103. Memorandum submitted by Linklaters
1. INTRODUCTION
The law in its current state is clearly in need
of reform. It is wrong for an offence of this nature to be capable
of enforcement only against the smallest of companies. The "identification
principle"—that prosecutions against companies for
manslaughter can only succeed where the courts are able to identify
a "controlling mind" whose gross negligence caused death—is
in need of replacement.
We therefore support in principle the creation
of a new offence of corporate killing.
We note that it is the intention that very few
prosecutions would be brought each year under the new offence,
and that its purpose is to penalise truly egregious instances
of corporate failing. However, various provisions in environmental
and health and safety regulation have been interpreted much more
widely post enactment than was envisaged during the legislative
process[182].
Our principal concern with the bill, therefore, is that the test
for liability is couched widely enough to permit prosecutions
under the proposed offence in very many cases and certainly far
more than the five per year which Government anticipates.
This and our other comments are set out in more
detail below.
2. DEFINITION
OF SENIOR
MANAGER
2.1 Nature of "senior manager" role
The proposals intend only to cover those senior
managers who play a major role in management decisions about,
or actually managing, the activities of an organisation as a whole
or a substantial part of it.
For the offence to reflect Government's aims,
this concept should capture the activities of those persons who
are engaged with the strategic management of the organisation.
We are concerned it is too widely drawn at present to do so. The
definition would permit relatively junior levels of management
to be treated as senior management.
Clause 2(a) might be recast to reflect more
closely the aspirations set out in the consultation paper by referring
to "the making of strategic decisions . . ."
Clause 2(b) is potentially capable of capturing
a yet wider group of managers. We imagine the intention is to
capture the activities of those with overall management responsibility
for the operational performance of a business. In this regard
we think the reference to "organising" broadens the
group significantly beyond those who could properly be termed
"senior managers". Organisers may be relatively junior,
process related personnel. We would delete the reference to organising.
We also think it should be clear that the manager
is an employee, officer or director of the defendant organisation.
2.2 "Substantial part" of an organisation
The Government acknowledges that the application
of this test will differ between organisations, depending on their
size and operations. However, major differences of application,
at least between similarly shaped organisations, are not desirable.
If, as the Government anticipates, there are few cases brought
under this legislation, regulators and juries will find it particularly
difficult to determine how to apply this aspect of the test. Further
guidance would be useful as to how to apply the test in relation
to relatively common corporate structures.
2.3 "Significant role"
This is a key aspect of the test for determining
the senior management whose conduct will be assessed against the
requirements for the offence, and yet it is not defined. The Government
points out in its commentary on the draft bill that this intends
to capture those whose role is decisive or influential rather
than those who play a minor or supporting role. The Government
describes this as a "second threshold" which will need
to be overcome to determine management seniority.
We appreciate that this test of significance
will be a question for a jury, but some guidance on what constitutes
a "significant role" could be usefully included in the
bill. Without such guidance we are concerned that this test will
be meaningless and that almost any manager could, with the application
of hindsight, be construed to have a significant role.
2.4 Senior Manager definition as a whole
The definition as presently drafted is wide
enough to catch a very broad spectrum of managerial activity.
In most large commercial organisations, there will be a large
number of management positions that could potentially have a significant
role of some form on the organisation's processes. This could
encourage a "fishing expedition" approach on the part
of regulators, who are likely to come under pressure to prosecute
under this new legislation. In relation to organisations with
complex and multi-layered management, the CPS could adduce evidence
from multiple levels of management and effectively "aggregate"
that evidence to derive a gross breach of an applicable duty of
care. Although it is clearly contemplated, and correct, that the
offence should derive from the failings of those with overall
responsibility for the strategy or operations of these organisations
(or large parts thereof), any aggregation of failings should be
restricted to the level of senior management within the defendant
company. The bill appears to bring into the definition persons
who would not in ordinary parlance be considered senior managers
and hence to aggregate the deficiencies of a large range of persons.
This appears to be at odds with the objectives of this legislation,
and we think further refinement of these provisions is necessary
to ensure fairness of application.
3. CONDUCT THAT
"FALLS FAR
BELOW"
It is correct, in our view, that the offence
should only capture the most serious workplace failures that lead
to fatalities. This reflects the expectation that, though tragic,
the majority of workplace deaths are unlikely to derive from management
conduct which is so far below that which could reasonably be expected
that a prosecution under this legislation is required. More general
health and safety legislation would remain applicable to cases
involving lesser failure.
The use in the current draft bill of specific
guidance for juries as to what amounts to a gross breach is helpful
in theory. We are concerned however that there is a real disconnect
between the actual test, as set out in clause 3(1), which replicates
the common law position in its imposition of a high threshold
for liability, and the relatively low threshold set by the guidance
under clause 3(2). By requiring that the jury considers, inter
alia, the issues outlined in clause 3(2) and by setting requirements
under 3(2)(b) in particular that can readily be ticked off, the
legislation suggests that if the elements of clause 3(2) are fulfilled,
this is sufficient to constitute conduct falling far below what
can reasonably be expected. This has the potential significantly
to lower the test of gross breach from that which would apply
to an individual under the common law.
It is not clear from the draft bill whether
it is intended that juries must take into account all three factors
listed in clause 3(2)(b) in considering whether an organisation
has committed a gross breach. We assume from the wording of the
clause that this is the intention and, if so, this should be made
clear.
3.1 Failure to comply with any relevant health
and safety legislation or guidance
The obligation on juries to consider whether
there has been a failure to comply with applicable health and
safety legislation is an obvious starting point. It does however
raise an issue which can be difficult for organisations to voice
publicly. With the increase in regulation in the sphere of health,
safety and the environment, the imposition of strict liability
in many cases, and the lack of specificity, in some cases, as
to what constitutes compliance, it can be very difficult for even
the most committed organisation to avoid compliance breaches.
Further, the context in which any post incident investigation
takes place is very likely to change the assessment as to what
constitutes compliant conduct. In practice, therefore, where there
has been a fatal accident, it will always be possible to identify
a compliance breach. Therefore while this is a necessary test,
it is not one which will ever be particularly determinative as
to whether or not an offence has been committed under the Act.
To render this limb of the test somewhat more
focused, it could be refined by making clear that the compliance
breach or the circumstances flowing from the breach contributed
materially to the person's death.
We do not believe it is proper to extend this
element of the test to codes, guidance, manuals or similar publications
published by regulators. By their very nature, these are not legally
enforceable. The Health and Safety Executive publication "Health
and Safety Regulation" states clearly that "following
guidance is not compulsory and employers are free to take other
action". It would be wrong to impose criminal liability for
such a serious offence on the basis of a failure to follow advice
in an HSE publication, when a failure to follow such advice in
other circumstances would not of itself give rise to liability.
The current drafting also diverges from the Government's assertion
that these proposals do not seek to place additional burdens on
businesses.
To the extent that the Government wishes to
keep some reference to guidance, a compromise position might be
for any failure to follow guidance to be an aggravating factor
taken into consideration at the sentencing stage, rather than
as a deciding factor in the commission of the offence.
3.2 Seriousness of the compliance failure
We assume this is meant to measure not just
the extent of the failure to comply with a particular requirement,
but also the relative importance of the requirement which has
been breached, and that the test is to be fulfilled where the
jury consider a serious breach of a serious obligation to have
occurred. This is not explicit in the current drafting and should
be clarified.
3.3 Knowledge of Senior Managers
This element of the test has three limbs. Whether
senior managers:
— knew or ought to have known of the
organisation's failure to comply;
— were aware or ought to have been
aware of the risk of death or serious harm posed by the failure
to comply; and
— sought to cause the organisation
to profit from the failure.
The first limb is straightforward. We imagine
that this limb will almost always apply, unless a particular requirement
has only just been introduced. The second limb is also reasonably
clear, but it would be preferable to make explicit that the risk
of serious harm or death has to be reasonably high. We also believe
that there should be a due diligence defence available expressly
in the legislation. If a company has taken action to try to bring
itself into compliance, for example, by training and monitoring
its employees in the conduct of particular activities, this should
be taken into account. Thus, an amended test might read:
"were aware or ought to have been aware
of a significant risk of death or serious harm posed by the failure
to comply and failed to take reasonable steps to render such risk
as low as reasonably practicable"
Our other concern lies with the third limb,
and what this is intended to capture. If this is taken literally,
the instances where evidence exists that an organisation intended
to profit from a failure to comply with health and safety legislation
are likely to be few. If, however, this is construed to capture
situations where, for example, expenditure is delayed because
an annual budget has been fixed (which will have been based on
a particular profit target) and there are insufficient funds in
that budget to permit expenditure within that year, it could arise
in many organisations. This construction would conflict with the
provisions of clause 4(2) in relation to the liability public
authorities (given that such an issue would relate to a decision
on the allocation of public resources). Disparity in treatment
of like circumstances between commercial and public organisations
in this regard would be unfair.
4. PARENT COMPANY
LIABILITY
The draft bill would apply to parent or other
group companies if that company owed a duty of care to the deceased
and there was a gross management failure by senior managers that
caused death. We wonder whether extending the offence in this
way is consistent with the well-established principles of individual
corporate identity and so-called "piercing of the corporate
veil". Seeking to apportion liability to parent companies
is likely to be seen as an attempt to find a "deep pocket"
for liability purposes and undermines the relative freedom of
groups of companies to structure themselves as they see fit, in
accordance with their business needs. There is also the potential
that extending liability to parent companies could discourage
large groups of companies from organising, managing and implementing
health and safety initiatives on a group-wide basis (and we have
previously encountered concerns about doing so for precisely this
reason). Given the width of the drafting of the rest of the bill,
even the dissemination of the most generic of health and safety
policies could be viewed as an assumption by parent company management
of responsibility for issues which may in reality be delegated
to the management of subsidiary entities.
5. INDIVIDUAL
LIABILITY
The consultation paper makes clear that the
Government considers that corporate manslaughter is an offence
committed by organisations rather than individuals. We agree with
this position. The current bill should concentrate on its core
aim of establishing a clearer offence in respect of organisations
rather than attempting a wholesale change of the law relating
to manslaughter, health and safety and directors' duties.
An individual in a corporation may, for many
reasons (such as changes in intra-company responsibilities or
alterations in management structure) not actually be responsible
for the collective failings of the organisation to which he belongs.
There is a significant risk that individual liability would give
rise to a culture of blame and that senior managers would retreat
from embracing and encouraging safe systems of work. Certain industries,
such as construction, might find it difficult to retain or recruit
managers with appropriate health and safety qualifications and
training.
Even without the risk of personal prosecution,
this legislation will be felt keenly by managers. It is they who
will be asked to justify their actions and their decisions not
to act in the event of prosecutions. The prospect of this in itself
is likely to have a significant (not entirely beneficial) impact
on management conduct. One can foresee that increased emphasis
will be placed on recordkeeping in order that companies (and indirectly
managers) are in a position to defend themselves. In any event
individuals could still be liable under the provisions of the
Health and Safety at Work Act 1974 and the general law of manslaughter.
We support the on-going work which the Government
and the Health and Safety Commission propose in relation to assessing
the obligations and duties on directors in their individual capacity
and, in particular, whether further work needs to be undertaken
to clarify the legal duties of directors under existing health
and safety legislation or voluntary action under Codes of Practice
(including consideration of whether different requirements should
be made of executive and non-executive directors). We look forward
to receiving the findings of the Health and Safety Commission
on this area later this year.
6. CAUSATION
We agree that the ordinary rules of causation
should apply to determine whether the management failure caused
a person's death. Clearly if a corporation fulfils the other requirements
of the offence then the chain of causation should only be broken
if there is an extraordinary event which intervenes to cause death.
7. PROSECUTION
The current Draft Bill envisages that the police
will investigate offences, with the CPS having responsibility
for prosecution. We agree with the Government's comments that
it is important for the HSE to be "effectively harnessed"
in an investigation. We consider that, with the proposed new offence
hinging principally on (a) the establishment of a relevant duty
of care and, most importantly, (b) that there was a gross breach
of that duty (and in reaching this decision the jury must take
into account whether there was a failure to comply with relevant
health and safety law and guidance), it is imperative that the
HSE have a role to play in the investigation and prosecution process.
We are not convinced that, without further training, police forces
have the necessary experience or expertise in considering health
and safety law to properly investigate such cases. It is therefore
important that the police and HSE co-operate very closely in potential
corporate manslaughter cases.
8. SANCTIONS
We agree with the proposed principal sanction
of financial penalties, coupled with a court power to order remedial
works to be undertaken. We do not consider alternative sanctions,
such as corporate probation, to be necessary. The publicity of
a prosecution (even if unsuccessful) will result in significant
reputation damage to a defendant organisation and any prosecution
is also likely to result in increased regulatory supervision.
These factors will be foremost in the minds of management in the
majority of UK businesses which endeavour to achieve compliance
with the law.
We also have reservations about the usefulness
of remedial orders. Such powers already exist under health and
safety law in relation to enforcement and prohibition notices.
We wonder whether, in practice, a remedial order following a successful
prosecution would ever be made. In reality following a fatal accident
most organisations would take immediate steps to investigate and
address any identified weaknesses, and even if they did not do
so of their own initiative, the HSE could require such action
under existing provisions.
23 June 2005
182 A prime example of this is the way in which some
local authorities have sought to use Part IIA against lenders,
and against waste producers whose waste was sent long ago to landfills
which have now been designated as contaminated land. Back
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