Wednesday, 11 January 2012

Directors' Update December 2011

Directors’ Update December 2011

Specific Directors’ Duties

The subject of directors’ duties has been a hardy perennial ever since the Labour Government included it in their manifesto in May 1997.  In April 2011 the HSE returned once again to the issue of health and safety duties in law for directors.  Whilst it did not rule out a return to review this decision, it yet again supported the maintenance of the status quo.  Specific health and safety duties for directors has long been an ambition of the unions which was only half met by the introduction of the Corporate Manslaughter Act in 2007 because it applies to corporations and not individuals.  If a Labour government egged on by the unions could not muster the political will to enshrine directors’ duties into criminal law, it is very unlikely that a Conservative government committed to reducing the regulatory burden is going to find parliamentary time for it.  In all probability therefore the issue can safely be parked for the next four or five years unless there is a high profile case which prompts another review.

Any director who has been paying attention to these updates however, will know that there is little reason for directors to relax their guard.  Part of the HSE’s reasoning is that it already has a powerful instrument in the form of section 37 of the Health and Safety at Work Act (HSWA) under which directors can be prosecuted for consent, neglect or connivance which lead to a breach of duties, and it has shown increasing willingness to use it.  Add to this the fact that under the Health and Safety Offences Act 2009 (also covered in previous updates) a Crown Court can imprison an individual for up to two years or impose an unlimited fine for a prosecution brought under section 37, and you can see why the HSE believes that it already has sufficient legal powers where directors are concerned.  The conviction of Richard James at Lewis Crown Court in May 2011 is case in point.  Mr James was a director of a property maintenance company.  In 2009 a 21-year-old roofer fell 8.5m through a skylight of a building managed by the company and died.  Although Mr James was acquitted of manslaughter he was convicted under section 37 and received a six month sentence suspended for two years and ordered to complete 150 hours of community service.  He may not serve time in jail but he now has a criminal record.  Such a fall from height is not unimaginable at an event or an exhibition.

New Relevant Case Law

There has also been relevant case law which further empowers courts with regard to section 37.  The caveat was always that there had to be active ‘connivance’ which implied that the director had to know about the failing in order to be in breach of the law.  A recent ruling1 rejected that premise so that it is possible to prosecute a director for a health and safely failing which they did not know about but ought to have done.  In this case it was failing to ensure that safety systems were in place.  Ignorance of the breach of duty by the company, in other words, is no longer a defence.  There has been a further appeal in a separate case resulting in a binding interpretation of current law2.  In this case two directors were prosecuted and fined for offences under the Private Security Industry Act because the company supplied unlicensed security guards.  The mechanism is the same as section 37 of HSWA which permits prosecution of directors for offences committed by the company.  This case was appealed because the directors were employed after the contract started and so they were not part of the original decision and the instigation of the breach of duty.  The case is salutary because it introduces the precedent that new directors are not immune to offences committed before they were appointed if they fail to act once they join the company.  The lesson is clear.  Directors, including those that have recently been appointed, need to be satisfied that the company they are joining is legally compliant with relevant health and safety law or they risk prosecution.

Corporate Manslaughter Case

Previous updates have extensively covered the Corporate Manslaughter and Corporate Homicide Act.  The first conviction of Geotechnical Holdings and a key director was not ultimately a good indicator of how this law would be applied in practice not least because the director concerned was never prosecuted because he was too ill to stand trial.  In the most recent case, Lion Steel Equipment is being prosecuted for the death of a worker who fell from height.  Three of its directors are being prosecuted for manslaughter by gross negligence3 and also face charges under section 37 of HSWA.  Here we have directors being held collectively and individually to account for failings which led to a death at work.  We will follow this case in a future updates.


Whereas the law regarding directors’ duties has not significantly changed, recent application of the law indicates an increasing willingness by the courts to hold individual directors to account and, where warranted, impose custodial sentences.  Directors and newly appointed directors must recognise that cabinet style collective responsibility exists at board level and positively engage in the scrutiny of the company’s operations to ensure that health and safety duties are discharged in compliance with the law.

Simon Garrett

This and other updates and comment can be viewed on our blog at


1.     Regina v P Ltd and Another

2.     R v Huthins and Charalambous 2011

3.     Involuntary manslaughter by gross negligence requires a breach of duty which causes death

The essential elements are:

(2) breach of the duty causing death; and

(3) gross negligence which jury considers justifies criminal conviction,

(4) that gross negligence was a substantial cause of the death.

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