What's in a name? The draft Corporate Manslaughter Bill
Howard Fidderman looks at the government's draft Bill for reforming the law of corporate manslaughter.
The government has finally published a draft Bill that would introduce a new offence of corporate manslaughter. The text is the most awaited - and one of the most delayed - pieces of legislation on health and safety at work since the HSW Act was passed in 1974. The draft is subject to public consultation1 until 17 June and parliamentary scrutiny, meaning that it will still be some months before parliament will debate a Bill proper. Throw in the uncertainties of a general election and possible further Labour prevarication and even a 2006 Act starts to look premature. But when the Act does receive Royal Assent, it will secure recognition in directors' minds like no other piece of health and safety legislation has done since 1974 - even though, for most organisations, the new law will prove one of the most irrelevant.
The new offence (see box 1) will be known as "corporate manslaughter" and will apply to corporations and most Crown bodies and government departments (in effect, there will be no Crown immunity). It will abolish the application to corporate bodies of the common law offence of manslaughter by gross negligence, differing from that law in that it concentrates on senior management failures, rather than the culpability of a named individual as is currently the case (see box 2).
The new offence can be tried only in the Crown Court and sanctions are confined to unlimited fines and remedial orders. Individuals will not be liable for the new offence (be it aiding, abetting, counselling or procuring an offence of corporate manslaughter), although they can still be charged with the existing individual common law offence of gross negligence manslaughter or health and safety offences. Nor will the Bill apply to an incident that occurred before legislation comes into force.
The offence covers England and Wales, as well as territorial waters, offshore installations, UK-registered ships and British-controlled aircraft and hovercrafts. The Secretary of State for Northern Ireland will consult on extending the Bill's provisions in that country; Scottish ministers will consult separately on proposals for reforming Scots law.
The government's draft Bill is the latest step in a process that started in 1994 when the Law Commission consulted on reforms to the law of involuntary manslaughter. Although it made recommendations on reform to the government in 1996 (HSB 250 p.7), nothing happened until the Labour government set up an interdepartmental working group that resulted in a May 2000 consultation document proposing three new offences of "reckless killing", "killing by gross carelessness" and "corporate killing". The first two offences would have applied to individuals; the third to organisations.
Consultation closed in September 2000, eliciting 150 responses that dealt specifically with corporate manslaughter. Although these gave "strong support" for a new specific offence, the government spent the ensuing years prevaricating, delaying and breaking promises and a manifesto commitment to legislate. The draft Bill is, essentially, a renamed version of the corporate killing proposal, fine-tuned after four years of political nervousness.
The new offence
The draft Bill would make an organisation guilty of an offence of corporate manslaughter where the way in which its senior managers organise or manage any of its activities:
causes a person's death; and
amounts to a gross breach of the organisation's duty of care to the deceased.
Whether an organisation owed a duty of care is decided by the judge, and will typically arise:
under the common law of negligence to its employees;
under statute in its capacity as occupier of land (which includes premises). This would cover issues such as ensuring that lifts are properly maintained and fire precautions taken;
in connection with its supplying of goods or services. This relates to negligence for the safety of products rather than statutory provisions, as well as to the duties owed by service providers to customers. The category covers services for a consideration (usually payment), as well as those offered by bodies such as local authorities (LAs) and NHS trusts; or
from carrying on any other activity on a commercial basis. This is a catchall to ensure that commercial activities that do not involve the supply of goods and services are covered, for example farming and mining.
Although it might seem self-evident, the charge is restricted to where the management failure caused the death. In determining this, the ordinary rules of causation apply, ie the failure must have made more than a minimal contribution to the death and there was no intervening act that broke the chain of events linking the failure to the death. The Law Commission had been concerned that the rules on governing whether an intervention had broken the chain meant it would be difficult to establish the failure as a cause, and proposed a provision to counter this. The government feels case law has moved on to the extent that the chain can be broken only by an extraordinary event (in which case the new law will not apply), and that no safeguard is necessary.
How gross is gross?
A breach of duty will be "gross" if the failure "constitutes conduct falling far below what can reasonably be expected of the organisation in the circumstances". In reaching this decision, a jury must consider whether an organisation failed to comply with any relevant health and safety legislation or "any code, guidance, manual or similar publication" that is made or issued by a health and safety enforcement body. (This may confer on HSE guidance a status that it does not have under health and safety law.)
If this is the case, the jury must consider the degree of seriousness of the failure to comply and whether or not the senior managers:
knew or ought to have known of the failure;
were aware or ought to have been aware of the risk of death or serious harm posed by the failure; and
sought to cause the organisation to profit from that failure.
The government's explanatory memorandum accompanying the Bill states that evidence of awareness can include warnings from health and safety enforcement authorities, enforcement notices and previous convictions relating to the offence that caused the death. The memorandum also appears to tie consideration of profit to the motive behind the breach, ie there has to have been an intention to secure profit through a breach (as opposed to a tacit awareness that profits could result). It adds that: "The extent to which the company actually profited would [also] be a matter relevant for sentencing." The Hampton report on regulation and enforcement goes further than this to state that the fine should cancel out any economic gain from the crime (see Hampton and the Regulators).
How senior is senior?
Senior managers are those who play a significant role in:
making decisions about how the whole or a substantial part of an organisation's activities are managed or organised; or
the actual managing or organising of the whole or a substantial part of those activities.
What constitutes a substantial part of a manager's activities will depend on the size and nature of the organisation. The offence is therefore likely to cover regional management within a national organisation, for example a national network of retail outlets. It will also cover divisional management where an organisation has a handful of activities in roughly equal proportions, such as a company with manufacturing, retail and distribution divisions. The government advises that whether or not levels below this will be covered will depend on whether business units can "sensibly be said" to represent a substantial part of an organisation's overall activities. By "significant", the government means those whose role in the management failure is decisive or influential, rather than minor or supporting.
The new offence will consider management conduct collectively as well as individually. It does not, however, allow for aggregation of individuals' conduct to identify a gross management failure (as was tried, unsuccessfully, during the trial following the Herald of Free Enterprise disaster at Zeebrugge). Although the new offence specifically excludes actions of junior and local managers, their failures may be taken as evidence of more senior failings.
Enforcing the new offence
In 2000, the government's consultation stated: "There are strong practical reasons for considering whether it should be open to health and safety enforcing authorities to investigate and prosecute the new offence" (in addition to the police and the Crown Prosecution Service (CPS)). The reasons were that the tests - the extent of the management failures - were the same as inspectors used under the HSW Act and that they were therefore best placed to investigate and prosecute, avoiding duplication of resources.
Analysis of the consultation found "little consensus" on this issue, and the government has decided that, as with the common law offence of manslaughter, the police will investigate, and the CPS will prosecute, the new offence. It is "important", adds the government, for the HSE and LAs "to be effectively harnessed" in the investigation and that the existing protocols for effective liaison between the bodies are implemented adequately and reviewed.
Proceedings in relation to the new offence can be taken only with the consent of the Director of Public Prosecutions (DPP). The 2000 document had proposed that there should be no requirement on individuals to obtain the DPP's consent for bringing a private prosecution, but responses to the consultation revealed significant concern that families of victims and campaigners would bring a potentially high number of ill-founded prosecutions that would fail but place "an unfair burden on the organisation involved with possible irreparable financial and personal harm".
The sanctions
The sanctions for the new offence - fines and remedial orders - were originally recommended by the Law Commission in 1996 and accepted by the government in 2000. There is no limit on the fine that a court will be able to impose, and the government advises that fines "can be set at a very high level" where circumstances merit.
The government also believes there is little point in fining a Crown body because all that happens is that the money is recycled through the Treasury back to the service provider that paid the fine. Despite this, the government has drafted the Bill so that Crown bodies are liable to a financial penalty, stating that it would welcome thoughts on this issue.
The Bill introduces the notion of remedial orders, whereby a court can order an organisation to take steps within a specified period to remedy:
the breach for which it was convicted for corporate manslaughter; or
any matter that resulted from that breach and was a cause of the death.
As an example, the remedial order might require risk assessment and monitoring where an organisation's failure to conduct these had led to inadequate safety precautions that resulted in a death. The court may extend the order. Failure to comply with an order is subject to a fine of up to £20,000 in a magistrate's court or unlimited fine in a higher court.
The government's current consultation does not explore remedial orders in terms of their relationship with enforcement notices (prohibition and improvement) issued under the HSW Act. But its 2000 document noted that it would be useful if courts were able to order remedial action either where the HSE had not issued an enforcement notice or where a company had not complied with it. But given that the HSE would be highly likely to have issued an enforcement notice in circumstances that have led to a manslaughter conviction, it is questionable as to how useful such a notice will be. Further, remedial orders are a weakening in one important way: failure to comply with a prohibition notice is one of the few offences for which a company director or senior manager can be imprisoned; failure to comply with a remedial order carries only a fine. Given that the corporate manslaughter charge is reserved for the gravest of offences, it seems ridiculous that a director cannot be imprisoned for a failure to remedy matters that led to a death, but can be for a failure to remedy matters that led to the risk of a death.
Escape for directors
Although the Law Commission had said it would be wrong to allow punitive sanctions against individuals for an offence premised on collective failure, the government's 2000 consultation expressed concern that a new offence would have insufficient deterrence without sanctions against company officers - particularly for wealthy and larger organisations. Nor would it prevent culpable individuals from setting up new businesses or managing other companies.
The government therefore proposed that: "Any individual who could be shown to have had some influence on, or responsibility for, the circumstances in which a management failure, falling far below what could be reasonably expected, was a cause of a person's death, should be disqualified from acting in a management role in any undertaking carrying on a business or activity in Great Britain." The government even sought views on imprisonment for contributing to the management failures.
Responses showed strong but evenly split views, and the draft Bill confirms subsequent government statements that it had rejected individual sanctions. The government cites similar justifications to those advanced by the Law Commission and points out that directors can still be prosecuted on an individual charge of manslaughter and under the HSW Act, and that they can be disqualified under existing law.
Who's in and who's out?
The offence will apply to any body corporate, regardless of the country of incorporation. It includes companies incorporated under the Companies Acts and bodies incorporated under statute (non-departmental public bodies and public sector bodies) and by Royal Charter. The scope goes further than the Law Commission's recommendations, but not as far as the government's 2000 proposal that the offence should cover all "undertakings", whether incorporated or not.
The draft Bill excludes from the offence corporations sole, unincorporated bodies and the armed forces, as well as certain strategic policy decisions and functions that must be performed by, or on behalf of, the State (see box 3). The Home Secretary, Charles Clarke, believes that accountability for this last group - a "narrow band" of state-related functions and activities - lies "elsewhere", through Parliament, the ombudsman, judicial reviews, public inquiries or the ballot box.
The problem with including unincorporated bodies in the offence - and the reason why the Law Commission restricted its 1996 proposals to incorporated bodies - is that they have no distinct legal personality. Such bodies include organisations such as partnerships, trade unions and registered friendly societies. The government will keep the position of unincorporated bodies under review and invites comments specifically on this area. It intends, however, to bring police forces, which are unincorporated, within the scope of the legislation and is considering how best to do this.
The territorial application of the offence reflects the Law Commission's recommendation and the government's 2000 proposal that the offence should apply if the injury that results in the death occurred in a place where English courts have jurisdiction, ie the offence would apply regardless of whether the management failure took place in England or abroad. All companies, including foreign-registered companies, are therefore liable to prosecution. The offence will not, however, have extra-territorial jurisdiction even where the employer is registered in England and Wales. Practical difficulties, states the government, make this unenforceable. The TUC, however, insists that there are some extra-territorial circumstances where the legislation should apply, in particular around risk assessment failures2.
The CPS will also be able to charge parent or group companies of the accused organisation (as well as the subsidiary) with corporate manslaughter. The reasons for this were set out in the 2000 consultation and reflected the government's fear that companies might attempt to avoid liability by setting up subsidiaries to carry out their riskier activities that would lack the financial resources to pay substantial fines. Responses supported the government, which has applied the new offence to a parent company that owed a duty of care to the victim in respect of an activity that constituted the offence.
Crown immunity goes
The effective removal of Crown immunity from the new offence goes further than the government had envisaged in 2000, when it merely sought comments on a limited application of the offence to the Crown by enabling civil courts to make a declaration of non-compliance with statutory requirements requiring immediate Crown action. Respondents in 2000 favoured the widest application, including criminal prosecution of the Crown. Welcoming the draft Bill, the HSC's chair, Bill Callaghan, said that the proposals "reflect HSC thinking, especially with regards to application to the Crown". (Ironically, it still has immunity from HSW Act-related legislation.)
The resulting Bill is explicit that government departments and corporations that are servants or agents of the Crown owe a duty of care that is no different to the duty they would owe if they were not a servant or agent of the Crown. As such, the offence applies to Crown bodies that are either corporate bodies or are listed in a schedule to the Bill. The schedule lists 33 ministerial and non-ministerial government departments that have no separate legal status from the Crown, including the Home Office, Department for Work and Pensions, the Treasury, Privy Council Office, HM Revenue & Customs, Cabinet Office and Charity Commission. Incredibly, five years after it consulted, the government warns that further work still needs to be carried out on Crown bodies, particularly in relation to executive agencies.
Nothing to fear?
The government believes that the current manslaughter law is neither clear nor effective, "fails to reflect the reality of modern corporate life, operates too restrictively and fails to deliver an effective sanction". Introducing the draft Corporate Manslaughter Bill, the Home Secretary, Charles Clarke, described the public concern that arises from the feeling that "the law is not delivering justice" - particularly following the failure of corporate prosecutions for public disasters such as Zeebrugge in 1987.
Clarke stresses that the proposals need to strike a "careful balance" between holding organisations "properly to account for gross failings by their senior management" that have fatal consequences and reserving corporate manslaughter charges for "the very worst cases of management failure". The government believes that the new offence will secure a wider range of convictions and that the "extra deterrent effect" of a possible corporate manslaughter conviction "will also provide a further driver for ensuring safe working practices". Clarke emphasises that the new offence is "not about new standards"; nor does he want to "increase regulatory burdens, stifle entrepreneurial activity or create a risk averse culture".
In some ways, the new offence is similar to the existing offence, in that both require a duty of care and gross negligence. The government has followed the Law Commission in fixing the level of failure at conduct that falls far below what can reasonably be expected in the circumstances. But it has also recognised the concern of some respondents that this was insufficiently clear by providing non-exclusive statutory criteria for assessing culpability.
In terms of impact, the government believes that the vast majority of organisations subject to the new offence are already subject to the existing offence. The new offence is clearly linked to existing health and safety duties and does not create any new regulatory "burdens". Clarke reassures organisations that take a "conscientious" approach to their current obligations that they "have nothing to fear". Those that do not might incur costs if the new offence encourages them to intervene proactively (although they should already have been acting in this way under the HSW Act). The government therefore estimates costs of £14.5 million to industry, but points out that a 1% increase in compliance with health and safety measures would reduce the cost of workplace injuries and deaths by between £200 million and £300 million.
Deterrence and fairness
The Bill has been welcomed widely, although in some quarters this might be as much to do with the publication of a draft after so many years, rather than all of its detail. The TUC's general secretary, Brendan Barber, said the new offence would "help make the workplace safer by providing a new sanction against those organisations who show scant regard for the health and safety of their employees". Bill Callaghan, said that the HSC's "strong support" for the proposed offence "is based on the fact that we consider it will increase the deterrent effect already offered by existing health and safety penalties".
These statements are undoubtedly true: in avoiding the "directing mind" pitfall, the new offence will offer a new and practical sanction that will have a deterrent effect. It should also result in more companies being prosecuted and convicted, although it should not be difficult to improve on current conviction totals: seven companies, 19 directors, senior managers and owners, one fairground inspector and one teacher. Of these, 12 have served jail sentences (one conviction was subsequently quashed), and one director was sentenced to community service. (These figures exclude seven individuals - mainly landlords and gas fitters - that have been jailed for gas-related manslaughter.) The new offence will also be fairer in that it should end the scandalous situation whereby all but the smallest organisations are able to avoid conviction for corporate manslaughter.
Directors need to fear
The biggest doubt about this draft Bill, however, is not that it will have an impact but that it will not have the impact that the government and other advocates hope for. In this respect, the absence of sanctions against individual directors is particularly troubling. The government was absolutely clear in 2000 that it feared an offence that did not allow disqualification of directors would not have sufficient deterrence. The differences between its 2000 proposals and the 2005 draft Bill do nothing to reduce that fear.
The HSE has meanwhile stepped up its efforts to target directors in a non-punitive way as a means of persuading organisations to take health and safety seriously (see Repackaged and recycled, but the message remains the same: health and safety benefits the bottom line). There is no sense in the government and the HSE not backing this up with explicit and individual duties and sanctions under the HSW Act and the new offence of corporate manslaughter. Barber, while welcoming the draft Bill generally, stresses that the TUC is "disappointed that the draft bill does not threaten individual directors with the ultimate sanction of a jail sentence".
Nor is the only other sanction in the Bill - a remedial order - likely to make directors tremble, particularly when they can ignore such an order without fear of prison.
Making the sanction hurt
There is also a fundamental doubt as to the ability or inclination of courts to impose a substantial fine: in the past 30 years, courts have imposed just four fines of £1 million or over and a further eight of £500,000 or over for HSW Act-related offences (ie not manslaughter). In 2003/04, the average fine following a workplace death was just £43,113 (see When things go wrong: enforcement HSE style). Lest we forget, the HSE is proud that it prosecutes only the most severe failings, and judges have been told repeatedly by the Court of Appeal, the Lord Chancellor and the government to stiffen their sentences, but without significant success.
And when a court does convict an organisation for manslaughter, the fines have ranged from £4,000 to £60,000 (one fine of £90,000 included health and safety offences). The main penalty handed out by courts to individuals convicted of work-related manslaughter has been a custodial sentence, ranging from nine months to seven years, but usually 12 or 18 months and often suspended. Once the new offence of corporate manslaughter is in place, it is by no means certain that the CPS will continue to bring manslaughter charges against individuals in smaller organisations at even the poor rate managed to date. To do so would perpetuate the situation whereby it is directors, owners and managers of small organisations that are charged and go to jail, while those in charge of large enterprises continue to escape sanction.
If the government will not penalise directors individually for their role in a corporate manslaughter, it is even more important that it makes the organisational sanction bite. Options could include innovative penalties such as corporate probation and linking fines to size, turnover or profit - particularly in the private sector. Court of Appeal criteria and sentencing guidelines require these factors to be taken into account (HSB 275 p.1). But they have failed to have a consistent effect (see Hampton and the Regulators) and there is now a pressing need for a more direct link.
It is still the case that small organisations are being fined a far higher proportion of their income than larger organisations: the single largest fine imposed for a health and safety at work offence - £2 million on Thames Trains - amounted to just 5% of its parent company's profits. In contrast, the fine imposed by the Court of Appeal in 1998 on Howe Engineering- the case that set the sentencing criteria above - represented more than half of its annual profit. If the government were to address these factors, it might end up with an Act of significant deterrence. To ignore them and introduce the Bill as currently drafted will have a far more limited effect.HF
1 "Corporate manslaughter: the government's draft Bill for reform", March 2005, Cm 6497, the Stationery Office, £9.50 or free at: www.homeoffice.gov.uk. Responses should be sent, by 17 June, to the Corporate Manslaughter Bill team, Home Office, 2 Marsham Street, London SW1P 4DF or to corporatemanslaughterbill@homeoffice.gsi.gov.uk.
2 www.tuc.org.uk/h_and_s/tuc-9599-f0.cfm.
Howard Fidderman is a freelance journalist and editor of HSB.
