| 1 |
What
duties do directors have in relation to health
and safety within their companies? |
| |
Most
people find this difficult to believe but health
and safety law does not impose any positive
duties upon company directors in relation to
health and safety. Health and safety law imposes
duties upon companies – not directors –
and directors are in law separate from the company
Although
the law requires that companies must do lots
of things in relation to the safety of the company,
there is no requirement for directors to do
any thing to make sure that the company –
of which they are in control - is actually complying
with the law. There is no requirement for example
of ensuring that they keep themselves properly
informed about issues of safety within their
company, or indeed to take any action to make
their company safe.
It
is only when directors are made aware that their
company is committing an offence, and that there
are reasonable and practicable steps that can
be taken to prevent the offence, they do have
a duty to take action. But this is not made
explicit in health and safety law. We only know
they have to do this as otherwise they could
be prosecuted.
There
is therefore nothing stopping directors to insulate
themselves from what is going in their company
and remaining uninformed and ignorant of what
is going on in their company. This is entirely
lawful.
|
| 2 |
Does
it matter that directors don’t have any positive
duties? |
| |
Yes,
it matters for a number of reasons
First, because the situation is very discriminatory
against directors of small companies. Directors
of small companies are much more likely to be
in a position where they can’t delegate
their responsibilities to other people within
their company, and will often have detailed
knowledge of what is going on at the shop floor.
This knowledge places upon them to take action
and, if they take no action, the risk of prosecution.
However
directors of medium and large-sized companies,
can delegate their responsibilities down the
company chain without having more to do with
safety issues, if they so wish. There will as
a result have no corresponding duties upon them
– and the risk of prosecution is almost
non-existant.
Second
– and this is really the heart of the matter
- the Health and Safety Commission and the Government
accept the critical importance that directors
can have on the health and safety of the company.
Their active role in ensuring that action is
taken within their companies in relation to
health and safety, can make a fundamental difference
to whether or not a company’s operations
are safe to both workers and members of the
public. As a result it is very important that
they take the necessary action within their
companies that will ensure they comply with
health and safety law.
|
| 3 |
Why
is the conduct of directors so important? |
| |
Directors
are the most powerful people within a company.
They are in control of how resources are allocated
and the emphasis placed upon safety. They are
the individuals with the ability to turn an unsafe
company into a safe one and vice-versa. Director,
at present, have all the power and control –
but none of the responsibility. |
| 4 |
Are
there any other reason why the lack of duties
is important? |
| |
Yes
– the lack of duties also has a serious impact
upon accountability.
The lack of positive duties upon company directors
can make it very difficult to hold them to account
for their failures. Although, in a particular
case, common sense might suggest that particular
failures on the part of a director should result
in a prosecution for ‘neglect’, the
absence of duties can make it very difficult to
prove that the director had a legal obligation
to do anything different. As a result prosecution
– and hence accountability – can be
very difficult |
| 5 |
But
the HSE do prosecute directors? |
| |
Yes
they do, but in two-and-a-half years between April
2002 to November 2004, only 27 directors were
convicted following prosecution by the HSE –
whilst at the same time over 1000 companies were
convicted.
In the same period over 600 workers and members
of the public were killed in work-related deaths,
and over 50,000 workers suffered major injuries.
It should, of course, come as no surprise that
all these directors belonged to pretty small companies. |
| 6 |
So
how will the Health and Safety (Directors Duties)
Bill help? |
| |
Well,
it will connect the directors (with all the power
and currently without the responsibility) to the
company (with all the responsibilities). It imposes
a duty upon directors to take ‘all reasonable
steps” to ensure that their companies are
complying with health and safety law? |
| 7 |
But
is that not too onerous? |
| |
No,
the duty is not an absolute one. It only required
directors to take “reasonable steps”.
Moreover, the Bill does not set out what those
reasonable steps should be. It says that the HSC
will draft an Approved Code of Practice that will
set out what directors need to do to ensure they
are taking the “reasonable steps” –
and the HSC would only do this after a process
of consultation. |
| 8 |
But
will that still not be unfair upon non-executive
directors? |
| |
The
Bill is silent on what particular duties non-executive
directors will have – but that it because
it has left the responsibility for that to the
HSC. It is very likely that the HSC would accept
that the responsibilities of non-executive directors
should be different from those that are employed
by the company. |
| 9 |
But
there are no offences in the bill – so how
can the duty be enforced? |
| |
Yes,
you are right that there are no offences in the
bill. However, it can be enforced through the
imposition of an improvement notice or through
existing health and safety offences – namely
section 37 of the Health and Safety at Work Act
1974. This allows directors to be prosecuted for
‘neglect’ – and the duties contain
in the bill will provide the legal foundation
that will facilitate prosecutions. |
| 10 |
But
won’t that mean a great number of directors
will be prosecuted? |
| |
No
– not unless directors are in serious breach
of section 37. By imposing duties, the Bill
will only mean that a pretty moribund section
of the Act will now be able to be used properly.
It would meant that in the future, it would
be much more difficult for directors to hold
up their hands up and say, ‘it was not
my responsibility, I didn’t know anything
about it.’
Moreover,
the bill does not change HSC’s Enforcement
Policy Statement – or indeed ts guidance
to inspectors - which lays down quite strict
public interest tests before prosecution will
take place. What the Bill would mean, though,
is that the obstacles in the way for prosecution
would be removed.
|
| 11 |
Isn’t
the purpose of the Bill just about convicting
more directors? |
| |
No
that is not the case at all. The primary purpose
of the bill is to get directors to have a more
of an active role in the safety of their companies.
It’s aim is to make companies safer –
and avoid prosecution.
And
it is likely to have that effect, as directors
will want to avoid conviction. This is important
– as research shows a huge motivator for
directors is the avoidance of personal liability.
Indeed
it could be argued that a test of whether the
Bill is a success or not is fewer prosecutions
of directors – as this would mean that
they would be doing their job better. However,
that is unlikely a consequence, as the Bill
will remove the current blockage that has prevented
many unscrupulous directors from being prosecuted,
and action would be able to be taken against
them
|
| 12 |
But
wouldn’t the bill inhibit people from becoming
directors? |
| |
This
is an argument that some organisations, like
the Institute of Directors argue. However, for
many years now financial duties – much
more stringent than anything being imposed upon
directors by the current Bill – have been
imposed upon directors, but this has not stopped
individuals from taking their positions on the
Board. It is simply accepted by directors that
part and parcel of being a director is that
they have some personal responsibilities in
ensuring that their finances are in good order.
So in reality, we cannot see any reason why
things should be different when mild safety
obligations are imposed.
There
is also another point to make about this. At
present the HSC says that many directors are
voluntarily taking up safety responsibilities
– and the HSC have published voluntary
guidance to encourage them to do so. Well if,
as the HSC says, directors are willing to voluntarily
take on responsibilities – which certainly
some appear to be doing – then clearly
they are not being inhibited from taking safety
responsibilities seriously.
Anyway, just as you would not want individuals
to be directors of companies who were not interested
in financial probity, so you would not want
individuals to be directors if they were not
interesting in ensuing that their company complied
with health and safety law. How would people
have viewed directors if they had said, when
legislation imposing financial duties was being
debated, that they would not become directors
if these duties were imposed upon them? It is
doubtful that anyone would have believed them
– and it is right for people not to have
done so.
|
| |
| 13 |
Would
not voluntary guidance have the same effect? |
| |
No.
Voluntary guidance will be useful for some directors
who are motivated for one reason or the other
to take safety seriously – but many directors
wont be so motivated. Also the voluntary guidance
is rather wishy-washy. It is not clear quite what
directors should or should not do.
The only way that you will have a level playing
field, is if there are some minimal obligations
upon directors laid down in law. The importance
of directors’ conduct in the safety arena
is too serious to be left to voluntary process.
Safety is a right and should’t be treated
like a charity – dependent on ‘voluntary
giving’. |
| 14 |
Is
there an issue about scape-goating? Won’t
the Bill allow the Board to nominate a director
who can then be scape-goated if something goes
wrong? |
| |
It
has often been the criticism of proposals in this
area that directors can be scapegoated. Indeed,
some people talk about companies appointing a
director, paying him or her handsomely, and making
his the ‘director responsible for going to
jail.’ This bill avoids that. |
| 15 |
But
the Bill rquires large companies to appoint a
‘health and safety information director’? |
| |
That
is right, but notice the title of this post
– the ‘health and safety information
director’. The general duty of all the
other directors is not delegated onto this person’s
head – so that he would have to take the
rap if anything went wrong. Far from it. It
is his responsibility to provide the board with
adequate information about the safety of the
company to ensure that all the directors can
themselves take the necessary steps to ensure
that the company complies with health and safety
law.
So
the Bill cleverly sidesteps the problem of scape-goating
|
| 16 |
Isn’t
all of this covered by the government’s proposals
to reform the law of manslaughter? |
| |
Ah
yes, the long awaited proposals! Well the answer
to that is ‘no’. the proposals to enact
a new offence of corporate killing - or corporate
manslaughter, as it may be called - is to ensure
that companies, but not directors, can be held
to account for systemic gross failures that caused
a death. It does not deal with directors at all. |
| 17 |
But
wouldn’t the new offence of Corporate Killing
deter directors – and so have the same effect |
| |
I
am sure you are right that some directors will
be deterred into taking action – and that
is one of the main rationale’s for the proposals.
But remember, it will only create an incentive
upon those directors who thing that their company’s
operations might result in a death. Most company
directors never imagine that – and would
not be deterred
The Health and Safety (directors duties) bill
would have an effect upon all directors, and would
deal not only with risks that might result in
deaths but also those where the risk is one of
injury or ill health. Its impact is therefore
likely to be much wider. |
