Killing in company
The main provisions and likely practical impact of the new legislation on corporate homicide
After almost a decade of deliberations, lobbying, consultations and debate, the Corporate Manslaughter and Corporate Homicide Act finally received Royal Assent on 26 July 2007 and will come into force on 6 April 2008.
Described by some as “a groundbreaking piece of legislation… ensuring justice for victims of corporate failings” (Justice Minister Maria Eagle), and by others as “no more than gesture politics” (Patrick Maguire, legal adviser to the STUC), the Act is an unsatisfactory and uninspiring attempt to address the public outrage over apparent lack of accountability for workplace fatalities in a manner which will not be seen to stifle entrepreneurial activity or create a risk-averse culture.
The need for legislation in this area was almost unanimously agreed. The existing law, which required the identification of the “controlling mind” of a company, was undoubtedly unsatisfactory, resulting in one high-profile failed prosecution after another. Such a “controlling mind” was only readily identifiable in small companies with uncomplicated management structures. In June 2003 the case of Transco plc v HM Advocate 2004 SCCR 1 made legal history when it became the first ever prosecution of a company for culpable homicide in Scotland. In that case, the Crown sought to develop the common law by establishing guilt by the principle of aggregation. This attempt also failed, with the judiciary commenting that “if... Parliament considers that a corporate body, in circumstances such as the present, should be subjected, not only to potentially unlimited financial penalties, but also to the opprobrium attaching to a conviction for culpable homicide, then it must legislate”.
And legislate it has. The Act aligns corporate killing laws both north and south of the border. The Scottish Executive had previously invested considerable resources into developing proposals for Scottish legislation in this area. It set up an expert group to “review the law in Scotland on corporate liability for culpable homicide”.
The expert group’s report was welcomed by the Scottish Executive, which appeared to be in favour of its recommended “radical and innovative” new law, including a separate offence for individuals which could lead to imprisonment, and a definition of the new proposed offence based on a redefined concept of “recklessness”. However, both Westminster and the Scottish Executive concluded that the expert group’s proposals were beyond the legislative competence of the Scottish Parliament, health and safety being a reserved matter under the Scotland Act 1998.
Whilst such an about turn was no doubt a source of embarrassment to the Executive, practitioners and organisations in Scotland breathed a sigh of relief – uniformity in health and safety law across the UK was seen by many as being an important overriding concern.
The issue of criminal liability for organisations following workplace fatalities is an emotionally charged one. It was brought to the fore once more only last month, following the conviction (for breaches of the Health and Safety at Work Act) of ICL Plastics and ICL Tech arising from the gas explosion at the Glasgow plastics factory which killed nine employees. Lord Brodie fined the companies a total of £400,000, leading to questions of whether matters would have been different if the companies had been prosecuted under the new Act.
The new offence
In terms of s 1 of the Act, the new offence of corporate homicide will be committed by an organisation where there has been a fatality which has been caused by a “gross breach” of a relevant duty of care owed by the organisation to the deceased, and where the way the activities of the organisation were managed or organised by its senior management was a “substantial element” in that breach. Such cases will be tried by jury in the High Court.
A “relevant duty of care” is defined in s 2 of the Act as any duties owed by an organisation “under the law of negligence”, in a list which includes duties owed by employers to employees and duties owed by occupiers of premises. Whether a duty exists is a question of law, for the judge to decide based on the facts. This importation of English law negligence principles into Scots criminal law is not likely to be without its difficulties.
Once it is established that a relevant duty of care exists, it falls to the jury to decide whether there has a been a gross breach of that duty. A gross breach of a relevant duty of care will occur where the conduct alleged to amount to a breach falls far below that which can reasonably be expected of the organisation in the circumstances.
Section 8 of the Act sets out the factors which a jury will be directed to consider. These include (a) the seriousness of the alleged failure; (b) the risk of death posed; (c) the extent to which the attitudes, policies, systems or accepted practices of the organisation were likely to have encouraged any failure, or to have produced tolerance of it; and (d) whether health and safety guidance was followed.
Persons who play “significant roles” in management, or the making of decisions at a management level, over the whole or a substantial part of a company’s activities are “senior managers” for the purposes of the Act.
While senior managers cannot be prosecuted as individuals under the new Act, their actions will be subject to vigorous scrutiny and will form a major part of the case for the prosecution. In addition, the Act does not abolish the common law of culpable homicide as it applies to individuals in relation to workplace fatalities – individual directors, managers and senior officers could be prosecuted both for culpable homicide and for a breach of the Health and Safety at Work Act 1974, s 37. In practice, however, it is widely thought that such individual prosecutions will become less likely if prosecutions of organisations under the Act are successful.
Crown immunity from prosecution has all but been removed (except in specified circumstances), and in addition the Act applies to unincorporated bodies, local authorities, partnerships and trade unions. After a last minute concession by the government, the Act will also apply to deaths in custody.
Penalties and orders
The maximum penalty under the Act is an unlimited fine, the same penalty faced by corporations prosecuted for workplace fatalities under the Health and Safety at Work Act 1974. This has led the Act to be widely condemned by campaigners as lacking teeth.
The court can, on an application by the prosecution, make a “remedial order” under s 9 requiring the organisation to take steps to remedy the breach and any deficiency in the organisation’s policies, systems or practices. This power is akin to that already enjoyed by health and safety inspectors in the form of prohibition and enforcement notices.
In addition, the court can make a “publicity order” requiring the organisation to publish the fact of its conviction, the details of the offence, the amount of any fine imposed and the terms of any remedial order. At present the Health and Safety Executive does “name and shame” guilty companies on its website on conviction. It may be thought that the widespread publicity which will follow from a publicity order will cause severe embarrassment and reputational damage. In an era of extensive marketing and increased “brand awareness”, this risk of reputational damage may act as the greatest deterrent. On the other hand, in today’s 24/7 news coverage and media frenzy over the need to report convictions of this nature, will a publicity order cause any additional damage to the reputation of the offender?
What then, will the Act actually achieve? Prosecutions will undoubtedly become easier and are more likely to be considered by the prosecuting authorities each time there has been a workplace fatality. It no longer being necessary to identify a “controlling mind”, the Act does level the playing field between large and small organisations. Additionally, the courts have already displayed a hardening attitude and a willingness to impose large fines under the Health and Safety at Work Act, the record fine of £15 million imposed on Transco being only one example. Courts are likely to give due consideration to the nature of the offence for which an organisation has been convicted, and the new Act will justify higher penalties. All of this may serve to put health and safety firmly on to the boardroom agenda.