On 6 April 2008 the new Corporate Manslaughter and Corporate Homicide Act 2007 comes into force.
What does the Act do and why do we need it?
The Act creates the new offence of corporate manslaughter in England, Wales and Northern Ireland and the offence of corporate homicide in Scotland. It is intended to make it easier for the authorities to prosecute companies and other larger organisations where a corporate management failing has led to death.
As the law currently stands, before a company can be convicted of manslaughter, a "directing mind" of the organisation (that is, a senior individual who could be said to embody the company in his actions and decisions) also has to be guilty of the offence. Only smaller companies with hands-on directors have been convicted. It has often proved impossible for this test to be met in the case of large organisations where safety decisions are not taken at board level and rarely by one individual.
Who is covered by the Act?
The new offence is directed at organisations, which includes all companies and other corporate bodies operating in the UK, whether incorporated in the UK or abroad. Also covered are partnerships, trade unions and employers’ associations if they are an employer as well as police forces, numerous government departments and public bodies.
What is the new test?
An organisation will be guilty of an offence if the way in which its activities are managed or organised:
- Causes a person’s death; and
- Amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.
For an organisation to be found guilty, the way in which its activities are managed or organised by its senior management must be a “substantial element” in the gross breach.
When does a duty of care arise?
A relevant duty of care in relation to an organisation includes a duty owed:
- To its employees or to other persons working for the organisation or performing services for it. This will include an employer's duty to provide a safe system of work for its employees. An organisation may also owe duties of care to those whose work it is able to control or direct, even though they are not formally employed by it. This might include contractors, secondees or volunteers.
- As occupier of premises. This covers an organisation’s responsibilities to ensure, for example, that buildings they occupy are kept in a safe condition.
- In connection with:
- Supplying goods and services.
- Commercial activities.
- Construction and maintenance work.
- Using or keeping plant, vehicles or other things.
For the purposes of the Act, whether a particular organisation owes a duty of care to a particular individual is a question of law.
What will amount to a gross breach?
To be termed a gross breach, the organisation’s conduct must fall far below what could reasonably have been expected of the organisation in the circumstances. In determining whether there has been a gross breach of a relevant duty of care, a jury will consider:
- Whether the organisation has failed to comply with health and safety guidance relating to the incident. Health and safety guidance means any code, guidance, manual etc that is concerned with health and safety matters, and is made or issued by an authority responsible for enforcement (such as the Health & Safety Executive).
- The seriousness of the failure.
- How high the risk of death was.
- The extent to which there were attitudes, policies, systems or accepted practices (i.e. its safety culture) in the organisation that were likely to have encouraged or produced tolerance of non-compliance with safety requirements.
What is meant by the term “senior management”?
Senior management is defined as the persons who play significant roles in:
- Making decisions about how the whole or a substantial part of the organisation’s activities are to be managed or organised; or
- The actual managing or organising of the whole or a substantial part of those activities.
Persons falling within this category will have their aggregated conduct examined to see if corporate managerial or organisational failings substantially contributed to the company’s breach of its duty of care. This covers both those in the direct chain of management as well as those in, for example, strategic or regulatory compliance roles.
There has been a lot of debate about what constitutes “senior management”. The answer is likely to be different in each case, depending on the size and structure of the business involved.
What are the penalties under the Act?
Companies convicted of corporate manslaughter will be liable to a fine which is unlimited in size. Since the fine may be payable over a period of years, it can have a serious impact on profitability for many years to come, rather than being a single “hit”. This is the same penalty as for breaches of health and safety legislation, although higher fines are anticipated, reflecting the gravity of the new offence.
Courts will have the power to order remedial action to require a convicted organisation to take specific steps to remedy the management failure that led to the fatality. They also have the power to make publicity orders, requiring companies to publicise details of their conviction and the fine imposed. Such an order has the potential to damage the reputation of an organisation. Publicity orders are not being brought into force on 6 April 2008, but will be introduced when supporting guidelines are available.
Breach of a remedial or publicity order will be an indictable offence and also subject to a fine.
What about individuals?
The offences only cover organisations. There is no new offence being created of which an individual may be guilty. However, directors and managers will continue to be held to account through existing health and safety laws with the potential for being guilty as an individual and imprisoned and/or fined for gross negligence manslaughter and culpable homicide in appropriate cases.
Are there any safeguards?
The consent of the director of Public Prosecutions is needed for all prosecutions and is therefore likely to be reserved for only the most serious offenders. The government estimates about ten prosecutions a year.
What about existing health and safety law?
Save for the fact that the new law replaces the existing corporate manslaughter offence, the Act does not change other existing health and safety law. Prosecutors will be able to add health and safety charges in addition to manslaughter charges on any indictment.