specific to certain employees – for example, new and expectant mothers or the young – are assessed separately.
R v Chargot Limited
Shaun Riley was driving a dumper truck at a farm near Chorley in Lancashire, shifting soil to create a car park. After a few successful trips, the truck tipped over and he was killed by the load he was carrying. There were no witnesses to what happened. He had not been trained, he was unsupervised and he was not wearing the seat belt that would almost certainly have saved him.
Three parties were prosecuted for health and safety offences: his employer, the site contractor and the contractor’s managing director. The prosecution rested its case on the fact of the accident – the employee’s death was enough to show that there had been a breach of the duty to ensure his health and safety. The burden of proof then passed to the defendants to establish, on the balance of probabilities, that it was not reasonably practicable for them to do more than they did to prevent the tragedy.
The court supported this view, holding that, to be successful, the prosecution had to do no more than identify a risk to the health and safety of employees or the public, provided it was a material risk that any reasonable person would appreciate and take steps to guard against. Further details as to the precise acts and omissions that caused the death were unnecessary. Proof of accident or injury will generally be enough to show the risk was material, not hypothetical. The burden is then on the business to show that it took all reasonably practical steps to prevent it.
The employer was fined £75,000 and ordered to pay costs of £37,500; the contractor paid a fine of £100,000 and costs of £75,000; the managing director’s fine was set at £75,000 with costs of £103,000.
In addition to the general duty described earlier, more specific health and safety duties will apply to many businesses, including:
- Fire safety – if you are an employer and own, control or manage premises, you must take reasonable steps to reduce the risk of fire and ensure there is a safe escape route if fire occurs. Fire risk assessments must be carried out. This applies to all buildings, structures and open spaces, but not to individual private dwellings. See: The Regulatory Reform (Fire Safety) Order 2005
- Injuries, diseases and dangerous occurrences – employers, the self-employed and those in control of premises must record and report to the Health and Safety Executive all deaths, major injuries, ‘over three-day injuries’ (those that result in someone not being able to undertake their normal work for more than three consecutive days), diseases and near-miss accidents (known as ‘dangerous occurrences’) that relate to work activities. See: HSE's guide to the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (92-page / 898KB PDF)
- Work equipment – if you provide equipment at work, you have a duty to prevent or control risks arising from its use. You need to ensure that it’s suitable for its intended purpose and that it’s inspected and safely maintained. What’s more, you must provide adequate information and training for those who use it. See: The Provision and Use of Work Equipment Regulations 1998
- Display screen equipment and work stations – employers must carry out a risk assessment for work stations and provide adequate health and safety training for those using them. They must also ensure users take regular screen breaks and are informed of their entitlement to annual eye tests paid for by the company. See: The Health and Safety (Display Screen Equipment) Regulations 1992
- Manual handling – employees must be given adequate training on safe handling and lifting techniques and told to follow the company’s health and safety systems and policies. See: The Manual Handling Operations Regulations 1992
A director’s personal liability
The liability described in the preceding section is a liability of the business, usually a corporate body in one form or another. But where a company is shown to have committed a health and safety offence, an individual director may also be found to have committed a criminal offence (and this applies equally to a company secretary, manager or anyone else acting in a similar capacity).
The case against a director can be proved if the offence by the company was:
- committed with their consent – they were aware of the circumstances and positively endorsed it;
- committed with their connivance – they were aware of the circumstances but turned a blind eye;
- attributable to their neglect – they should have been aware of the circumstances and taken action.
Despite this personal liability when things go wrong, the positive obligation to manage a business in a way that ensures the health and safety of employees and others still rests with the company, not its directors. There is no guarantee this will continue, though: the health and safety duties of individual directors are constantly under review.
A breach of health and safety law is a criminal offence, punishable in the case of a business by a fine. In recent years, fines have increased, and the courts have made clear that they should be large enough both to reflect the culpability of the business and to get the attention of the shareholders.
Where the offence involves a fatality, fines between £100,000 and £500,000 are increasingly common; larger companies can expect to pay more than £1m. (See: The Hatfield rail crash and Balfour Beatty, below; and our guide on Sentencing guidelines for health and safety offences: level of fines.)
Prosecutions for health and safety offences may be dealt with in the Magistrates’ Court or the Crown Court. In the former, the maximum fine is now £20,000 for most offences, which may in itself lead to a greater number of prosecutions. A broader range of cases can now be taken to the Crown Court, exposing defendants to higher, unlimited fines.
A business found to have breached health and safety law can also be issued with an enforcement notice that either requires:
- specific action to be taken in a set time period; or
- a specific activity to stop or the use of particular plant or equipment to cease.
A director found guilty of consent, connivance or neglect is liable for an unlimited fine and to a prison sentence of up to two years. Fines won’t be covered by a directors’ and officers’ insurance policy, or by any indemnity from the company (see: Indemnity and insurance protection for directors, an OUT-LAW guide), and, of course, no-one can serve a prison sentence for you. To make matters worse, once found guilty you can be disqualified from acting as a director for up to 15 years.
So the consequences of a health and safety lapse by a director can be severe: a hefty fine, prison, and a long term obstacle to earning a living.
The Hatfield rail crash and Balfour Beatty
Four people were killed when cracked rail tracks caused a train to derail approaching Hatfield station. Balfour Beatty was responsible for maintaining the tracks. A faulty rail had been identified 21 months before the crash and a replacement rail had been delivered to the site six months before, but the repair had never been carried out.
Balfour Beatty was prosecuted for health and safety breaches, and the judge described its performance as ‘one of the worst examples of sustained industrial negligence in a high-risk industry [he had] ever seen’. The company pleaded guilty and was fined £10m; Network Rail protested its innocence but was convicted by a jury and fined £3.5m. Balfour Beatty appealed and had its fine reduced to £7.5m.
The Court of Appeal judgment was not that a £10m fine for a systemic failure was wrong in principle but that it bore too little relationship to the Network Rail penalty. (The implication was that the Court thought the latter was too low, but fairness dictated that it reduce the former to bring the two more into line.)
Among other points to come out of the ruling is that fines should be large enough to raise concerns among shareholders – but that need not necessarily mean that they must be so large as to reduce the next dividend or hit the share price.
Guidance for directors
To help directors deal with health and safety risks, and so avoid liability for themselves and their companies, in 2007 the Health and Safety Executive, the body that enforces health and safety law, teamed up with the Institute of Directors to produce guidelines, Leading Health and Safety at Work – Leadership Actions for Directors and Board Members (12-page / 456KB PDF), which sets out an agenda for effective leadership by the board.
The first step is to set the right ‘tone at the top’ and for the board to provide effective leadership from the top down. The guidance sets out three ‘essential principles’ that underpin good health and safety performance:
- strong and active leadership;
- worker involvement and engagement;
- assessment and review.
A four-point agenda can be used to embed these principles into an organisation’s culture by:
- planning the direction for health and safety policy;
- delivering on health and safety;
- monitoring performance;
- reviewing and checking compliance.
As mentioned in Corporate manslaughter, an OUT-LAW guide, directors and senior managers who read this guidance and follow it will give their companies a better chance should they ever be investigated for a gross breach of the duty of care under the corporate manslaughter legislation.
In addition, examples of conduct by directors and senior managers that can avoid or minimise the risk of prosecution include:
- receiving reports on safety performance and ensuring safety is discussed regularly at board level;
- leading by example and being visible;
- seeking and acting on competent advice when making policy and purchasing decisions;
- thoroughly considering requests for resources and justifying carefully any refusals;
- providing training to directors and senior managers on their health and safety responsibilities;
- checking the safety arrangements of key suppliers and contractors;
- setting personal objectives around safety performance;
- participating in a clearly defined management system for health and safety.
By contrast, the following are common examples of conduct by directors and senior managers that can lead to their personal prosecution for health and safety offences, or at least to prosecution of their company:
- allowing safety risks to persist to save money;
- sanctioning or promoting unsafe working practices;
- approving and signing off inadequate risk assessments or method statements;
- failing to take a diligent approach to collective and individual responsibilities.
See also: Corporate manslaughter, an OUT-LAW guide