Select Committee on Home Affairs and Work and Pensions First Report


9  GROSS MANAGEMENT FAILURE

195. We have stated (para 169) that we believe that the best way of capturing the essence of corporate culpability is to employ the Law Commission's proposed concept of a "management failure" which, following the Commission's proposals, should be defined as "conduct falling far below what can reasonably be expected of the corporation in the circumstances". Drawing on the analogy of gross negligence manslaughter we believe that such a failure is best described as a "gross management failure".

196. One of the criticisms of the Law Commission's management failure test was that it was potentially too vague. We agree with that criticism and, while rejecting the notion of a duty of care (para 105) which is crucial in clause 3, we welcome the proposed guidance in that clause aimed at aiding the jury in their determination of whether there has been a gross breach. If the concept of "duty of care" is removed from the Bill this guidance will be relevant to determining whether there has been a "gross management failure" rather than a gross breach of a duty. Some of the criteria employed in clause 3 could be a useful starting point in providing assistance to the jury.

197. In particular, and as discussed earlier (paras 181 to 187), we welcome the proposal in clause 3 of the Bill that the jury be required to have regard to whether the organisation has failed to comply with relevant health and safety legislation and guidance or any other relevant legislation and that they consider how serious was the failure to comply. This is an appropriate mechanism for assisting the jury to determine whether there has been a gross management failure. We believe, however, that the jury should be given further assistance in measuring the seriousness of the failure to comply and would recommend that they be required to consider whether a corporate culture existed in the organisation that directed, encouraged, tolerated or otherwise led to that management failure. We believe that such a consideration is the most appropriate way of assessing corporate culpability.

198. Such a provision might read as follows:

    "3. Gross management failure

    (1) A management failure is a "gross management failure" if the failure in question constitutes conduct falling far below what can reasonably be expected of the organisation in the circumstances.

    (2) In deciding that question the jury must consider whether the evidence shows that the organisation failed to comply with any health and safety legislation and related guidance and any other relevant legislation and, if so, how serious was the failure to comply.

    (3) In assessing the seriousness of the failure to comply, the jury may take account any of the following matters -

      (a) whether a corporate culture existed within the corporation that encouraged or tolerated non-compliance with that legislation or guidance; or

      (b) whether the corporation failed to create and maintain a corporate culture requiring compliance with that legislation or guidance.

    (4) In subsection (2) "health and safety legislation" means any enactment dealing with health and safety matters, including in particular the Health and Safety at Work etc Act 1974 (c.37), or any legislation made under such an enactment.

    (5) In subsection (3) "corporate culture" means an attitude, policy, rule, course of conduct or practice existing within the corporation generally or in that part of the corporation where the relevant conduct occurs".

199. We urge the Government to consider returning to the Law Commission's original proposal as a starting point. We acknowledge the argument that the Law Commission's "management failure" test could cover failings within a company that occur at too low a level to be fairly associated with the company as a whole. Nevertheless, we recommend that the Home Office should address this specific concern without abandoning the Law Commission's general approach. We suggest that juries be assisted in their task by being required to consider whether there has been a serious breach of health and safety legislation and guidance or other relevant legislation. In assessing this they could consider whether a corporate culture existed in the organisation that encouraged, tolerated or led to that management failure.


 
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