106. Memorandum submitted by Confederation
of British Industry
The Confederation of British Industry (CBI)
welcomes the opportunity to respond to the Home Office Consultation
Document: Corporate Manslaughter, the Government's Draft Bill
for Reform. The CBI, with a direct corporate membership employing
over 4 million and a trade association membership representing
over 6 million of the workforce—is the premier organisation
speaking for companies in the UK. Nearly all businesses may be
affected by the proposals on reforming the law on corporate manslaughter
and this response reflects an extensive CBI consultation of regional
and national committees and the broader membership representing
business of all sectors and sizes.
These proposals cannot be taken in isolation
and make no reference to developments and initiatives taking place
in other Government departments such as the DTI (company law,
corporate governance and product safety), ODPM (transport safety)
and HSE where high levels of risk management are expected of companies
and different levels of management already have legal duties.
Whilst there are no grounds for complacency, the UK is one of
the best performers in health and safety terms within Europe,
thanks largely to the diligent application of existing risk-based
law aimed at preventing incidents.
The CBI's submission provides general comments
on the current developments of the criminal law, as well as providing
more specific comments on the possible implications of the proposals
on businesses and it comments on some of the legal drafting.
EXECUTIVE SUMMARY
The public deserves reassurance that business
is accountable and takes its responsibilities to society seriously.
However, the framework of obligations within which business must
work needs to provide clear standards for behaviour.
It is essential that:
— the law does not unduly increase
risk averse behaviour in corporations (the AD Little Study (March
2005) commissioned by DFT has provided information on this). It
is also essential that the law also does not unduly increase risk
aversion behaviour in enforcing authorities
— adequate time, discussion and publicity
are given to any legislation that is made, to allow business time
to understand the implications of the legislation and make any
necessary adjustments.
We welcome and support the draft Bill being
aimed at corporations and not individuals. Directors and individuals
are already subject to existing company and health and safety
laws. An individual whose acts or omissions are judged to be sufficiently
serious and causative of a death will also be potentially liable
for a separate offence under existing law of gross negligence
manslaughter.
If there is an intention to place specific health
and safety legal duties on directors or to propose innovative
penalties these should be the subject of separate debates. It
will be necessary to consider the effectiveness of sanctions and
the responsibilities of companies and the relevant level of control
and direction in relation to all the operating and strategic activities.
Recognising that existing health and safety
legislation already provides for unlimited financial penalties,
the primary additional sanction within these proposals is the
ability to stigmatise a company with the label of having committed
corporate manslaughter, with its major effect on corporate reputation.
There is a danger that those organisations who take their corporate
reputation seriously will become risk averse, whilst those with
little invested in brand and reputation will remain unchanged
by the proposals.
There is a danger that the proposals will lead
to duplication, and possibly conflict, between the many legal
frameworks and enforcing authorities dealing with company behaviour
and liabilities that could be linked to work-related fatalities
unless Government takes a coherent approach.
We support the intention that this legislation
is focused on the few incidents where gross negligence is proven
(the Home Office estimates that it will generate 5 cases a year)
but have severe reservations that enforcing authorities will be
able to resist undue pressure from lobby groups and individuals
to put forward proposals for cases that will affect company reputations
even if there are insufficient legal grounds to prosecute.
We have concerns that in addressing the issue
of the controlling and directing mind of a company the focus has
turned to that layer of an organisation deemed a "senior
manager". The variety of the corporate structures in the
UK and the inclusion of those who "actually manage activities"
has the potential of lowering the status of person who might give
rise to a liability compared to the type of person who might represent
a directing mind
The offence of corporate manslaughter should
be:
— applied to all undertakings; Crown
Immunity should be limited to matters of national security, we
believe that the draft law has only gone some way to achieving
this
— applied to behaviour that grossly
negligently disregards foreseeable risks to employees and the
general public
— related to a duty holder's obligations
for the reasonably foreseeable identification and evaluation of
risks and the reasonably practicable control of risks
— related to a continuing and systematic
failure to assess and control risks rather than an isolated lapse
within a well-established system, not be founded on aggregation
of a number of unlinked faults that had been appropriately managed,
to paint a picture of systemic failures.
— consistent across the UK.
GENERAL COMMENTS
Better Enforcement of Current Law
We understand the perceived need to introduce
an effective legal sanction to deal with serious management failings
that lead to fatalities overcoming the "Indentification"
principle. Clearly it cannot be right that corporate liability
can only apply if all elements of the offence can be proved against
one member of the directing mind of the company.
We share the Home Office view that in seeking
to create a new offence that it is most important that businesses
that already take their obligations seriously under health and
safety law should have nothing to fear. Companies that already
manage health and safety to achieve exemplary performance should
be recognised as not having to do more.
The debate on corporate manslaughter takes place
against increasing public concern that the sanctions imposed by
the courts do not reflect the consequences of the event, both
for individuals and for corporations. Particularly for fatal injuries,
there is the view that someone must be, and must be seen to be,
to blame. The real challenge under new proposals, as it is with
current law, is getting the evidence, proving and enforcing the
law whatever the offence is called.
The expectation by the Home Office, that the
offence will attract no more than 5 prosecutions a year, as it
is intended to be aimed at only the most serious offences, is
a heroic assumption. There is a significant possibility that pressure
groups will seek to press for prosecution in a much larger number
of cases. Notwithstanding the need to get evidence, it will be
tempting for enforcers to forward corporate manslaughter papers
to the CPS rather than justify inaction and poor usage of a new
law to a sceptical section of the public.
Changing Values
Business recognises the changing values and
expectations of society and accepts the balance of authority and
responsibility that should be placed on organisations and individuals,
both within and outside an organisational framework. However,
business operates by managing risks and should be held accountable
when risks are not managed appropriately. They cannot be expected
to provide or be accountable for a risk-free environment.
Business Competitiveness
It is also important that the developments in
framing legislation and penalties for business are not misunderstood
by those considering inward investment and having the flexibility
to chose global locations.
Application and Enforcement
The proposals relate to England and Wales and
it is desirable that there is consistency across Great Britain
and Northern Ireland.
Whilst the extent of the offence would apply
to England and Wales in reality the possibility of taking cases
and effectively imposing sanctions against foreign registered
companies or those where the senior management is based abroad
should be more realistically assessed. We do not believe that
in practice, enforcement of companies outside the UK will be achievable
in the short term. With the development of "e-commerce"
the distance between corporations and senior management can be
considerable. Those who will have to judge the linkage will need
a great understanding of company systems and cultures.
Penalties as Motivators
The CBI stresses that companies must not gain
advantage from flouting health and safety and other laws. Compliance
with the law and a high standard of health and safety performance
are seen as primary indicators of business success as well as
being necessary to gain the public approval to operate. However,
generally, prosecutions and penalties are not the prime motivators
for a company to deliver good health and safety systems and performance.
Individuals in Companies
Directors, who are grossly negligent in their
own right, of causing the death of a person to whom they owe a
duty of care, can be prosecuted under the common law offence of
manslaughter. It would be fundamentally inappropriate to lower
the standard and tests of proof against an individual, simply
to satisfy calls for a corporate scapegoat or because it may be
challenging to prosecute the individual for his own actions or
inaction, rather than on the basis of what is fair and reasonable
For fatalities arising from work activities
the Health and Safety at Work etc Act 1974 (HSWA) already acknowledges
the principle of custodial sentences for individuals held responsible
for the most serious omissions or acts. The framework of HSWA
covers all work related activities, suppliers of products and
services and obligations of landlords. Sections 7 and 37 differentiate
duties for employees, managers, and directors. Any debate concerning
enforcement against individuals should be held in the separate
context of the existing provisions under HSWA.
Within organisations, employees must take reasonable
care for their own health and safety and that of others to contribute
to the organisation's efforts. If the law focuses the responsibility
on individuals or a specific level of management, however senior,
it runs the risk of others abdicating their responsibility to
the detriment of the team effort. Health and safety management
and performance is completely undermined in a blame culture and
businesses have worked hard to remove this as a factor that stifles
innovation.
SPECIFIC COMMENTS
ON ELEMENTS
OF THE
DRAFT BILL
We have the following concerns with the draft
bill and a number of suggestions for consideration as to how the
desired goal might better be achieved whilst minimising the risk
of increasing regulatory burdens, stifling entrepreneurial activity
or creating an excessively risk averse culture.
Senior Managers
If the Bill is enacted, it seems likely that
in any case prosecuted against an organisation with complex management
structures there will be potential for argument as to who is a
senior manager. The definition in section 2 has two strands where
a senior manager is defined as a person who plays a significant
role in:
(a) the making of decisions about how the
whole or a substantial part of its activities are to be managed
or organised, or
(b) the actual managing or organising of
the whole or a substantial part of those activities.
The definition in s2(b) "actually managing
a substantial part" appears to potentially lower the threshold
management position for those who might be a "senior manager"
under the new law but who would not be identified as a "directing
mind" under the current common law. It seems that the introduction
of the responsibilities of senior managers has not captured the
real level of decision making of a business but has introduced
an artificial level on which responsibility is placed.
It seems that the difficulties of applying the
identification principle to directors have been carried forward
to this proposal despite the fact that the offence is now intended
to be targeted at the corporate body as a whole rather than individuals.
If the intention is to catch strategic rather
than operational decision-making at Board level then a definition
based on "Director, Secretary or person appearing to act
in such a capacity" would provide a formulation already well
established in other areas of law.
Assessing Management failure
The proposed offence in s1 relates to the way
in which an organisation's activities are managed or organised
by its "senior managers" (this can involve the acts
or omissions of more than one senior manager). The notes to the
draft Bill state that this involves an assessment of how the activities
of an organisation were organised or managed in practice. It is
not altogether clear what this actually means nor in reality how
this is not going to involve some form of aggregation of senior
managers' conduct. It is incumbent on the Home Office to give
further guidance on how the acts or omissions of more than one
senior manager in any incident are to be examined and how liability
will be imposed other than on the basis of some form of aggregation.
However, whatever the level of management identified
with controlling the corporation, a formula allowing the conduct
of the organisation of the business as a whole should be considered
rather than restriction to the conduct of a narrowly defined senior
management role.
Businesses adopt a variety of corporate structures
for different reasons, such as tax and financial planning and
joint venture relationships. They are often not related to the
management of health and safety.
In the event of a fatality, it is likely that
two managers doing much the same job in organisations of similar
size but one may be a single integrated corporate entity and the
other a corporate structure that contains many subsidiary "Limited"
entities could have differing effects on the potential corporate
liability. The inclusion within the definition of senior management
of those who actually manage, as opposed to providing strategic
direction and control of resources, coupled with the requirement
of the legal entity to owe a duty of care to employees or the
public, could mean that where there is a low level subsidiary
legal entity, the possibility of an isolated management failure
in such an operation could mean that the subsidiary legal entity
is targeted for the offence of corporate manslaughter despite
the existence of wider well organised corporate management systems
and decisions
In considering assessment of management failure,
after a work related fatality, HSE, and/or other relevant enforcing
authorities, should be actively involved in assessing the extent
of safety management, at an early stage.
Gross Breach
Section 1(1) (b) requires a breach to be "gross",
that is: "falling far below what can reasonably be expected
in the circumstances". We believe that the test for a gross
breach should refer to "reasonable foreseeability".
S3 (2) states that the jury must consider whether
the evidence shows the organisation failed to comply with safety
legislation and if so:
— How serious was the failure to comply
— Whether or not senior managers:
— knew, or ought to have known,
that the organisation was failing to comply with that legislation
or guidance
— were aware, or ought to have
been aware, of the risk of death or serious harm posed by the
failure to comply;
— "sought to cause the organisation
to profit from that failure".
We do not believe that any organisation should
gain commercial advantage from non-compliance with safety law.
Most organisations do not deliberately seek to put "profit"
before safety but have to put resources and attention into other
aspects of running the business. If there is a fatality and a
clear and marked deficiency in safety management, but no clear
evidence that an organisation actively sought to "profit
from that failure", this may well affect a jury's decision.
As such, the wording in the Bill (and any guidance in this area)
will need careful attention.
The construction of "whether or not"
is not helpful to those who have to implement compliance systems,
as, after the event, it points juries to matters that may or may
not be considered. The risk of emotive responses and "wisdom
in hindsight" being brought into account is self-evident.
The apparent certainty of s3 (2) is further
reduced by clause 3 (4), which leaves the jury with very wide
residual latitude to be able to take into account any other matter
it considers relevant. Any other matters that a jury may take
into account should be clarified to avoid uncertainty
The use of the word "gross" is significant.
It would seem to be an attempt to emphasise that the offence should
be restricted to the most serious cases only, as opposed to a
re-packaging of HSWA s2 and s3 and this is something that must
be made to work.
We do not consider that the reference to general
health and safety law and guidance, then specifically referencing
HSWA is at all helpful. It detracts from the other enforcing arenas.
The reference to guidance also does not add
anything, as sources of guidance do not necessarily have a link
to the quality and relevance of the legislation. There is a well
known and accepted hierarchy of Approved Codes of Practice and
guidance produced by the Health and Safety Executive (HSE) that
has a particular legal effect. The status of guidance across enforcing
authorities is not consistent with many relying on "statutory"
guidance to establish acceptable operating standards. Guidance,
including that issued by HSE, is not mandatory and failure to
follow it should not, in itself, be taken as evidence of a gross
breach.
Relevant Duty of Care
The offence in s1 requires that the way in which
the activities of the organisation's activities are managed or
organised by its senior managers—causes a person's death.
However, the new offence does not appear to
change the position on causation from the current common law situation.
In many respects the difficulty of proving the legal concept of
causation in any incident is likely to provide as much of a hurdle
to the prosecuting authorities under the new offence as it does
already. Reasons for accidents are never straightforward and normally
involve the complicated interaction of numerous multi-causal elements,
organisations and people at varying levels and it is hard to see
that the new proposals do anything to simplify this.
The offence in the draft Bill will only apply
in circumstances where an organisation owed a duty of care to
the victim. Draft s4 (3) confirms that the existence of a duty
of care in a particular case is a matter of law for the judge
to decide. In general terms the proposed duties would not appear
to impose any greater duty of care than under existing health
and safety legislation or the common law offence of manslaughter
but it becomes more significant when considering corporate structures
and levels of senior management.
The relationship of corporations to their contractors
and franchisees and the degree to which they have a duty of care
or the primary duty of care to these employees is an essential
element in the application of the offence. The different legal
and practical structures of corporations will give rise to different
answers to the identification of the senior management level and
the organisation that owes the duty of care to the victim. The
inevitable inconsistency risks discrediting the law.
Fines and Remedial orders
The offence should only be brought in the most
serious of cases and the appropriate fine should be calculated
by the Court consistently with the criteria adopted by the Court
of Appeal in R v Howe and Sons and the production of accounts.
The draft Bill provides the Court with the power
to make remedial orders within a specified time and this principle
is already contained within the HSWA (s42). However, it is rarely
if hardly ever used as in practice the potential sanction is fraught
with difficulties and now is the time to reconsider its validity.
A criminal court is unlikely to be equipped
to decide on the necessary standards of safety. There would be
a danger that a court considering one aspect of managing safety
by one undertaking involved in the particular industry would be
unaware of the impact of any remedial order on the activities
of the system overall. Further there may be issues or other safeguards
in the system that a court would not be aware of or did not fully
appreciate, so would have to defer to many experts who may have
conflicting views. There is a risk of "punitive" as
opposed to "effective" safety measures being imposed,
and imposing measures that are either wrong or may have a negative
effect on other areas of safety management.
In any safety incident resulting in corporate
killing the enforcing authorities should be aware of the circumstances
and serve the necessary prohibition/improvement or remediation
notices. That is the role of the HSE and others enforcing authorities.
Individual Culpability
The draft Bill imposes no new liability on individuals.
This is to be welcomed.
If, however, an individual's acts or omissions
are judged to be sufficiently serious and causative of a death
then they will be potentially liable for a separate offence under
existing law of gross negligence manslaughter. Further the enforcing
authorities will continue to have powers under s37 of the HSWA
in relation to senior managers or officers to cover acts or omissions
where employees or others affected are exposed to risk. Similarly
s7 HSWA creates a similar duty in the case of employees to other
employees and others affected.
Notwithstanding that the draft Bill does not
impose a new liability, an issue arises from the concept of "senior
managers" involvement in the corporate manslaughter offence.
In order to prove the offence it will be necessary to identify
the senior managers through whom it is alleged that the organisation's
liability is attributed. It will also be necessary to examine
their actions and omissions to consider a) whether they are by
definition a senior manager ie whether he/she plays a significant
role in the making of decisions about how the whole or a substantial
part of its activities are managed or organised b) whether those
acts or omissions formed part of a gross breach of what could
reasonably have been expected by the organisation as a whole.
The inevitable position is that those individuals
are to an extent going to be examined as if they themselves were
on trial. However, because they are not defendants themselves
(unless prosecuted for manslaughter or under the HSWA as individuals)
they will have no locus before the court to defend or put forward
explanations for their actions or omissions.
It is possible that such a person may be effectively
found to have committed the offence of gross negligence manslaughter
by the court without being able to defend him/herself. Whilst,
in the absence of other proceedings, no criminal sanction would
flow from this, there is the prospect that they could have the
reputation irreversibly damaged and potentially render them unemployable.
Who will investigate the offence?
The draft Bill proposes no change to the current
responsibilities of the police to investigate, and the CPS to
prosecute and we welcome this approach. However, this should be
supported by close co-operation with the HSE (or other relevant
enforcing authorities). Sharing technical information and evidence
following the incident is essential to establishing quickly whether
there may be a "gross breach", to enable appropriate
and effective remedial action to be taken and to prevent a recurrence.
S1 (6) and the requirement for the consent of
the DPP is a sensible conclusion to have reached and is to be
welcomed so that enforcing authority and business resources are
not wasted on vexatious or inappropriate responses.
Coverage of Governmental Bodies
On the face of it the draft Bill does not take
advantage of Crown Immunity. However the detail is obscure and
whilst exclusion of the Armed forces may well be in the public
interest we are extremely concerned at the proposed exclusion
of public authorities from a duty of care for the purposes of
the Act including allocation of resources and weighing of competing
public interests. Agencies such as the Food Standards Agency and
HSE do make very significant decisions and enforce actions impacting
on the safety of operations and products in the UK market place
and it is right that at least the same high standards should be
expected from them in the management of such matters as are expected
from commercial operators. Where a public authority has duties
of care in negligence they should have duties under this law,
this reflects the norms and expectations of society. There is
also the possibility of regulations being made under the Bill
which would limit (and possibly exclude) certain government activities
and that further consideration is to be given as to what government
bodies should be excluded from liability. This leaves the door
wide open to potential injustice.
17 June 2005
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