The Corporate Manslaughter and Corporate Homicide Act 2007 ('the Act') was given Royal Assent in July this year, 10 years after the Law Commission first recommended that legislation was required in this area. The majority of its provisions come into effect in April 2008, although those applying to deaths in custody will not come into effect until a later date. The Act creates a new offence called corporate manslaughter in England, Wales and Northern Ireland, and corporate homicide in Scotland. It aims to address the existing difficulties in prosecuting companies where gross negligence in the conduct of business results in death and to encourage management to take health and safety issues seriously.
Background to the legislation
Following the Stockline disaster in 2004 and the subsequent prosecution of the companies responsible under health and safety legislation, the subject of corporate killing has received significant media attention, focusing on the inadequate penalties, failed prosecutions and lack of managerial accountability in situations where companies or other organisations are responsible for deaths.
In August this year, ICL Plastics and ICL Tech were fined £400,000 by the High Court in Glasgow, having plead guilty to four separate offences under the Health and Safety at Work Act 1974 after leakage from a corroded pipe resulted in an explosion in the Stockline plastics factory operated by the companies, killing nine employees and injuring 40 more. This was Scotland's worst industrial disaster since the Piper Alpha oilrig explosion in 1988. Investigations in the Stockline case showed that had proper health and safety procedures been in place, the deaths could easily have been prevented.
Lord Brodie, the presiding judge in the case termed the penalty an "inadequate response" to the tragedy, given the gross negligence of the company's management in failing to implement adequate health and safety measures. The fines imposed were seen as insufficient to give the proper appearance of those responsible for the disaster being held accountable.
Although the penalties available under the Health and Safety at Work Act 1974 (the 1974 Act) and other health and safety legislation are limited, the alternative, prosecuting companies for corporate killing by gross negligence at common law, is notoriously difficult. Conviction requires proof beyond reasonable doubt that an individual director or manager, acting as the 'directing mind and will' of the company, and embodying the company in his or her actions and decisions caused the death. The stringency and specificity of this test makes it difficult to prosecute larger organisations where fatalities have resulted from a series of management failures or the lack of a proper health and safety culture within the company, as these factors cannot be attributed to the acts or omissions of any particular individual.
The new regime
The new regime under the Act aims to address the stumbling blocks within the existing law, creating a more effective basis for liability.
The offence of corporate manslaughter/corporate homicide makes companies and other corporate entities liable for the way in which their senior managers run the organisation and its activities. It applies to companies, partnerships, trade unions, police forces, and certain government bodies. The offence occurs when the way in which an organisation is managed or organised causes a person's death and amounts to a gross breach of a 'relevant duty' owed by the organisation to the deceased (s1(1)).
The Act does not create any new duties of care, and specifically refers to those currently owed under the law of negligence, including as an employer and occupiers liability. Therefore whether the organisation owes a duty of care is a matter for the court to determine.
It is for the jury to determine whether there has been a 'gross breach' of any duty owed. This is defined as conduct falling "far below what can reasonably be expected of the organisation in the circumstances". There are a number of factors listed that must be taken into account, including whether there was a breach of health and safety provisions, the seriousness of any such breach and the significance of the risk of death posed.
Significantly, among the factors that can, but do not have to, be taken into account are the health and safety practices adopted by the organisation and its general health and safety culture. Given that a company will not be liable for the offence providing reasonable safeguards have been adopted, the fact that a company's health and safety culture can be looked at in evidence means that companies will be well advised to adopt clear policies and procedures in this area.
Another important feature of the Act is that it introduces the concept of "senior management failure." This allows the jury to look at the collective actions of management, the system of work adopted and the general 'safety culture' within the company when determining whether there has been a gross breach of duty. This removes the necessity for the company's guilt to be attributable to the gross negligence of a person senior enough to 'embody' the organisation. Consequently, prosecution of larger organisations should be easier than under the previous regime.
When the Act comes into force, the police have responsibility for investigating workplace fatalities in addition to the Health and Safety Executive. If there are sufficient grounds, it is likely that charges will be brought under both health and safety legislation and the new Act, increasing chances of obtaining a conviction.
The main penalty under the Act is an unlimited fine. Fines are expected to be larger than those currently levied under health and safety legislation, reflecting the seriousness of the offence. However, additional penalties include remedial orders and publicity orders.
Conviction under the Act would be seriously damaging to a company's reputation. Being found 'guilty' of corporate manslaughter or homicide would clearly attract more stigma than any of the offences under health and safety legislation. The potentially detrimental effect on share price of a company following the adverse publicity surrounding a conviction is likely to make health and safety procedures an area of greater concern for shareholders.
Where a publicity order is made, the organisation will be required to publish details of the offence and the level of fine. Failure to comply with a publicity order is an offence in itself.
Remedial orders, on the other hand, require the organisation to adopt certain measures to improve health and safety. Potentially creating a significant expense to the company, particularly when combined with a fine.
Regardless of any criticisms, the Act has clearly made some positive changes which should help to overcome the existing problems with prosecuting corporate killing. The potential reputational damage resulting from a conviction is likely to act as a strong deterrent to ignoring health and safety issues. In the event of a conviction, the cost to the company in failing to take such matters seriously and to adopt proper procedures would be far greater than the cost of implementing proper measures in the first place. Under the Act, as long as reasonable safeguards have been put in place for an activity, and a death nonetheless occurs, there will be no liability. As a result, companies will be encouraged to adopt proper measures and reduce the risk of disasters such as the ICL Stockline explosion from occurring again.