Yutree Underwriting

Corporate manslaughter: New guidelines

Mar 3, 2016

“Corporations have no soul to damn and no body to kick, they therefore do as they like.” So stated Lord Chancellor, Baron Thurlow in the 18th Century. This attitude remained within English law until the case of MS Herald of Free Enterprise.

Fulfilling duties and responsibilities

MS Herald of Free Enterprise was a ferry which capsized moments after leaving the Belgian port of Zeebrugge on the night of 6th March 1987, killing 193 passengers and crew. The ferry had been designed for rapid loading and unloading, so there were no watertight compartments. When the ship left harbour with her bow door open, the sea immediately flooded the decks, and within minutes she was lying on her side.

Investigations found that many employees had failed in their responsibilities that day – one employee had failed to close the bow doors; another had failed to ensure the bow doors were closed; and a final employee had left port without knowing whether or not the bow doors were closed.

A public Court of Inquiry into the incident was held under British Lord Justice Sir Barry Sheen in 1987. The Sheen Report severely criticised the attitude to safety prevalent in P&O, stating: “All concerned in management… were at fault in that all must be regarded as sharing responsibility for the failure of management. From top to bottom the body corporate was infected with the disease of sloppiness.”

This case lead to confirmation that a company can, in principle, commit manslaughter. Twenty years later, we saw the introduction of the Corporate Manslaughter and Corporate Homicide Act 2007, which created a means of accountability for deaths caused by very serious management failings. Since the introduction of the Corporate Manslaughter and Corporate Homicide Act 2007, Lion Steel Ltd was charged in relation to the death of 45-year-old employee Steven Berry who fell through fragile roof panelling sustaining fatal injuries. The company pleaded guilty to the offence on 4th July 2012 and was fined £480,000.

In another case, Paul Bowers, 47, was killed on 26 January 2013 when a pile of metal “stringers”, delivered to the warehouse in Hanger 14 of Cambridge airport, toppled on to him. The prosecution said CAV Aerospace Limited was responsible for ordering stock and maintaining health and safety at the warehouse run by a subsidiary. The company, based in Consett, County Durham, denied charges of corporate manslaughter and breaching health and safety but was found guilty.

So why are we talking about it now?

As of 1 February 2016, fines are now intrinsically linked to the turnover of the defendant company. For larger companies, fines may increase from hundreds of thousands into the millions of pounds and fines measured in the millions could become the norm. The Sentencing Council’s Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences Definitive Guideline suggests that fines should range from £180,000 to £20,000,000 depending upon the size of a company, but will, essentially, be unlimited. It is clear that the guidelines say that the fine must be sufficiently substantial to have a real economic impact on the defending company and it must bring home, to management and shareholders, the need to comply with health and safety legislation.

Some examples of potential corporate manslaughter incidents that could affect your client include:

  • A pedestrian killed by falling scaffolding
  • A gas leak caused by an unregistered gas fitter
  • An employee injured by faulty machinery

So how can your clients best protect themselves?

Clients should take time to review their existing processes and procedures and consider how the importance of safety can be shared internally so as to improve performance and, ultimately, so that accidents can be avoided. Where concerns are identified then the following could be considered:

  • An increase in compliance
  • Re-evaluation, re-investment and re-education in health and safety policies
  • Consideration of safety initiatives, procedures and training
  • Consideration of the appointment of a Health & Safety Manager where one does not exist and/or support roles to take responsibility in this area

All of the above will all be crucial to try and ensure that the worst-case scenario never happens. If it does happen, the implementation of the above will enable your client to demonstrate that they did all that they could which could mitigate the impact of an otherwise significant fine.

Your clients should consider the individuals who could be shown to have contributed to any future gross breach of duty of care. The Corporate Manslaughter and Corporate Homicide Act 2007 will put company executives in the firing lines for breaches of health and safety. Directors & Officers liability (D&O) insurance is a relatively inexpensive policy that will be absolutely priceless should a prosecution occur, as it focuses on the directors’ personal financial protection.

Clients should also check their employers’ and public and products liability policies to ensure that the defence and appeal costs are included following any manslaughter. All of Yutree’s liability policies include a Corporate Manslaughter extension as standard.

We hope that you found this article useful. If you would like to discuss liability insurance for any of your clients then please do get in touch with us on 01638 660651 or e-mail Laura at laura.high@yutree.com.

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