A bulletin from Marsh’s London office warns Organizations in England and Wales that they must embed “robust health and safety risk management practices or face severe financial and reputational penalties in the event of a successful corporate manslaughter prosecution.”
Marsh’s warning follows the introduction in England and Wales of new sentencing guidelines for the Corporate Manslaughter and Homicide Act 2007. The law’s provisions “impact all organizations found guilty of corporate manslaughter as a result of a gross breach of the duty of care which results in the death of an individual,” Marsh explained. “Such a breach will involve failures by senior management in the discharge of their health and safety responsibilities.
“In addition to financial penalties, publicity orders are likely to be appropriate in most cases as part of the punishment. The order will specify the place where the public announcement will be made and consider the size and prominence of the notice or advertisement. The organization may also be compelled to make a statement on relevant websites, ensuring that the information is brought to the attention of shareholders and/or members of the public.”
Marc Spurling, a Claims Defensibility Consultant in Marsh Risk Consulting, explained: “The government expects that cases of corporate manslaughter or homicide following a death at work will be rare, as the offence is intended to cover only the worst instances of failure across an organization. However, if a successful prosecution does occur, the penalties could be severe.
“As well as the financial penalties, the publicity order penalties, by which the organization can be compelled to advertise its prosecution, could potentially damage its reputation further and harm the success of the organization in the longer-term.”
He urged organizations to reduce the potential for corporate manslaughter prosecutions by “demonstrating a robust health and safety culture which is embedded at all levels of the business and is actively encouraged by the senior management team.”
The new guidelines include the following advice to the courts:
— Organizations may be fined many millions of pounds. The court may increase/decrease the fine based on the financial circumstances of the organization but any fine will seldom be less than £500,000 [$762,000].
— In deciding on the level of fine, the court will not be influenced by the impact on shareholders or directors, but may take into account the effect on ‘innocent’ workers and on public services.
— Fines in respect of workplace accidents causing death but falling short of corporate manslaughter should be in the order of hundreds of thousands of pounds but seldom be less than £100,000 [$153,000].
— Fines for large organizations should be payable within 28 days.
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