Watch your step!

Health and safety is an area that no business can afford to neglect, explains Ana Paula Nacif

While large companies may have it all – from big budgets to specialist advisors – smaller businesses may struggle with too much to do and too little time.

But health and safety is not something a company, regardless of its size, can afford to skip. In fact, smaller companies that get it wrong are more likely to go under as they fight long, expensive legal battles – not to mention the damage a PR disaster can do to their bottom line.

For those who thought they were either too small to worry about health and safety or blamed little time and money for their lack of commitment, the Corporate Manslaughter and Corporate Homicide Act 2007 will be a timely wake-up call.

The act has been in force since 6 April and makes it easier for companies to be prosecuted and fined should an employee or a person connected with the business die as a result of negligence. Before, an individual director or manager had to be identified as the ‘company’s mind’. Now, the courts will look at senior management as a whole to find the culprit.

Complying with health and safety doesn’t have to be taxing or expensive, however. The Health and Safety Executive website (www.hse.gov.uk) lists what the law requires of SMEs. But businesses need to be mindful that it doesn’t become a box-ticking exercise.

“Directors need to make sure that everyone involved with the business is fully aware of their obligations,” explains Callum Taylor, Management Liability Underwriting Manager at Hiscox. “It is all very well for directors to be aware of their health and safety responsibilities, but unless the information is filtered through the organisation, the company could still be found negligent.”

With the new Act, cases that would previously have been prosecuted under health and safety laws could now end up in the criminal courts.

So, for example, if an employee is killed in a road accident, a corporate manslaughter prosecution could follow if it was later found that the car was not roadworthy, even if it did not belong to the company. Ultimately, the company is responsible for ensuring that vehicles used by employees for business purposes are safe.

The government has predicted that there will now be between ten and 13 manslaughter prosecutions of companies each year. While this may not sound a lot, it probably does reflect the fact that the government is serious about picking the right cases to prosecute and will do everything it can to achieve a conviction.

An expensive business

The cost of defending such cases can run into the millions of pounds. In the Hatfield rail crash prosecutions, for example, in addition to fines totalling £13.5 million, the defendant companies were ordered to pay prosecution costs totalling £600,000. The defendants’ own costs were kept confidential but are likely to have exceeded those of the prosecution.

“Undoubtedly, a number of the high-profile prosecutions in recent years would have had a different outcome if they had been brought under the new Act,” explains Derek Bambury, Head of Business & Professional Risk with Browne Jacobson LLP solicitors.

Fear of prosecution shouldn’t be the only motivation behind SMEs’ health and safety concerns. A safe work environment is also likely to boost staff morale. “Employees are likely to be more motivated if they feel they are valued and cared for by the company,” says Callum.

For brokers, the new act is an opportunity to engage with their clients on health and safety matters. A review of clients’ protection programmes would also not go amiss.

It is important to remember that not all insurance policies provide appropriate cover.

To be fully protected, businesses need to be covered for claims against both the company and senior management.

 

 

 

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