Earlier this year, we considered the Health and Safety Executive’s (HSE) proposed cost recovery scheme – "Fee for Intervention (FFI)" - and asked what it would mean for businesses. Under the scheme, those who break health and safety laws are liable for recovery of the HSE’s related costs, including, inspection, investigation and taking enforcement action.

The scheme came into force on 1 October 2012 and we consider the detailed guidance which has been published about how the scheme will work.

The trigger

The scheme is triggered when a HSE inspector considers a business to be in "material breach" of health and safety law and allows the HSE to charge for the work on an hourly rate basis as is required to investigate and advise the business until they become compliant.

The HSE guidance defines a "material breach" as "when, in the opinion of the HSE inspector, there is or has been a contravention of health and safety law that requires them to issue notice in writing of that opinion to the duty holder".

Written notification could be by letter or email and could be a notification of a contravention, as well as an issue of improvement, prohibition notice or notice of a prosecution.

Any work "reasonably incurred" by the HSE in relation to the material breach will be charged at £124 per hour. The guidance specifies that the charge will attach to "all work that is needed to identify a material breach and all work to ensure that the breach is remedied. It also includes any investigation or enforcement action, up to the point where the HSE’s intervention, in relation to the material breach, has been concluded or a prosecution started …"

All work needed

The HSE guidance states that this will include writing letters and reports, taking statements, any follow up work to ensure compliance including site visits, telephone calls, email correspondence, gathering information/evidence and so on.

The HSE will also charge for any external resources drawn on in the course of their work, for example, work done by the Health and Safety Laboratory or other external experts. The scheme will not, however, apply to local authority inspections or investigations.

Concerns over how the scheme will work in practice have already been raised, particularly by the construction industry where the application of the scheme may not be straightforward. For example, it may not be clear who the defaulting duty holder is on a site where there are multiple parties at work. In its guidance, the HSE says it will attribute a proportion of the fee to each defaulting duty holder it identifies. However, any time spent in seeking to identify who is the duty holder in "material breach" would also be charged.

Point of challenge

It can be envisaged that the application or apportionment of a fee may be a point of challenge for businesses. With that in mind, the HSE has set out a two stage dispute process.

The appeals process originally proposed by the HSE consisted of a review solely by HSE employees as to the merits of each individual case. This proposal attracted fierce criticism given that the HSE would effectively be "judge and jury".

As a result the dispute process was revisited and divided into two stages, albeit the first stage remaining a review by a HSE manager. The reviewing manager will be independent from the department who issued the fee. In the event that a duty holder is not satisfied with the outcome, a second stage is available which ensures a review by a panel comprising HSE employees and an independent business representative.

Where an appeal is successful the business will recoup the fee incurred and not have to pay for the HSE’s costs of the appeal. The business will not, however, be entitled to recover any legal costs it has incurred in the process. The costs of a failed appeal will all fall to be paid by the business. HSE guidance states that the cost of the appeal will be calculated as the time taken to resolve the dispute multiplied by the FFI hourly rate. It is not currently clear if that will be per individual involved. If so, that could be costly considering the number of HSE employees involved in the process and the potential cost of the external business representative.

It is clear that the FFI scheme will have wide ranging implications for the relationship between the HSE and businesses, and how businesses respond to HSE investigations.

Cause for concern

There is a real concern that HSE inspectors will be under pressure to generate income under the scheme and will formalise their opinion in writing where in the past they would have given informal verbal advice. While this may be something which is out of a business' hand, the main concern may be to reduce the cost to them when the scheme is triggered. The simplest step businesses can take is to remedy any material breach identified by an inspector as soon as possible. In short - the less work the HSE has to do, the less the business will pay.

As a longer term plan, particularly for larger organisations, it could be helpful to monitor the level of fees paid to the HSE through the scheme and the nature of the breaches that are attracting the fee. This will enable an assessment to be made of any trends across the business and for health and safety resources to be focussed to address any vulnerable areas. This will be especially important for multi-site businesses as they will presumably wish to guard against being hit with a fee (or a prosecution) for the same breach in more than one location.

These are all issues which will need to be navigated as the scheme gets going and as we see how individual HSE inspectors seek to implement it.