Friday 28 September 2012

What would be the impact on an event if the country in which it was held left the Euro during the tenancy or close to it?


Whether or not you believe in the whole European project and the Euro, we have reached a point where there must be at least an even bet that one of the Eurozone countries will leave the Euro in the next 12 months.  The question, therefore, is not why or whether it will happen, but how to prepare for such an eventuality.

 

Responsible event companies plan and train to deal with ‘major incidents’.  Many focus on the topical risks such as fire or a bomb threat.  Companies with more advanced risk management programs include a wide range of possible scenarios such as political and civil unrest or serious disruptions to travel infrastructure such as occurred when flights were suspended over much of Europe after the Eyjafjallajoekull volcano erupted in Iceland.  Are we, however, missing one of the most obvious scenarios?  What would be the impact on an event if the country in which it was held left the Euro during the tenancy or close to it?

 

The problem is that, for many, the whole EU project is an emotive issue which tends to cloud our judgement.  There is no place, however, for emotive subjectivity when it comes to risk analysis. To add to the confusion, if you put any two economic experts in the room, each will argue convincingly a completely contradictory position and this is especially true with matters concerning Europe.  Yet through all the clamour one clear message is emerging.  Whether or not you believe in the whole European project and the Euro, we have reached a point where there must be at least an even bet that one of the Eurozone countries will leave the Euro in the next 12 months. 

 

I have no particular claim to economic competence so these views are based on the output from what I regard as the more serious and objective comment from the Economist and other similar journals1.  In particular Roger Bootle has produced a paper ‘Leaving the Euro:  A practical guide’ that gives an insight as to how it might occur2.

 

The Warning Signs

 

The one thing that is certain is that if it does occur, everyone will say that they knew it was going to happen.  It will be less easy to explain why it was not planned for.  Most economists seem to agree that the ‘Armageddon scenario’ is a country ‘crashing out’ in a disorderly default.  However if a country signals its intention, it would very likely precipitate the disorderly default that would be caused by the markets’ reaction to the news.  An exit therefore would need to be planned in secret.  In essence we can expect no early warning.  Some expect that it would still be necessary to impose capital controls in advance to ensure that if the news leaked out, it did not cause a run on the banks and a flight of capital from the country.  This might provide an indication that a country was preparing for an exit.  Event companies should consider whether capital controls would have an impact particularly with regard to moving freight across an international border.

 

The Timing

 

Managing an exit during normal trading would be impossible.  The ideal scenario would be to make the announcement on a Friday after trading preferably before a bank holiday.  This at least gives us a clue as to when it might happen.  Easter is a good bet.  Using this prediction it does at least give us some guide regarding the potential vulnerability of events particularly those that open on a Monday or a day after a bank holiday.

 

If there were no convenient bank holiday, the country could announce one which opens the prospect of the additional problem of an event finding itself trying to open on an unplanned bank holiday in the middle of its tenancy.

 

The Transition

 

The next working day, trading would begin in the new currency probably at 1:1 parity but with expectations of falls of between 30% and 50% in the new currency depending on the currency in question. 

 

On the bank holiday days cash points would be closed.  There would be no new currency in notes and coin form.  We have, however, moved a long way towards a cashless society and planners would rely on the fact that many transactions could take place electronically.  It would also be probable that the Euro in note and coin form would be allowed for small transactions at the new market rate much as it is accepted in Switzerland alongside the Swiss Franc. 

 

This raises some practical issues.  It is very likely that cash would quickly be in short supply.  This is more likely to be a nuisance rather than a serious problem and organising teams can easily mitigate this risk by ensuring that everyone has a healthy supply of Euros and perhaps an emergency fund held centrally.

 

The Reaction

 

Here we are in uncharted territory and one certainty is that this would create a great deal of uncertainty.  Exhibitors and visitors would be pushing the organiser or venue for information regarding the viability of the event or travel to it, and the practical issues such as the lack of currency in note or coin form.  Communicating with key stakeholders and visitors would be vital in regaining the initiative.

 

One of the chief concerns of exhibitors and visitors would be personal security.  There would almost certainly be significant civil unrest with colourful media images of riot and disorder in the country and the destination city particularly if it were a capital city.  This may well be exacerbated by high profile calls for industrial action and the resignation of the government.

 

Many of the businesses, exhibitors or visitors may anticipate financial difficulties or take a view that the venue would be unsafe or very poorly attended and opt to pull out.

 

Every event relies heavily on hourly paid workers for a range of tasks such as forklifting.  Faced with industrial and civil unrest, transport problems or a more emotive desire to remain with the family, many may stay away from work creating operational problems due to labour shortages.

 

The Legal Question

 

Some event companies are already opting for business transactions expressed in US dollars in anticipation of this kind of issue.  An event may well be faced with cancellation and this would raise the issue of cancellation insurance.  Some policies are written to expressly exclude cancellation due to variations in the rate of exchange, rate of interest or stability of any currency.  It is certainly worth checking the position with insurers.  More seriously could contracts agreed in Euros be settled in the new devalued currency? 

 

How to Prepare

 

The breakup of a monetary union is not without precedent, e.g. following the breakup of Czechoslovakia in 1993 but in most cases the political and economic contexts are not comparable so researching previous examples will not necessarily help.  The first step is to accept that it could happen and is at the higher end of the risk scale based on probability and potential consequence.

 

Whilst the context may be unprecedented the likely consequences in operational terms, such as disruption to infrastructure are not.  Companies with well-practiced major incident handling processes will find that they are well prepared because the following principles will still apply:

 

·         Monitor the risk and identify the tipping point when it becomes a major incident for the company

·         Respond quickly and simultaneously at strategic and operational level

·         Ensure well-timed and effective communication with key stakeholders

·         Monitor developments and cross-reference sources of information to sort fact from inaccurate speculation.

 

Event teams should look at simple practical issues such as an emergency fund of additional currency.  In addition, other key parties such as contractors or host venues should affirm that they have plans in place to cope with such an eventuality.  Setting up a hosting scheme for exhibitors and visitors at the airport with a help desk may help to allay the fears of those concerned about travel to the host country.

 

The Euro ‘crisis’ has run for over 2 years and we have become used to the high drama of political brinkmanship and summits where financial chaos is imminent and then narrowly avoided until the next peak in the crisis arises.  It is up to professional event companies to ignore the hype and objectively assess and prepare for this entirely foreseeable risk.

 

Notes

 

1.    Economist – August 2012 ‘Breaking up the euro area’

2.    Capital Economics – ‘Leaving the Euro: A practical guide’  Roger Bootle

Friday 31 August 2012

X-Venture Update - Summer 2012


The London Olympics has focused the attention on event safety as never before against a background of a government sponsored review on health and safely law.  There is also uncertainty with regards to the approach that the HSE will take with their new remit to enforce construction safety at events and powers to charge businesses for their time in attending and investigating a breach of regulations.  Taken together these changes represent a significant change in the regulatory environment for the events industry.

 

HSE Enforcement of Construction Safety at Events

 

The enforcement of safety in construction activities has now been taken up by the HSE directly and will no longer, in theory, be enforced by the Local Authority (LA).  It was previously assumed by event safety professionals that this move prefaced the application of the Construction Design Management Regulations (CDM) to events, however, this is not the case.  The HSE has set up a working group to deal with event construction. 

 

The HSE is responsible for the enforcement of health and safety law in the UK.  For events this is usually delegated to the local authorities who have largely the same powers of enforcement as the HSE.   The London Olympics were the catalyst for a review by the HSE into event construction.  The HSE have decided that they will take on enforcement with regards to construction at events. 

 

The HSE report, ‘Identification of safety good practice in the event construction and deconstruction of temporary and demountable structures’ gives us an important window into their mind-set.  They reviewed six accidents and made six site visits.  These were all related to entertainment, festival or sporting type activities, one dating back to 1994.  There is not one mention of exhibitions except a reference to ‘other events’.  Drilling down into the report it is clear that some generalisations have been made concerning the events industry as a whole based on a very narrow focus of research.

 

Whilst the application of CDM is not envisaged, it is quite clear that a central theme of the report is a dislike of the perceived varied and ad hoc approach to management of events and a desire to impose some form of template in this regard which is worrying. 

 

On the other hand the HSE have a valid point as the events industry has not covered itself in glory with regards to health and safety in the past.  Also the findings of this report may be tempered with the findings of the working group over time.

 

The HSE have visited a lot of venues but as yet we have not seen any active enforcement.

 

HSE Fee for Intervention

 

The HSE proposes to introduce a Fee for Intervention (FFI).  It was due to come into force in April but this has now been postponed until October subject to parliamentary approval.  The regulations put a duty on the HSE to recover its costs for carrying out its regulatory functions from those found to be ‘in material breach of health and safety law’.  A ‘material breach’ is where in the opinion of the HSE inspector there has been a contravention of health and safety law that is serious enough to require them to notify the person in writing.  The proposed fee is an hourly rate of £124 chargeable to companies and not individuals.  It applies not only to time on site but any follow up work associated with the visit including investigations.

 

The idea behind it is that the government believes that businesses and organisations that break health and safety laws should pay for the HSE’s time in putting right, investigating and taking enforcement action.  The hope is that it will encourage compliance.

 

The principle of paying for law enforcement agencies to investigate a breach of law is not replicated in general law enforcement and a cynic would point to the 35% budget cut imposed on the HSE as the true rationale.  The following is an extract from the HSE guidance with regards to material breach:

 

Falls from height

Falls from height are a frequent and well-known cause of death, or serious injury such as broken bones and partial or total paralysis.

Some examples of failures might include:

·         not adequately planning and/or supervising work at height;

·         not ensuring workers are competent for work at height;

·         not choosing appropriate access equipment where falling from a height is possible;

·         not inspecting and maintaining access equipment, such as scaffolding, harnesses or ladders, to ensure it remains effective at preventing or reducing injury;

·         using forks or a pallet on the forks of a fork-lift truck for a person to work at height, instead of a suitable working platform; and

·         using damaged/defective ladders/stepladders, eg splits in timber ladders, cracked welds at rung/stile connections on metallic ladders, missing rungs or steps and missing anti-slip devices.

 

The full guidance can be found on the HSE website at


 

It is still possible that the exhibitions industry will not notice a difference because, with or without FFI, the HSE’s reach cannot currently encompass the whole events and exhibitions industry.  That said, the larger events with heavy construction could well receive a visit.

 

The HSE’s view will be heavily influenced by the Olympics and they could make unfair comparisons given LOCOG’s unparalleled access to resources.  There is a danger that the Olympics will raise the bar on event safety to levels which are not sustainable particularly in competition with other events business internationally.  Working at heights and general site management in terms of controlled access and site safety discipline will be issues which the HSE could target and many exhibitions would be vulnerable.

 

Another factor will be the reaction of venues and the role of the eGuide.  The eGuide may serve to assuage HSE concerns regarding the exhibitions industry’s ability to regulate itself.  Conversely the venues will not want trouble with the HSE and this will create a pressure for tighter controls.  Higher standards are desirable but they must be sustainable from a business perspective.

 

Recent governments have a poor record of producing legislation with unintended and unproductive consequences.  FFI may prove to be yet another example with the HSE using it to generate revenue to fill a funding gap and unfairly targeting industries such as exhibitions and events. 

 

Directors’ Liabilities

 

Previous updates have commented upon the apparent developing trend to hold company directors personally and legally accountable for health and safety failings.  The HSE have now revealed that the prosecution of directors under s.37 of HASAWA has increased by 400% in the last 5 years.  The HSE denies that this a targeted campaign but point to wider changes in the legal framework under which directors operate such as the Corporate Manslaughter and Corporate Homicide Act and the Health and Safety Offences Act.  Both of these were covered in previous updates.  Conversely prosecution of employees under s.7 has dropped sharply indicating a definite shift, deliberate or otherwise, to focus legal sanction against company directors.

 

Löfstedt Review

 

Professor Löfstedt was tasked by the Government to review UK health and safety legislation and formerly reported at the end of 2011.  He concluded that there is no need for a radical overhaul of health and safety legislation which he found to be broadly fit for purpose.  He did, however, propose a review of ‘strict liability’ offences giving rise to civil compensation even where the employer has done all that is reasonably practicable to prevent harm1. 

 

Overall the government’s desire for a common sense approach to health and safety is to be welcomed; however this is not likely to make any significant difference to the events industry currently.

 

Fire Safety Prosecution

 

Following a fire in 2008, the first case of a trial by jury under the Regulatory Reform (Fire Safety) Order has seen a hotel and its director prosecuted and fined for a failure to conduct a suitable and sufficient fire risk assessment and a number of other offences under the order.  The director was ordered to pay fines and costs of £230,000.  The case is important because it is yet another example of the fire authorities taking enforcement action and prosecuting a venue for public endangerment.  Fire legislation is regularly breached, particularly on the build up of exhibitions and venues and organisers are vulnerable to enforcement action.

 

eGuide

 

The latest eGuide has just been republished.  This rotation has seen some significant revisions.  ACC Liverpool, AECC and HIC Harrogate have adopted the guide.  This has meant that variations in Scottish law have had to be included to accommodate the AECC.  The eGuide committee has been restructured with the formation of a technical committee to review and implement updates and revisions.  This will speed up the process of responding to end user requests for revisions and incorporating legislative changes.

 

Note

 

1.     Stark v Post Office.  The Post Office was found liable for the injuries sustained by a postman after he fell off his bike even though the defect which caused the fall was undetectable.  The court ruled that the duty to maintain work equipment in a safe condition was absolute and as the bike was broken that duty had been breached.

Thursday 26 April 2012

Speaker Session at Safety and Health Expo


I have been invited to represent the IOSH Sports Grounds and Events in a speaker session at Safety and Health Expo on 16th May at the NEC (1330 – 1530).  I would be delighted to see a few friendly faces in the crowd.  I have two slots; one on disaster handling and recovery for events and one on the HSE’s involvement in event construction.  The link to the IOSH page is below.  I have written a couple of articles on this and posted them on this blog site  As with all of these type of sessions they are made by the intelligent and informed questioning that follows which is why I am hoping that some of you lot will show up!  Of course you will also be able to drop in and see Mirabelle and the UBM organising team at the same time.





Wednesday 18 April 2012

What lies behind the HSE’s decision to get involved with enforcement of event construction?

IOSH Sports Grounds and Events Group - Safety and Health Expo 2012 16 May

As a preface to the IOSH speaker session which will provide ‘An update on the HSE’s new initiative to enforce construction safety at events’ the speaker, Simon Garrett, looks at the background to this.

The HSE is responsible for the enforcement of health and safety law in the UK.  For events this is usually delegated to the local authorities who have laregly the same powers of enforcement as the HSE.  The London Olympics were the catalyst for a review by the HSE into event construction.  The HSE have decided that they will take on enforcement with regards to construction at events.  The HSE report, ‘Identification of safety good practice in the event construction and deconstruction of temporary and demountable structures’ was based on a review of six accidents and six site visits.  These were all related to entertainment, festival or sporting type activities and there is a concern among event safety professionals that this was a very narrow focus on which to base some of the generalisations stated as fact in the report.



CDM 2007 applies to all construction projects and essentially is about the management of those projects in a safe manner and the design of structures so that they are safe to use and maintain.  The HSE’s stated position is that although legally this legislation does technically apply to events, they will ‘not enforce CDM provisions at events’.  This was always a bit of grey area but we now have a definitive position.  The HSE’s view is that duties under the Health and Safety at Work Act, the Management of Health and Safety at Work Regulations the Working at Height Regulations and other construction activity related regulations are perfectly sufficient for the enforcement of event construction. 



The HSE’s focus will be on construction by which they mean ‘any structure being constructed’.  It may reasonably be assumed that they intend to focus on the larger more complex structures though in theory it applies to all structures from shell scheme up to complex structures.  The HSE have been somewhat opaque in regards to the extent that this covers rigging though it is reasonable to assume that there will at least be overlap.



Where does this leave local authorities?  This is difficult to gauge because it will depend on individual authorities.  The HSE has limited resources and some industry commentators believe that it may not have fully appreciated the extent of activities covered by their new remit.  Notwithstanding there is a clear HSE agenda here and they would not be doing it if they did not feel that there was a problem to be addressed.  One thing is clear, the events industry is going to have to ensure that it has its house in order with regards to event construction if it is going to be put under renewed scrutiny by the HSE.



Simon Garrett is the MD of X-Venture Global Risk Solutions and a Chartered Practitioner

Do we really live in a more uncertain world?

IOSH Sports Grounds and Events Group - Safety and Health Expo 2012 16th May



As a preface to the IOSH speaker session which will consider ‘The Essentials of Contingency Planning and Major Incident Handling’ the speaker, Simon Garrett, considers whether the rising interest in this subject stems from the fact that we really do live in an uncertain world.



Who would have thought that the actions of a Tunisian fruit seller would trigger a series of events in the Middle East in 2011 that would lead in the space of a year of the toppling of dictators in Tunisia, Egypt and Libya that hitherto had had an iron grip on power for decades?  Many argue that the pace of these events was fuelled by media exposure and the ability of the masses to use social media to organise themselves in a way that would not have been possible a few years ago. 



Closer to home, those living in Western economies have for decades enjoyed the proceeds of growth, prosperity, longevity and free access to education and health care.  The next few years will bring with it the need to share austerity, accept falling living standards and stricter rationing of social infrastructure such as education and health care long considered a basic right.  The rationing of university education in the UK through pricing is just one example.  The riots in London and other UK cities in 2011 is testament to the ability of relatively small numbers of people organising themselves using social media to wreak havoc to the extent that city centres became no go areas and thus subject to mob rule.  We have seen riots before of course but these were largely contained to specific areas.  Are we now seeing the beginnings of a new and less containable social phenomenon?



Whilst risk prediction even a few months out is usually a mug’s game it is hard not to conceive that the latter half of 2012 will see the dénouement of the Euro and the whole EU project in some form or another.  The backlash from the dispossessed victims of austerity measures who feel that they have little to lose and much to gain from mass civil disobedience against leaders seen to have long ago exceeded their political mandate is likely to be violent, massively disruptive and unpredictable.  Economic opinion appears to be divided between those that think that the collapse of the Euro is unthinkable and those that believe it to be inevitable. 



In the events industry we are uniquely vulnerable the sudden changes and disruption to civil infrastructure.  Our business is expeditionary conducted at a distance from our base location.  An event organising team can leave its London office to set up an event in Birmingham, Barcelona or Beijing. The greater the distance, the greater the dislocation from our normal environment.  We are highly dependent on meeting tight deadlines.  A factory may lose production for a morning and catch up using overtime. We have no such ability to catch up.  We are thus highly reliant on the civil infrastructure and in particular transport links to function normally and efficiently.



The uncertainties of the world around us and our unique vulnerability to unforeseen changes in local conditions, presents both a challenge and an opportunity to event organisers.  It is a challenge to the unprepared and an opportunity for event organisers to expand into new markets where others fear to tread.



We cannot know what the next unthinkable or unforeseeable crisis will be, but we can prepare knowing that the only certainty in our business is the need to plan, prepare and train to deal with uncertainty.


Simon Garrett is the MD of X-Venture Global Risk Solutions www.x-venture.co.uk

Friday 2 March 2012

Do we really live in a more uncertain world?

Do we really live in a more uncertain world?



 AEO Marketing and Ops Masterclasses, 6 March 2012 - International Confex, ExCeL London.  Production Theatre 1630 - 1715

As a preface to the aeo ops masterclass which will consider ‘Contingency planning – How to deal with an event crisis’ the speaker, Simon Garrett, considers whether the rising interest in this subject stems from the fact that we really do live in an uncertain world.

There are many years that in retrospect can be seen as being pivotal to world history and where global changes were preceded by times of great uncertainty.  The Russian revolution of 1917 and the collapse of Soviet empire which was the product of that revolution in 1989 are but two examples.  Dramatic as the events in these years were, however, they were in many ways predictable and based on political and economic factors which had been building for some time.  Events these days tend to unfold more quickly.



Who would have thought that the actions of a Tunisian fruit seller would trigger a series of events in the Middle East in 2011 that would lead in the space of a year of the toppling of dictators in Tunisia, Egypt and Libya that hitherto had had an iron grip on power for decades?  Many argue that the pace of these events was fuelled by media exposure and the ability of the masses to use social media to organise themselves in a way that would not have been possible a few years ago.  The ‘Arab Spring’ is still an unfolding story with concerns over Egypt and Libya, the threat of a full scale civil war in Syria and the possible spread to sub Saharan Africa. 



For 2012 the political soothsayers at the turn of the year pointed the fact that four of the five permanent members of the UN Security Council, France, USA, China and Russia are picking new leaders.  Whilst the outcome may be predictable in China and Russia any change in these huge powers introduces uncertainty.  In Russia Putin is the subject of increasingly vocal protest.  China in particular is going to have to change if it is to avoid mass social unrest.  Weibo, the Chinese version of Twitter has fuelled protest and civil disobedience much as it has done in the West and in Wukan villagers took over their village prompting a stand-off with the authorities which received global news coverage.  How will the new leadership in Russia and China respond to these challenges? 



On the economic front those living in Western economies have for decades enjoyed the proceeds of growth, prosperity, longevity and free access to education and health care.  The next few years will bring with it the need to share austerity, accept falling living standards and stricter rationing of social infrastructure such as education and health care long considered a basic right.  The rationing of university education in the UK through pricing is just one example.  The riots in London and other UK cities in 2011 is testament to the ability of relatively small numbers of people organising themselves using social media to wreak havoc to the extent that city centres became no go areas and thus subject to mob rule.  We have seen riots before of course but these were largely contained to specific areas.  Are we now seeing the beginnings of a new and less containable social phenomenon?



Whilst risk prediction even a few months out is usually a mug’s game it is hard not to conceive that the latter half of 2012 will see the dénouement of the Euro and the whole EU project in some form or another.  The backlash from the dispossessed victims of austerity measures who feel that they have little to lose and much to gain from mass civil disobedience against leaders seen to have long ago exceeded their political mandate is likely to be violent, massively disruptive and unpredictable.  Economic opinion appears to be divided between those that think that the collapse of the Euro is unthinkable and those that believe it to be inevitable.  It is worth considering the former view in light of the fact that before 2008 the collapse of Leman Brothers – a bank that was ‘too big to fail’ - would have been ‘unthinkable’.  Since 2001 when AA Flight 11 smashed into the World Trade Centre the unthinkable became thinkable.  We cannot know what new previously unthinkable crises will arise in future but we can prepare for uncertainty.



In the events industry we are uniquely vulnerable the sudden changes and disruption to civil infrastructure.  Our business is expeditionary conducted at a distance from our base location.  An event organising team can leave its London office to set up an event in Birmingham, Barcelona or Beijing. The greater the distance, the greater the dislocation from our normal environment.  We are highly dependent on meeting tight deadlines.  A factory may lose production for a morning and catch up using overtime. We have no such ability to catch up. We are thus highly reliant on the civil infrastructure and in particular transport links to function normally and efficiently.



The uncertainties of the world around us and our unique vulnerability to unforeseen changes in local conditions, presents both a challenge and an opportunity to event organisers.  It is a challenge to the unprepared and an opportunity for event organisers to expand into new markets where others fear to tread.



We cannot know what the next unthinkable or unforeseeable crisis will be, but we can prepare knowing that the only certainty in our business is the need to plan, prepare and train to deal with uncertainty.


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.

Conclusions

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
MA CMIOSH MIIRSM Dip2.OSH

This and other updates and comment can be viewed on our blog at http://x-ventureblog.blogspot.com




Notes

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.


Monday 9 January 2012

Health and Safety Update

General Update December 2011

The Purple Guide HSG 195

The Purple Guide has been in the process of revision over the last few years by HSE working through the Events Industry Forum (EIF)1.  This year the proposed draft was put out to consultation.  Our view was that it was a flawed document which, whilst it claimed to be widely applicable in the events industry, was in reality written by and for the outdoor entertainments events industry.  One only has to look at the membership of the EIF to see why.  We commented on all of the sections and encouraged our clients to comment on sections which would affect them.  Most event industry operations and safety professionals appear to have agreed with us and the draft document has now been officially withdrawn by the HSE.  The fundamental mistake was the failure by the EIF to recognise that other parts of the events industry have already developed guidance, not least the eGuide, which was not referenced in the draft.  The HSE will now create an ‘event safety micro site’ on HSE's website for the events industry in general, and handover responsibility for redrafting the revised Purple Guide to the EIF.  An important development is recognition by the HSE and the EIF of the existence of the eGuide and an undertaking to take account of it in the new revised Purple Guide.  Chris Skeith and the AEV will monitor its development as will we at X-Venture.

Health and Safety Enforcement and the Löfstedt Review

The concession regarding the Purple Guide may turn out to be a pyrrhic victory if we do not keep an eye on the bigger picture regarding how health and safety is regulated and enforced in the events industry.  The 2012 Olympics have awakened an interest by the HSE in the events industry generally, notwithstanding their involvement in the Purple Guide.  Previous updates have covered the potential for problems with parts of Construction Design Management Regulations (CDM) which is enforced by the HSE being applicable to events and exhibitions.  There has also been increasing interest by the HSE in temporary and demountable structures.

The recently published Löfstedt Review2 included the observation that splitting enforcement between the HSE for high risk industries, and the local authorities for other businesses and undertakings has led to an inconsistent approach.  The review recommends the following on page 87 of the report:

I recommend that legislation is changed to give HSE the authority to direct all local authority health and safety inspection and enforcement activity, in order to ensure that it is consistent and targeted towards the most risky workplaces.

The review lists those activities which are enforced by the local authorities and those which are enforced by the HSE. Whilst the idea of better regulation which was a key aim of the review is to be welcomed, it is a concern that the report does not cite event and exhibitions as falling under local authority jurisdiction which indicates that our interests have not been considered.  We should be concerned because events and exhibitions would easily fall within the ‘most risky workplaces’ being targeted.

There is no indication of an HSE campaign to tighten the regulatory screws on the events and exhibitions industry per se; however an holistic view of recent developments does give cause for concern.  The sight of an approaching local authority enforcement officer at an event was never necessarily welcome, but it should always be remembered that these are local officers who usually understand the events they are visiting and have a working relationship with the venue or event management team.  Contrast this with a visit from an HSE inspector who would not differentiate between a construction site and an event build up and it is easy to see how this could cause problems.

We will be commenting on the Löfstedt Review as a whole in a separate update.

Second Case of Corporate Manslaughter – Lion Steel

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 negligence and also face charges under section 37 of the Health and Safety at Work Act.  We will follow this case in a future update.

RIDDOR

From September 2011 only fatalities and major injuries can be reported by phone to the HSE.  All other reports must be on line at www.hse.gov.uk/forms/incident.  The Lord Young report last year contained a specific recommendation to extend the reporting of minor injuries colloquially known as the ‘three day RIDDOR’ from three days to seven days. This will bring the law in line with the requirement to

provide a ‘fit note’ for absence from work from a GP after seven days off sick.



Comment



We are often contacted for advice with regards to changes in the law but as this update ably demonstrates, it is not so much the law itself but how it is applied and enforced that should be of concern. 

Simon Garrett
MA CMIOSH MIIRSM Dip2.OSH

This and other updates and comment can be viewed on our blog at http://x-ventureblog.blogspot.com






Notes

1.     The Events Industry Forum is an informal body which meets twice a year to provide a gathering where events industry trade associations and similar bodies can meet to discuss issues of common interest.  www.eventsindustryforum.co.uk

2.     In March 2011, the Government established an Independent Review of Health and Safety legislation to make proposals for simplifying the existing raft of health and safety legislation. The review considered the opportunities for reducing the burden of health and safety legislation on UK businesses while maintaining the progress made in improving health and safety outcomes. This review was chaired by leading risk management specialist Professor Ragnar Löfstedt.  The Professor and advisory panel asked all interested parties to provide evidence to help inform the scope for reducing the burden of health and safety regulation on UK businesses whilst maintaining health and safety outcomes.  The report "Reclaiming health and safety for all: An independent review of health and safety regulation" was published on 28 November 2011.