Management of Health and Safety Management of Health and Safety Legal PerspectiveLegal Perspective

Mark Tyler

CMS Cameron McKenna

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Today’s TopicsToday’s Topics

Compensation Culture

Legislation as driver

HSE’s enforcement role

Directors’ responsibilities

H&S in Corporate Governance

Corporate Manslaughter

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Compensation CultureCompensation Culture

“The growing compensation culture in the UK is now costing about £10bn a year – or 1% of GDP”

Institute of Actuaries, Dec 2002

Growing compensation culture poses major threat to profitability and jobs.

Aon, July 2004

“25% of employees find the essential Employers Liability Compulsory Insurance difficult or impossible to secure despite vigorous attempts to find cover.’

Federation of Small Business, May 2004

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Compensation CultureCompensation Culture

The culture is a myth The perception causes fear of

litigation and imposes burdens on organisations

Redress for genuine claimant is hampered

Recommendations

Regulate claims Co’s More rehabilitation Raise small claims limit Investigate contingency feesImprove ombudsmen arrangements Promote occupational healthMore mediation Lower insurance premiums

www.brtf.gov.uk

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Compensation CultureCompensation Culture

Conditional fee rules introduced, 1995 Legal aid restricted for personal injury, 2000 Solicitors’ advertising rules relaxed, 2001 Increasingly strict interpretation of regulations

and common law duties of care.

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Number of Solicitors – England & WalesNumber of Solicitors – England & Wales

010,000

20,00030,000

40,00050,000

60,000

70,00080,000

90,000100,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

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Legislation as a DriverLegislation as a Driver

HSWA 100+ health and safety regulations Management of Health and Safety at Work

Regulations 1999

Corporate Manslaughter

“The Government is concerned both that there should not be scope for avoidance measures by unscrupulous companies or directors, and that enforcement action should act as a real deterrent, even in large companies and within groups of companies.”

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Major Injuries - Construction EmployeesMajor Injuries - Construction Employees

0500

100015002000250030003500400045005000

91/92

92/93

93/94

94/95

95/96

96/97

97/98

98/99

99/00

00/01

01/02

02/03

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Major Injuries – Construction EmployeesMajor Injuries – Construction Employees

0500

100015002000250030003500400045005000

91/92

92/93

93/94

94/95

95/96

96/97

97/98

98/99

99/00

00/01

01/02

02/03

CDM

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Legislation as a DriverLegislation as a Driver

Southall rail crash Ladbroke Grove rail crash Hatfield Transco/Larkhall }Safety Case

holders

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Legislation as a DriverLegislation as a Driver

Among the specific proposals which the Health and Safety Commission will consider are:

Fines linked to the turnover or profit of a company;

Prohibition of Director bonuses for a fixed period;Suspension of managers without pay;Suspended sentences pending remedial actionCompulsory health and safety trainingFixed penalty notices for specific offencesDeferred prohibition notices on welfare issues

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HSE Enforcement RoleHSE Enforcement Role

"The evidence supports the view that it is inspection, backed by enforcement, that is most effective in motivating duty holders to comply with their responsibilities under health and safety law. We therefore recommend that the HSE should not proceed with the proposal to shift resources from inspection and enforcement to fund an increase in education, information and advice".

House of Commons Work and Pensions Committee, July 2004

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Average Fines for Health and Safety Offences 1990/91-2002/03

£0.00

£2,000.00

£4,000.00

£6,000.00

£8,000.00

£10,000.00

£12,000.00

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Prosecutions 1990-2003Prosecutions 1990-2003Prosecutions 1990-2003Prosecutions 1990-2003

0

1000

2000

3000

90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03

Convictions Prosecutions

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Enforcing authorities should identify and prosecute or recommend prosecution of individuals if they consider that a prosecution is warranted. In particular, they should consider the management chain and the role played by individual directors and managers, and should take action against them where the inspection or investigation reveals that the offence was committed with their consent or connivance or to have been attributable to neglect on their part.

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D & O HSE ProsecutionsD & O HSE Prosecutions

0

5

10

15

20

25

30

35

40

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2003 survey of directors

“Rewards are not at the top of directors’ agendas. The area directors are most concerned about is the risk from health and safety and product liability laws.”

H&S in Corporate Governance

Action Point 5

"The board needs to ensure that it is kept informed of, and alert to, relevant health and safety risk management issues. The Health and Safety Commission recommends that boards appoint one of their number to be the 'health and safety director'".

Percentage of organisations that have allocated health and safety responsibility to a board level director [Source: HSE Research Report 135]

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H&S in Corporate GovernanceH&S in Corporate Governance

Combined Code – internal control guidance HSC/DETR’s ‘Revitalising Health and Safety’

strategy HSC’s ‘Health and Safety in Annual Reports’

guidance DTI’s draft OFR and Directors Reports

Regulations

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Top UK Companies’ H&S Information in Top UK Companies’ H&S Information in Annual ReportsAnnual Reports

49%1995 (FTSE100)

47%2001 (FTSE350)

80%2003 (FTSE350)

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H&S in Corporate GovernanceH&S in Corporate Governance

Combined Code – internal control guidance HSC/DETR’s ‘Revitalising Health and Safety’

strategy HSC’s ‘Health and Safety in Annual Reports’

guidance DTI’s draft OFR and Directors Reports

Regulations

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1990 91 92 93 94 95 96 97 98 99 2000 01 02 03 04

OLL Ltd Convicted

Great Western Trains

Acquitted

Reform Proposals

Proposals in October?

Corporate Manslaughter Developments

P&O Acquitted

Law Commission

Proposals

Case dismissed

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Experience with prosecutions in EnglandExperience with prosecutions in England

‘Work-Related Deaths’ Protocol 253 cases referred to CPS since 1992 69 prosecutions 18 convictions

Only 6 Corporate prosecutions have succeeded

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Manslaughter IndictmentManslaughter Indictment

“A, on the...day of...1996, unlawfully killed B”

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Corporate Manslaughter – doctrine of Corporate Manslaughter – doctrine of identificationidentification

“…where a corporation through the controlling mind of its agents, does an act which fulfils the pre-requisites of the crime of manslaughter…it, as well as its controlling mind or minds, is properly indictable for the crime of manslaughter”

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Current law of gross negligence Current law of gross negligence manslaughtermanslaughter

“...The jury must go on to consider whether that breach of duty should be characterised as gross negligence and therefore as a crime. This will depend on the seriousness of the breach of duty committed by the defendant in all the circumstances in which the defendant was placed when it occurred. The jury will have to consider whether the extent to which the defendant’s conduct departed from the proper standard of care incumbent upon him... such that it be judged criminal.”

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Unsuccessful attempts to prosecuteUnsuccessful attempts to prosecute

Zeebrugge Southall rail crash Ladbroke Grove rail crash Simon Jones Hatfield (Railtrack)

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The need for reformThe need for reform

Accountability The doctrine of ‘identification’ is discredited The common law of manslaughter is

unsatisfactory

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Home Office Proposals, May 2000Home Office Proposals, May 2000

1.A ‘management failure’. 2.It is ‘the cause or a cause of death3.The failure constitutes ‘conduct falling far below what can reasonably be expected...’

“There is a management failure if the way in which activities are managed or organised fails to ensure the health and safety of persons employed or affected by those activities”

Introduction of a specific “Corporate Killing” offence for ‘undertaking’ with three key elements

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Final ThoughtsFinal Thoughts

Revitalising targets not being met Problems with an enforcement approach Prosecutorial selection of cases No sentencing tariffs Little evidence for deterrent effect of the current

models Economically inefficient No alignment with business objectives Conflicts with other policy objectives Separate the enforcement and advisory

functions?