How new guidelines are reshaping UK health and safety

04 December 2015

Directors need to familiarise themselves with their health and safety responsibilities and review company policies ahead of changes to sentencing guidelines.

Company directors who breach health and safety (H&S) laws could soon face much bigger fines and tougher prison sentences. In November 2015 the Sentencing Council published definitive sentencing guidelines applying to H&S and corporate manslaughter prosecutions from early 2016, if not before. The guidelines are expected to be retrospective, applying to past incidents and prosecutions already underway.

Company directors who breach health and safety (H&S) laws could soon face much bigger fines and tougher prison sentences. 

In November 2015 the Sentencing Council published definitive sentencing guidelines applying to H&S and corporate manslaughter prosecutions from early 2016, if not before. The guidelines are expected to be retrospective, applying to past incidents and prosecutions already underway.

Stronger penalties

Directors and senior managers could go to prison for ‘negligence’, rather than the current trigger of deliberate or reckless conduct resulting in death or injury, based on the draft sentencing guidelines.* 

There will be greater use of custodial sentences and larger fines for individuals, both intended to send a message and truly penalise the individual and/or business. 

Fines for the company will be proportionate to the business: small companies (with revenues from £2–£10 million) could be fined as much as £450,000, while medium-sized companies (with revenues of up to £50 million) could be fined as much as £1.2 million, according to the draft guidelines.

As the guidelines make directors more accountable for H&S failings, it is important they familiarise themselves with their responsibilities and review company policies. 

Are directors doing enough currently to ensure that they have effective H&S management systems in place within their organisation

Sentencing guidelines

Recent cases demonstrate that courts are already imposing tougher sentences on individuals, particularly directors, with more immediate custodial sentences being handed out than before. 

Even those receiving suspended sentences are often receiving heavier fines. For example, at Canterbury Crown Court, a director who received a suspended 12-month sentence after a fatal accident was also fined £75,000, and prosecution costs of £25,000 were awarded against him.

The new guidelines suggest that individual directors and officers are under increased scrutiny when it comes to H&S, says Jamie Fitzroy, Risk Management Consultant at JLT Specialty. 

“Under the proposed sentencing guidelines, the HSE and others will be more proactive in prosecuting individuals, while courts are likely to take a tougher stance on directors once they are convicted.” 

“It won’t be enough for directors to simply delegate H&S management to others,” adds Charles Wenborn, Head of Leeds Risk Practice at JLT Specialty. “They must be able to demonstrate ownership at board level. Companies will need to ensure that they have effective safety monitoring, with clear reporting lines to senior management. If they fail to do so, a company could be deemed to have a poor H&S culture.” 

The changes to sentencing guidelines should prompt companies to review how H&S is dealt with at an executive level, says Fitzroy. 

“Directors need to see H&S as an important part of managing the business as a whole. It should be on a par with other activities, like finance or sales. “Being able to show that you are taking H&S seriously won’t stop you being prosecuted if something goes wrong, but it could help mitigate potential fines and custodial sentences if you can show that you are generally managing safety well.” 

If it is not already, safety management should be on the agenda of senior management and board meetings, with boards documenting and evidencing that they are actively managing H&S and acting on any issues, Fitzroy advises.

Insurance review

The probable increase in prosecutions and convictions of individual managers and directors will have implications for directors’ and officers’ (D&O) insurance, as well as employers’ liability (EL) and public liability (PL), says Wenborn.

The threat of custodial sentences could also result in more contested cases, if senior managers and directors fight to stay out of prison. 

Directors and their companies may also face much higher legal and investigation costs. This is partly due to the complex sentencing matrix – involving various steps and criteria to determine the offence category and appropriate level of fine or sentence, including culpability and harm factors, turnover of company, the offender’s means and other mitigating factors.

D&O insurance could pick up defence and investigation costs incurred by individual directors, but only to until the point of conviction, and would not cover the costs of dealing with any sentencing involved. 

EL and PL insurance policies could also be called upon in cases of corporate manslaughter prosecutions to pay for defence costs, but as with D&O insurance they would not cover fines and penalties.

Positive response

The proposed sentencing guidelines should spur companies to revisit H&S management, potentially investing more time and resource than before. 

“The changes should be seen in a positive light, giving H&S managers an opportunity to raise the profile of safety, revisit the basics and promote some fresh thinking within their organisations,” says Fitzroy.

Companies should review their H&S management practices and procedures to ensure that they are doing the best job they possibly can, Fitzroy advises. “Good safety management systems and processes are key, but companies need to closely monitor them and make sure that people are using them.” 

Companies should therefore set key performance indicators (KPIs) for H&S management, monitored on a regular basis by senior management. Companies should also consider the benefits of external audits for H&S, noting that there are many frameworks, tools and consultants to help companies develop systems and processes, 

Fitzroy advises. 

“It is always good to get an outside view of what you are doing, and there may be a need to take competent advice where it is not available internally,” he says. 

“With the revised guidelines and generally increased focus on directors, it’s definitely better to do too much, rather than too little.”

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For more information, please contact Charlie Wenborn, Head of Leeds Risk Practice on +44 (0)113 203 5836

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