On 1 October 2012 the controversial Health and Safety Executive (HSE) Fee For Intervention (FFI) charging regime came into force. The regime allows the HSE to recover costs of regulatory work at a rate of £124 an hour from dutyholders found to be in "material breach" of health and safety law.
"Material breach" of the law
For the two months of October and November the HSE has invoiced a total of £727,644.81 through 1,418 invoices. A broad breakdown of this is that 10 per cent of invoices are for values greater than £1,000 and 70 per cent are for less than £500.
The regime is triggered when a HSE inspector considers a business to be in "material breach" of the law and means that the HSE can then charge for the work it does on an hourly rate basis to investigate and advise the business until they become compliant.
Guidance published by the HSE setting out how the scheme will work states that a "material breach" is deemed to take place "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 dutyholder".
Written notification could be a notification of a contravention by letter or email, the issue of an Improvement or Prohibition Notice or 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 HSE’s intervention, in relation to the material breach, has been concluded or a prosecution started …"
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.
The dispute process
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 but at the same time any time spent in seeking to identify who is the duty holder in "material breach" would also be charged.
It can be envisaged that the application or apportionment of a fee may be a point of challenge for businesses. The HSE has set out in guidance a two stage dispute process where any challenges can be heard.
The dispute process originally proposed by the HSE consisted of a review solely by HSE employees as to the merits of a 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. It is intended that 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 then the second stage is 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, which could be costly considering the number of HSE employees involved in the process and the potential cost of the external business representative.
In addition to the appeal process, recipient organisations do have the option to ask simple queries of the HSE about an invoice upon receipt, without risking the incurring of further costs. Whether or not these initial queries are considered by the HSE to require the mounting of an appeal proper will depend on the queries’ nature and their presentation, but it should certainly be possible to ask the HSE for example to clarify on the basis upon which a material breach is suspected (if it has not already been made clear) and for an indication of any apportionment between any different dutyholders involved.
Impact on the HSE and business' relationship
It is clear that the FFI scheme will have wide ranging implications for the relationship between HSE and business, and how businesses respond to HSE investigations.
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’ hands, the main concern may be to reduce the cost to them when the scheme is triggered. Put simply the best thing businesses can do is to remedy any material breach identified by an inspector as soon as possible. The less work the HSE has to do, the less the business will ultimately be asked to pay.
Monitoring the level of fees
As part of a longer term strategy, 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 on areas where there are vulnerabilities. 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.
From our own experience, the FFI invoices we have seen so far have been variable in terms of their detail and apparent reasonableness. Those with a proper level of detail have been helpful in two ways:
- To enable an assessment of the reasonableness of the work done and the time spent
- To gain insight into the focus and direction of the HSE’s investigation
Assuming a recipient organisation is happy to make a challenge and there are not other issues arguing against it, invoices without proper detail should be subject to at least the first non-appeal level of HSE query. Unfortunately, in the absence of such a query and a sensible response it may not be possible to assess the reasonableness of some invoices until months later and only then if the HSE decide to mount a prosecution and are therefore obliged to disclose the evidence they have gathered.
However, it is likely that the main drivers against the querying and appeal of FFI invoices, and in turn the reason why close scrutiny and proper challenge may be rare, will be organisations’ unwillingness to be seen to aggravate the HSE and to risk throwing good money or time after bad; because the FFI invoices are not big enough to warrant it in the case of large organisations, and because further cost cannot be afforded in the case of small.
These are all issues which will need to be navigated as the scheme continues and as we see how individual HSE inspectors seek to implement it.