High fines and prison sentences for health and safety breaches are becoming more common. We consider the new challenges facing construction.
- Increased fines for health and safety offences have increased the pressure on companies to ensure they comply with health and safety legislation
- A new Sentencing Guideline for health and safety offences is in force and is leading to many more fines over £1 million, especially for companies with a high turnover
- All employees should be adequately trained to implement health and safety procedures, with consequences for those that do not
- More prosecutions are being brought against individuals for health and safety offences
- Breach of the law has civil consequences as well as criminal
- Businesses should be aware of contractual risks too; they should review and proactively manage their potential health and safety liability on each contract/project
A new Sentencing Guideline for health and safety (H&S) offences came into force in 2016. It has led to much higher fines for breaches of H&S law, especially for companies with a high turnover. This has increased the pressure on companies to ensure their H&S procedures comply with legislation, and that employees at all levels are adequately trained to implement those procedures. If companies do not, the sanctions are severe…
The Guideline requires the courts to impose fines that are sufficiently substantial to ensure they have a real economic impact on offenders and to reinforce to both the management team and shareholders the need to comply with H&S legislation. We can see from recent cases that the judiciary support the Guideline’s hard-hitting approach to sentencing.
Business owners and managers concerned both for the well-being and safety of their employees, their organisation’s profit margin and their own personal, potentially criminal liability will, no doubt, be reviewing their own H&S procedures. We summarise the Guideline below, look at the types of liabilities organisations can face and also highlight other issues to consider as part of a holistic approach to H&S.
The Sentencing Guideline – a recap
The Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences, Definitive Guideline (the Guideline) came into force for all matters sentenced on or after 1 February 2016. It provides a consistent method for judges and magistrates to calculate H&S fines. Previously, the legislation and case law gave judges wide discretion to impose an unlimited fine with no clear starting point. Judges are now required to follow the Guideline, unless it would be contrary to the interests of justice to do so.
Here’s a recap of the Guideline’s key points:
- The Guideline applies to all the main H&S offences.
- Judges and magistrates should follow a nine-step approach to calculate an appropriate sentence to suit the individual circumstances of the offence. This involves determining the category of the offence (in terms of culpability and risk and likelihood of harm), as well as ensuring the fine fulfils the objectives of sentencing and other factors.
- There are four categories of culpability (low, negligent, reckless and deliberate) and four harm categories ranging from category 1 (for death or serious injury) to the lowest, category 4.
- The court will also take into account aggravating and mitigating features. Aggravating features might include deliberate concealment of the activity, a poor health and safety record, falsification of documents, or failure to heed warnings. Mitigating features might include having no previous convictions, evidence of steps taken to remedy the problem and effective H&S measures in place.
- Organisations must remedy H&S failings involved in the offence by the date of sentencing or risk being ‘deprived of significant mitigation’. Organisations should therefore open a dialogue with the regulator as soon as possible after the offence has been committed and well before any sentencing hearing.
Recent sentencing examples
The courts have applied the Guideline in several cases in the last few months. The increase in fines following the introduction of the Guideline is marked: in 2014–15, the total levels of fines awarded amounted to £18.1 million, compared to £38.3 million in fines in 2015–16. This increase is illustrated by two fines issued to Wilko a year apart. In January 2016, just before the Guideline came into force, Wilko was sentenced for a fatal accident involving a fork-lift truck driver, and received a fine of £200,000. In contrast, in February 2017, Wilko was sentenced for a serious injury suffered by an employee and received a fine of £2.2 million.
Other recent cases evidence increased fines too. For example, when an employee of Solarjen Ltd fell 3.5 metres through a hole in the roof he was working on and suffered serious injuries, Solarjen Ltd were fined £250,000 (plus costs of £12,000) for failing to ensure physical guarding was in place to prevent falls.
There has also been a doubling in 2015–16 of the number of cases being brought under the Health and Safety at Work Act 1974 against individual directors and senior managers. For example, three directors of two companies were jailed in May 2017, after a fatal fall by a worker through a fragile roof. The employee’s employer and the owner of the building were jailed and their companies convicted of offences including corporate manslaughter. Total fines of £1.06 million were issued. The directors received jail terms of 1 year, 10 months and 8 months and were disqualified from being company directors for 10 years.
Who enforces H&S laws?
The Health and Safety Executive (HSE) is the regulator responsible for compliance with H&S laws on construction sites. Other specialist regulators may also have a role on certain sites (for example, the British Transport Police, the Office of Rail Regulation and the Civil Aviation Authority). As well as taking criminal prosecutions, regulators can use enforcement tools such as prohibition notices and improvement notices against those in breach to ensure compliance. Those in breach can also be subject to civil proceedings for civil liability.
In the most serious of cases, charges of corporate manslaughter may arise. If failings by an organisation’s senior management are a substantial element in any gross breach of the duty of care which results in the death of a member of the public or an employee of the organisation, then an offence has been committed under the Corporate Manslaughter and Corporate Homicide Act 2007. This means the company could face an unlimited fine and a requirement to comply with a publicity order, leading to the publication of details of the offence and fine. Other consequences flow from having a criminal conviction, such as being ineligible for tender processes.
As well as criminal liability, civil claims may be brought in negligence or under employment law against an organisation that is found to have failed in its duty of care.
Employees and senior directors may be liable in their personal capacity. If any offence under the Health and Safety at Work Act 1974 is committed with the consent, connivance or neglect of any director, manager, secretary or similar officer, then that person can be convicted under s 37 of the Health and Safety at Work Act 1974, alongside the company.
Companies can purchase insurance to protect directors (s 233 of the Companies Act 2006). However, protection can only be obtained for the cost of civil damages and for the legal costs in defending proceedings, and not for criminal fines or penalties.
The complex nature of H&S duties on construction sites
The personal tragedies and sanctions in cases such as those mentioned above are guaranteed to send a chill down the spine of most business owners, directors and construction managers – even those who have implemented the latest rules and regulations. But are the normal checks and balances enough? What more can organisations do to avoid liability and keep employees and contractors safe?
Responsibility for H&S issues on a construction project can be complex. Multiple parties are involved at any one stage of the project, which also means that there are multiple duty holders working in tandem together. Clients, the lead contractor, sub-contractors and professionals might all have some form of H&S duty in respect of any one particular element of work. Each of these parties might well have stringent measures in place to regulate their activities but what about the interface between their roles and other participants in the project and their workers?
Relationships on site are frequently complex which makes it harder to determine who is liable. When something goes wrong, blame can often be attributed to someone else’s actions or lack of action. Parties can be liable for a H&S breach even when their employees were not responsible for the action causing the breach.
Organisations should plan in advance of a project and ensure that the lines of responsibility and liability are clear. On busy construction sites, the duty holders for each relevant H&S law should be clearly identified, to ensure each organisation and individual on site knows where the obligations sit and can be confident that those duties and associated obligations are being carried out.
Avoiding liability: pre-contract issues to consider
Every organisation and individual has a role to play in assessing, controlling, reviewing and preventing risk. Here are some issues to consider at contract negotiation stage, before work starts:
- Employer perspective – as a minimum, carry out and regularly review risk assessments, and check that your current H&S procedures are up to date and implemented throughout your organisation. Before works are started, risks must be anticipated and managed through control systems. All required personal protective equipment (PPE) and safety equipment must be provided.
- Employee perspective – ensure training is up to date, and all instructions are followed on site. Instil a compliance culture into your colleagues and staff.
- Managing sub-contractors – your health and safety duties extend not just to employees but also to others who might be affected by your business activities, such as contractors, site visitors and neighbours.
- Pre-contract – consider due diligence to ensure that you only deal with well-run contractors with no previous convictions for H&S.
- Insurance – manage your insurance coverage appropriately for each project.
- Contractual issues – contracts should contain obligations for parties to comply with H&S law and recognised practice, including provisions which allow a party to halt work if unsafe practices are being followed and to enable those concerned about another party’s H&S record, to require regular review meetings to discuss concerns. You may wish to include reporting obligations for near misses and incidents.
- Corporate governance – good H&S management is rooted in good corporate governance. There is increasing pressure on organisations to report on health, safety and environmental issues in corporate reports and investors are becoming alive to the relevance of statistics other than financial in order to assess the success of a company.
H&S risks can be managed as long as organisations take appropriate steps and ensure employees and managers are active and engaged in managing risk. With fines on the rise, there is increasing pressure at board level in organisations to make sure H&S responsibilities are taken seriously. Additionally, the increased trend for individuals to face prosecution will help focus those responsible to ensure compliance.
The Grenfell Tower fire will further focus the spotlight on the adequacy of building and H&S regulations as well as the industry’s adherence to them. There seems little doubt that the London tragedy will encourage public support for the courts’ stricter approach to compliance when applying the Guideline. In the meantime, the industry may need to consider going above and beyond the current regulations where necessary to ensure safety