The Real Impact of the Corporate Manslaughter Act

The Corporate Manslaughter and Corporate Homicide Act is now in force for organisations of all sizes in the UK's public as well as private sectors.

This raises the question as to the potential impact on organisations and individuals.

First impressions may indicate that there is little significant change. After all, there is no direct impact on individuals, who could be prosecuted for manslaughter before this Act came into force.

The main legal change brought about by the Act is that a court will find an organisation guilty of Corporate Manslaughter if gross negligence can be proven. It is no longer necessary to first prove that a senior member of the organisation was personally guilty of manslaughter.

Significant Consequences

There are, however, significant consequences, some of which may not be immediately obvious, but all of which can severely impact the reputations of individuals and companies.

Impact of Investigations

The government view is that in the early years we are unlikely to see a significant increase in the number of prosecutions for corporate manslaughter. However, we are likely to see an increase in the number of investigations, which could be time consuming and harrowing for everyone involved.

It is no longer necessary to identify and prosecute a single "directing mind". However, it will be necessary to demonstrate that the fatality was substantially due to failure on the part of senior management – this may be the combined effect of failures on the part of a number of senior managers.

The inevitable consequence of this shift of emphasis is that investigators will have every incentive to arrest and prosecute senior managers/directors wherever there are reasonable grounds for suspicion. Should this happen, there is potential for conflicts of interest to arise between the organisation and those who have been arrested.

Publicity

The courts can order a convicted company to publicise what has happened. In such cases, the reporting must be in accordance with what the court dictates – there will be no opportunity for the Marketing department to add its own "spin" on the reports or to decide how and where the reports are to be publicised. In practice, such publicity may prove to be incidental in the light of the wider publicity that the investigation is likely to attract from the media.

Reputation

Organisations need to consider the impact on their reputation with their employees, the media, shareholders, suppliers, customers, recruitment and society, all of which will undermine their ability to win further business in the UK or elsewhere.

Insurance

On a purely practical point, companies would be well advised to check their insurance cover. Whilst it is not possible to insure against a fine, it is possible to insure against some of the other consequences, though this is not automatically included in many policies.

All of this is in addition to the purely legal consequences, which have been well publicised and, for the sake of completeness, are detailed below.

Views of IOSH

There may even be further consequences. For example, IOSH (Europe's leading body for Health and Safety) have expressed their views - which may or may not be adopted. They include:

• Compulsory training of directors and senior managers in health and safety management
• Audits conducted by third-parties
• Access to competent health and safety advisors
• Programmes for behavioural safety
• Possible suspension of directors or members of a governing body

Act Now

The Corporate Manslaughter Act refers to a 'Gross Breach of Relevant Duty of Care', which it defines as:

"A breach of duty that falls far below what can reasonably be expected of the organisation in the circumstances."

In considering how serious a failure on the part of an organisation has been, a jury may take into account all the normal health and safety provisions such as Policies, Practices and Systems. They will look at the quality of health and safety advice and asses the safety culture of the organisation. To mount a robust defence, companies' health and safety systems need to be in good order – demonstrably so.

If you have reason to believe your organisation is lacking in any of these areas, then the time to act is now. Don't wait for remedial orders to be imposed by the courts.

If you are at all unsure about how you may be affected by the Corporate Manslaughter Act, then contact us right away and arrange for a consultation. The consequences of not doing so could prove to be very serious indeed.

Legal Consequences

• Under the Act, organisations found guilty may be subject to substantial fines
• The Sentencing Advisory Panel recommends fines that are based on an organisation's worldwide annual turnover, ranging from 2.5% up to 10% - and possibly more, depending on circumstances.
• Organisations may be ordered by the courts to publicise their convictions in the manner prescribed by the court.
• Remedial orders can be imposed that are aimed at correcting underlying causes.