SHE Regulatory News - Spring 2012

WELCOME

Welcome to the first edition of Clyde & Co's Safety, Health, Environmental and Regulatory Newsletter.

Our SHE Regulatory Group is one of the largest and most recognised teams in the UK specialising in regulatory defence work.

We are only too aware of the difficulties that face your business with an ever increasing burden of regulation and legal duties. A workplace incident or a breach of those duties often culminates in an investigation and potentially criminal prosecution of a business, its management or staff.

With the stakes so high, it is essential that you and your organisation are kept up to date with changes in the law to protect the reputations of your business, its directors and employees.

Our quarterly newsletter provides a topical update on recent key developments in our areas of specialism:

Corporate manslaughter Health and safety Food safety Road traffic and Transport Environmental Fire safety Trading standards CORPORATE MANSLAUGHTER

Corporate manslaughter conviction – a new level of fines for corporations?

The prosecution and conviction of Cotswold Geotechnical Holdings Limited ("Geotechnical Holdings") under the Corporate Manslaughter and Homicide Act 2007 heralds a new era in the level of fines to be expected by corporations following deaths at work and shows there is clear blue water between corporate manslaughter and health and safety fines.

The company was fined £385,000 after being found guilty by the jury at Winchester Crown Court. Geotechnical Holdings' fine is to be paid back over 10 years at a rate of £38,500 per annum. The total fine is less than the general starting point of £500,000 recommended by the Sentencing Guidelines Council but is still significant given that it represents approximately 110 per cent of the company's annual turnover. Even more remarkably in this case, the court specifically recognised that it was "a consequence of the serious breach" that the level of fine ran the risk of putting the company into liquidation and this was "unavoidable". Geotechnical Holdings lost its appeal against the sentence and, perhaps unsurprisingly, has subsequently ceased trading having been crippled by the size of the fine.

Its director, Mr Peter Eaton, was previously charged but did not stand trial due to ill health.

So what can future organisations expect if charged with corporate manslaughter? The size of the fine against Geotechnical Holdings was clearly intended to make a significant impact on the organisation. While that particular company may have had a modest turnover, a fine in excess of 100 per cent of the turnover for a larger, more profitable organisation, if successfully convicted, could equate to well above the Sentencing Guidelines Council's £500,000 starting point.

Second corporate manslaughter prosecution*

The second ever corporate manslaughter prosecution under the new Corporate Manslaughter and Corporate Homicide Act 2007 has been brought following the death of an individual on an industrial estate, with a trial date set by Manchester Crown Court for 12 June 2012. The case is being closely followed in the hope that further light can be shed on the scope of this new, and as yet relatively untested, offence.

Lion Steel Equipment Limited is a light engineering company based in South Manchester. The prosecution for corporate manslaughter arises out of an accident which occurred at the company's premises, on the 29 May 2008, when one of their employees fell through a skylight whilst undertaking maintenance work on the factory roof. The company has also been charged with offences under the Health and Safety at Work Act 1974 and the Work at Height Regulations 2005.

It is significant that the task being undertaken at the time of the accident was ancillary to Lion Steel's main operations and should stand as a warning to all organisations that they must consider safety in relation to all work carried out by their employees and not just focus on their main production processes.

In addition to the charges faced by the company, three of its directors have also been charged with the offence of gross negligence manslaughter, which carries a maximum sentence of life imprisonment, for failing to ensure the safety of the company's employee. Whether multiple prosecutions of senior management and individuals will become a tactic adopted by the Crown Prosecution Service in future corporate manslaughter cases is an issue we will be following closely.

Since the latest corporate manslaughter offence is still in its infancy, case law establishing the boundaries of the new legislation is, at present, based on the prosecution and conviction of Cotswold Geotechnical Holdings earlier last year (see next article). It remains to be seen whether the trial of Lion Steel this year will provide clearer guidance on the remit and parameters of the new offence.

HEALTH AND SAFETY

Britain headed for gold as Olympics draw near

With the forthcoming London 2012 Olympics fast-approaching, commitment to health and safety on the largest construction site in Europe has remained paramount. The HSE has worked closely with the Olympic Delivery Authority to ensure that CDM Designers and Principal Contractors have robust risk management systems in place. One key objective was to encourage strong leadership and sharing of good practice throughout the construction phase of the project.

Thankfully to date the project has an exemplary safety record with the construction being brought in on time with reports of only 114 injuries and eight dangerous occurrences. The reportable accident rate at the Olympic Park is around one third of the construction industry average and below the national average for all workplaces. However, one senior HSE inspector suggested that given the recent cuts to the regulator's budget and the consequent impact on how it carries out its proactive work, this success may be a one-off.

Either way it seems the success of the Olympic project highlights the benefit of careful planning and consultation, and this success on such a large scale is proof of the good results that can be achieved and, hopefully, maintained.

Businesses to challenge unfair regulatory decisions

On 9 January 2012 it was announced that businesses who believe they have been the recipients of erroneous or over the top advice from the Health and Safety Executive ("HSE") or Local Authority Inspectors can now appeal those decisions to an independent panel, known as the Regulatory Challenge Panel ("the Panel").

The Government had announced its intention to set up such a body as part of its response to the findings of Professor Löfstedt's report in November 2011, "Reclaiming health and safety for all: an independent review of health and safety Regulation", which called for a process to challenge cases of incorrect or over-application of health and safety legislation.

Whilst it appears that the Panel will only consider cases in a limited number of circumstances, businesses are advised to understand the function of the Panel should they need an avenue to challenge potentially erroneous regulatory advice from the HSE or a Local Authority.

The Panel is now up and running to consider issues that businesses believe are "incorrect, or go beyond what is required to control the risk adequately". Key features of the arrangements are:

The Panel is chaired by Judith Hackitt, Chair of the HSE, and comprised of 11 independent panel members who have the competence and experience to assess advice that has been given on regulatory matters It will only deal with decisions of regulatory advice to control risks which stop short of enforcement action The Panel will not look at issues where other independent appeals processes exist, such as for enforcement notices or prosecutions The Panel will only consider cases from 30 June 2011 onwards The outcome will be made available on the HSE website Whilst the HSE have seemingly welcomed the introduction of the Panel, before businesses resort to raising an issue with the Panel they should first seek to resolve the matter directly with the HSE or Local Authority Inspector and their respective managers. With the early indication being that the Panel will only hear carefully considered and substantial claims of injustice or unfairness, the circumstances in which appeals can be heard may well prove limited. It remains to be seen just how far the Panel will go in upholding challenges brought and whether it will be reluctant in taking decisions that could potentially undermine the authority of Inspectors.

Businesses will also need to consider carefully whether to appeal since details will appear on the HSE's website and will therefore be in the public domain, potentially raising brand damage issues and the potential for adverse publicity.

Changes to the reporting of injuries

On 6 April 2012 the changes to the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 ("RIDDOR"), which extends the period before an injury or accident needs to be reported from three days to seven days following Lord Young's recommendations in the 2010 paper "Common Sense Common Safety", came into force.

RIDDOR previously required the "responsible person" (who will usually be the employer but could also be a manager, operator, owner or appointed person) to report an injury which resulted in the worker being unable to carry out their usual work activities for more than three consecutive calendar days.

The HSE, in line with Lord Young's suggestion, advised amending RIDDOR so that the duty to report now applies where the worker has been incapacitated for more than seven consecutive days, rather than three. Additionally, the time limit for reporting has been changed, so the responsible person is required to report the seven-day injury to the enforcing authority within 15 days of the accident, rather than the current 10.

The alleged main advantage of the change is that there would be a significant reduction in...