The importance of Directors playing a proactive and leading role in the management of health and safety within their organisations cannot be over stated. This update is designed to bring to your attention recent legal issues which have the potential to impact on your business. They should be read and considered, in the context of action to be taken, in the light of what is expected from Directors in terms of "best governance" in health and safety management as set out in the HSE/IOD guidance "Leading Health and Safety at Work". By way of reminder, that guidance recommends that Directors should, in terms of health and safety management:
Fee for intervention update (FFI)
Under the FFI scheme and regulations HSE is entitled to render an invoice to dutyholders where it finds a material breach of statute or regulations irrespective of whether any enforcement action in the form of Improvement/Prohibition Notices or prosecution is taken.
Last year OCS Group Limited brought a Judicial Review of the FFI scheme and, in particular, the appeal process on the basis that there was in reality no independent and objective appeal process and hence the dispute process was contrary to natural justice, HSE effectively being the judge and jury in relation to decision taken by it as an organisation.
In February 2017 the proceedings were settled with HSE agreeing to review the scheme and pay the costs of OCS. The Consent Order settling the proceedings set out a proposed new procedure for FFI disputes. In future, when levying FFI, HSE will provide a summary covering:
- Which provisions had been contravened and the reasons HSE believes there to be a contravention
- Why the contraventions amount to "material breaches"
- How and why the costs have been reasonably incurred by HSE
- HSE's response to any issue raised by the dutyholder during the query or in requesting the dispute.
In terms of the appeal process:
- Dutyholders will be able to make written representations once they have the summary and they can include information which they wish to be taken into account
- Such representations should make clear why FFI is disputed
- There will be an obligation on HSE to disclose information/evidence upon which it relies
- Disputes will be considered by an independent panel chaired by a lawyer with two other members with practical experience of health and safety management
- If there is an investigation or appeal against an Improvement/Prohibition Notice, the dispute process will be suspended until the outcome of the appeal/investigation is known.
HSE has now issued a public consultation which closes on the 2 June 2017. A summary of HSE's proposal for amending the FFI dispute process and a questionnaire to be completed by anyone wanting to contribute to the consultation process can be found on their website.
One point which arises from the proposed new scheme subject to consultation is the statement that "In the event that a dispute is not upheld the dutyholder will have to pay the costs reasonably incurred by HSE in handling the dispute. This will include a fee for the lawyer (chairing the panel – our addition) and travelling expenses for the other panel members."
There appears to be no proposal that if the dispute is resolved in favour of the dutyholder then HSE will be responsible for the cost incurred by the dutyholder in bringing the dispute.
Actions/considerations for directors
Do you have in place within your organisation an appropriate system for considering, monitoring and, if appropriate, challenging Notices of Contravention issued by HSE in relation to the FFI scheme?
Occupational health and wellbeing
Since his appointment as chair of the Health and Safety Executive in 2016 Martin Temple has at every opportunity expressed his desire and intention that HSE should have a positive impact on occupational health and wellbeing. Whilst acknowledging that there is no room for complacency in relation to occupational safety he is keen to ensure that HSE reminds dutyholders of their obligations in relation to occupational health and indeed wellbeing. We can therefore expect HSE to be more proactive in terms of occupational health and wellbeing. It is possible that there will be a much keener focus on work related mental health issues such as occupational stress and such a focus may lead to increased enforcement action.
Actions/considerations for directors
Is your organisation paying sufficient heed to occupational health and wellbeing? Do you have in place appropriate strategies and are you satisfied that your risk assessment processes robustly identify and tackle health, welfare and wellbeing risks?
Since the Sentencing Council Guideline for sentencing in health and safety and corporate manslaughter offences took effect in February 2016 there has been a dramatic increase in the level of fines imposed in health and safety prosecutions. In 2014 a total of £4.3 million by way of fines was imposed in England and Wales for health and safety offences. In 2015 that figure was £13.5 million and 2016 it rose to £38.6 million. All the indications are that that figure will rise considerably during the current year.
There are a few specific issues relating to sentencing which Directors and those responsible for the management of organisations should be aware of. They are as follows:
- When does a "large" organisation become a "very large" organisation?
Under the guideline, a "large" organisation for sentencing purposes is defined as one with an annual turnover (or equivalent) of £50 million or more.
However, the guideline states that where an organisation's turnover "very greatly exceeds the threshold for large organisations it may be necessary to move outside the suggested range to achieve a proportionate sentence".
The Court of Appeal on the 9 March 2017 in the case of R v Havering Borough Council held that the sentencing judge in the Crown Court was entitled to treat the Council, which had a turnover equivalent of £120 million, as a very large organisation thereby taking it out of the suggested sentencing range contained within the guideline.
We are already seeing Crown Court Judges being more inclined to increase penalties for organisations which have a turnover significantly in excess of the £50 million threshold for a "large" organisation. In our view that is something which should be resisted as such a step should only be taken if it is necessary to impose a sentence which is proportionate and that is determined by a number of factors.
- Sentencing in Scotland
The Definitive Guideline must be followed by sentencing Courts in England and Wales but does not apply directly to Scotland.
However, in November 2016 the Court of Session in Scotland, in an appeal against Sentence brought by Scottish Power Generation Ltd found that the Sheriff who imposed the sentence was right to have regard to the England and Wales sentencing guideline. They considered that the guideline provides a useful "cross check" for Scottish sentencing Judges especially where the offence or regulation is UK wide such as HSWA 1974. However, the Court also indicated the guidelines should not be "interpreted and applied in a mechanistic way". It remains to be seen the extent to which there will be a greater consistency of sentencing UK wide.
- Basis of plea
It is increasingly important to ensure that there is absolute certainty as to the basis upon which an organisation should be sentenced having regard to the degree of culpability, the level of harm risked and the likelihood of that harm occurring. Particularly for large/very large organisations the categorisation of each of these elements for the sentencing process can have a huge financial impact. Organisations should therefore be prepared to stand their ground and have sentencing hearings at which evidence is called in order to determine the proper basis on which they should be sentenced (this is known as a "Newton Hearing"). Similarly organisation should be giving very careful thought to entering pleas of not guilty. In many cases even if there is a conviction the evidence that emerges from a trial puts any failing into context and can lead to a lower categorisation of culpability although such a step has to be taken in the light of diminished credit for pleas of guilty being entered at an early stage.
Actions/considerations for directors
The high level of penalties simply underlines the need for organisations to operate to the highest standards of health and safety management. The role of Directors in terms of giving leadership and identifying health and safety management as a priority is vital in that regard.
Do you have in place measures to respond swiftly and effectively to formal investigations? Legal advice should be sought at an early stage to assess potential culpability and to determine a strategy for the investigation so that you are not on the "back foot".
Brexit – implications for health and safety
There is likely to be very little in the way of short term impact. In the long to medium term there is unlikely to be any significant impact on existing regulations and case law.
It is interesting to look at the EU's focus on health and safety management as at January 2017 which is set out as:
- Stacking up the fight against occupational cancer (the first cause of work-related deaths in the EU)
- Helping businesses, especially SMEs, to comply with rules on health and safety at work
- Addressing issues of growing concern – such as psycho-social risks, musculoskeletal disorders and ageing.
The EU focus is being reflected by Martin Temple, the HSE Chair, in his public utterances and approach.
Actions/considerations for directors
The potential impact on health and safety legal obligations need to be kept under review. However, organisations which operate in EU jurisdictions will post Brexit need to keep abreast of health and safety obligations in those jurisdictions. It is likely that even post Brexit a pan-European approach to the management of health and safety will be effective and desirable.
Personal liability of directors
In the year ending 31 March 2015 there were 15 personal prosecutions of Company Directors and Senior Managers under HSWA 1974 in England and Wales. In the year ending 31 March 2016 there were 46 such prosecutions, a threefold increase, and the trend towards investigation of individuals and potential prosecution on the part of HSE and other enforcement bodies continues.
Action/considerations for directors
This emphasises the need to ensure that Directors are giving appropriate leadership within their organisation, meeting requirements of HSE/IOD guidance and taking personal responsibility. If such an approach can be demonstrated then, even if there is sufficient evidence to merit prosecution, it is more likely that the HSE will be persuaded that prosecution of individuals personally will not be necessary in the public interest.