Corporate manslaughter and director liability
Organisations increasingly face investigation for corporate manslaughter and the number of convictions is expected to dramatically increase in the coming years.
The Corporate Manslaughter and Corporate Homicide Act (CMCHA) 2007 made it easier to secure convictions against organisations and really changed their liability for workplace deaths.
The offence of corporate manslaughter is committed by the company or organisation itself.
An organisation can be convicted of someone’s manslaughter if its mismanagement amounts to a “gross” breach of a duty of care. The CMCHA says an organisation will be guilty if the way in which its activities are managed or organised:
- causes someone’s death
- amounts to a gross breach of a duty of care owed by the organisation to the deceased.
An organisation will be guilty if the way its activities are managed or organised by senior management is a “substantial element” in the breach. The focus is therefore on general corporate procedures and processes rather than individual action and decision-making.
Under sentencing guidelines, judges impose fines in relation to an organisation’s size. Firms convicted of corporate manslaughter with a turnover of more than £50m face fines of up to £20m and up to £10m for Health & Safety offences.
Initially, there were few convictions under the CMCHA following its introduction. But it seems there’s been a policy change. Organisations now increasingly face investigation for manslaughter and the number of corporate manslaughter convictions is expected to dramatically increase in the coming years.
Gross negligence manslaughter
The CMCHA does not say anything about individuals within corporations being liable.
Individual directors at fault for work-related deaths may be prosecuted under the common-law offence of gross negligence manslaughter. Indeed, prosecutors still continue to charge individual directors particularly if their company is being prosecuted for corporate manslaughter.
Where a director is accused of causing a workplace death they may be prosecuted for being grossly negligent. To be negligent:
- the director must owe the deceased a duty of care
- the director must have breached that duty
- the breach must have caused the death.
But mere negligence is not enough. The duty of care failure must be “gross”. In other words, so extreme that the action or inaction of the director can be considered criminal i.e. conduct falling far below what’s reasonably expected. This final element makes the offence very difficult to establish. Even in high profile corporate failures such as the Hatfield train crash, no individual directors were actually convicted.
In the 2012 case of R v Lion Steel Equipment Ltd an employee died after falling through a factory roof. The company pleaded guilty to corporate manslaughter. It was fined £480,000.
But three directors, including the Finance Director and General Manager, were also individually prosecuted for gross negligence manslaughter. The maximum sentence is life imprisonment although almost every gross negligence manslaughter conviction leads to a three to four-year jail term.
The prosecution claimed the directors personally owed every employee a duty to keep them safe. It was argued this obligation existed simply by being a director and the relationship or involvement with employees didn’t matter.
The judge rejected this argument. He said the position of director does not in itself create a duty of care to every employee. Rather, what “measure of control and responsibility” directors or senior managers exercise over activities is key. Only by first asking what control and responsibility a director had can the duty be established. If directors don’t have direct control or responsibility then there may be no duty and no manslaughter liability. The judge stressed how difficult it is to establish gross negligence manslaughter.
None of the directors in Lion Steel were convicted of manslaughter. An informal bargain was said to have been struck in which the company pleaded guilty to corporate manslaughter in return for the case against individual directors being dropped.
Every director and senior manager should have clearly defined roles and responsibilities. A director’s degree of control and responsibility may be limited through their job description. Directors may in this way protect themselves from claims a duty was owed.
Establishing control and responsibility is much easier in small organisations.
In the first-ever corporate manslaughter prosecution (R v Cotswold Geotechnical Holdings Ltd 2011) the company was convicted and fined £385,000. Its single director was terminally ill and unable to individually stand trial for manslaughter. But in convicting the company, the court viewed the director as having control of, and responsibility for, almost all of the firm’s activities.
The gross negligence manslaughter conviction of a director in the 2013 case of R v Turnbull and North Eastern Maritime Offshore Cluster Limited also shows that despite the difficulty in establishing “gross” it is by no means impossible – especially if the lawbreaking is glaring and the director is directly responsible.
Turnbull was the sole director whose employee died after falling from a cherry picker. The court heard Turnbull’s lawbreaking included:
- not being sufficiently competent
- failing to adequately plan
- failing to ensure a safe workplace.
He was jailed for 3 years. An “aggravating” factor was Turnbull’s failure to improve his working practices after a similar non-fatal incident.
Health & Safety at Work etc. Act 1974
Directors can also be prosecuted for workplace deaths under the Health & Safety at Work etc. Act (HSWA) 1974.
The HSWA says individual directors or senior managers may be liable where a company fails to meet its Health & Safety obligations and the failing is due to the director’s “consent or connivance” or where their neglect permitted the safety failure.
Consent or connivance means the director was aware of the circumstances leading to the death and that they consented or allowed things to continue. The offence can also be committed through mere neglect.
A manslaughter charge is certainly dramatic. But directors should, if anything, be more aware of offending under the HSWA for three reasons:
- liability under the HSWA is much easier to prove than gross negligence manslaughter
- while the company’s lawbreaking must be established it need not be “gross”
- under the Health & Safety (Offences) Act 2008 a custodial sentence of up to 2 years may be given.
The 2008 Act has given the HSWA more teeth and closed the gap on the penalty for gross negligence manslaughter.
The 2016 Health & Safety Offences Definitive Guidelines include guidelines for sentencing individuals where there’s a breach of a Health & Safety duty and a death results. Judges follow a number of steps including assessing the:
- “culpability” or degree of fault which can be deliberate, reckless, negligent or low
- category of harm.
Sentences have “starting points” and “category ranges”. For example, if the harm was highly likely and the director acted deliberately or with complete disregard, the starting point would be 18 months’ custody with a category range of 1 to 2 years’ custody.
The exact duties directors owe people in relation to safety, particularly where a death occurs, have yet to be completely set out in legislation.
But guidance INDG417 published by the Health & Safety Executive and the Institute of Directors titled “Leading Health & Safety at Work – Actions for directors, board members, business owners and organisations of all sizes” does somewhat spell things out. Indeed, the guidance is often referred to in investigations and prosecutions. It provides:
“Following the guidance is not compulsory unless specifically stated and you are free to take other action. But if you do follow the guidance you will normally be doing enough to comply with the law.”
But it warns:
“In considering the liability of an organisation under the Corporate Manslaughter and Corporate Homicide Act 2007 a jury must consider any breaches of Health & Safety legislation and may have regard to any Health 8 Safety guidance. In addition this guidance could be a relevant consideration for a jury depending on the circumstances of the particular case.”
The role played by individual directors where there’s a death in the workplace is likely to be actively considered by regulators and prosecutors. Health & Safety legislation and the common law will be used to establish individual criminal liability.
Health & Safety legislation is believed to be a greater deterrent when individual directors are targeted rather than the organisation itself. Individuals naturally want to protect their own resources and liberty. Pursuing directors will therefore surely continue.
If you are a director, it is vital that you take your Health & Safety obligations seriously, be aware of and comply with the law and any guidance, properly define your responsibilities and act accordingly.