Health and safety – the costs of failure

18th June 2018

The intention of the Sentencing Council when producing new sentencing guidelines for health and safety offences was not only to create greater consistency but also to ensure that very large organisations that failed to protect the safety of their employees and the public received fines proportionate to their balance sheet.

Its success can be measured by figures published by the Health and Safety Executive. Since the guidelines came into force on 1 February 2016, there has been a major rise in health and safety fines of around 80 per cent from 2015/2016 to 2016/2017.

Million pound fines and prison sentences for directors and senior managers are now commonplace, affecting household names such as Travis Perkins, Warburtons, Wilko, Iceland and KFC. Although these very large organisations have borne the brunt of the new reality for offenders, organisations of all sizes have seen much greater fines. Smaller companies with a turnover of between £2m and £10m are now looking at fines of hundreds of thousands of pounds, often amounting to a year’s net profit.

Businesses can no longer can take chances with health and safety. The very survival of a company, and in some cases the liberty of its directors, can be at stake. 

The increases in penalties handed down to offenders have not arisen from new legislation or the extension of current legal duties imposed on employers and other duty holders. The Health and Safety at Work etc. Act 1974 remains the backbone of health and safety regulation in the UK. It imposes general duties upon all employers to ensure, so far as reasonably practicable, the health and safety of employees, contractors and visitors who may be affected by its undertaking.

A raft of health and safety regulations that are more prescriptive in nature (a requirement to undertake risk assessments, guard dangerous parts of machinery etc.) form another level of duties imposed on employers. Duty holders created by the legislation include companies and corporations, unincorporated associations, charities, universities and colleges of higher and further education. Individuals such as directors and senior managers, trustees and employees are also named as duty holders. 

It is essential to ensure health and safety is managed in an effective and proactive way.  As outlined above, a failure to comply with legislation can result in payment of a significant fine and costs, but a business will also face other financial and non-financial costs in the event of an accident at the workplace.

In the event of a serious accident, the police and HSE may shut down all or part of a business while an investigation is undertaken. Employees may have to be sent home or face requests for interviews from the authorities. A responsible employer will provide assistance and counselling to employees who have witnessed an accident to a colleague or been affected by it. Where breaches are identified, the HSE may serve a prohibition or improvement notice requiring compliance at very short notice. Requests for large amounts of documents and an explanation of the health and safety management system in place will require action at short notice. This in itself can have a significant impact on those involved. 

The HSE has a duty to charge duty holders for the cost of investigations where it can be established there has been a material breach of health and safety regulations.  These ‘fee for intervention’ charges can be significant, with invoices been sent by the HSE every two months.  

While a company’s insurers will pay for claims arising from accidents at work, this will result in a rise in premiums.  A poor claims history will increase insurance costs and in some cases cause difficulty in finding cover.

An organisation will often face bad publicity following an accident that can severely damage its reputation and jeopardise its future. Publicity following the death or serious injury of an employee or member of the public can often last for weeks during an inquest or contested trial.

The HSE publishes health and safety convictions on its website.  This information is easily available and recorded convictions may prevent an organisation tendering for new business.

To minimize the prospects of accidents and health and safety breaches, organisations should put in place and fully implement an effective and robust health and safety management system. The following steps should be taken; 

  1. Assess real risks associated with the undertaking and activities of the business.
  2. Put in place sensible procedures to manage health and safety with clear policies that focus on and control real risks.
  3. Implement arrangements that manage and control the risks to employees, visitors and contractors etc. who may be affected by the business’s activities.
  4. Inform employees and visitors of real risks and precautions they need to take.
  5. Provide employees with information and training to enable them to undertake work safely and ensure risks are controlled on a day to day basis.
  6. Check these measures have been implemented and review policies and procedures on a regular basis to ensure they are appropriate and effective.
  7. Put in place arrangements to respond to accidents or near misses. Where a serious accident occurs, you may be visited at short notice by the police and Health and Safety Executive. Have processes in place to respond to requests for information, paperwork and statements from witnesses. Be in a position to obtain legal advice at short notice.

This article does not constitute legal advice. Specific legal advice should be taken before acting on any of the issues covered.

Harrison Clark Rickerbys’ regulatory team can help you to ensure you are fully compliant with current health and safety legislation and provide advice and representation at short notice following an accident at the workplace, a visit from the regulatory authorities or receipt of a prohibition or improvement notice.

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