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Beware corporate manslaughter

In February 2011 Cotswold Geotechnical Holdings (GCH) became the first company to be sentenced under the new offence of Corporate Manslaughter. It has been fined £ 385,000 after being found guilty by a jury at Winchester Crown Court; an employee died when an unsupported trench collapsed in on him while taking soil samples.

Companies and organisations can be found guilty of Corporate Manslaughter if an employee dies as a result of management failures resulting in gross breach of duty of care. The Corporate Manslaughter and Corporate Homicide Act 2007 was designed to make all employers accountable.

Some commentators have expressed disappointment that the first case concerned such a small company which does not have the size or status of the type of corporations that the new legislation was expected to capture. GCH only had eight employees at the time of the offence.

The loss of life, a large fine and negative publicity may make a significant impact on a small company. The sentence handed down by the court demonstrates the tough stance likely to be taken against any company, regardless of size, which fails to adhere to health and safety guidance.

Employer’s have a duty of care to their staff whether it be on building sites, in factories or simply ensuring their company vehicles are roadworthy and the relevant safety checks and manufacturers guidelines for maintenance have been adhered to. In the event of a workplace death, courts will now look at management systems and practices across the organisation. If proven inadequate and at fault, the company can be exposed to a charge of corporate manslaughter. This can result in an unlimited fine or in some cases a fine equivalent to a percentage of the company’s annual turnover.

Many employers and public liability insurance policies provide cover for defence costs in respect of prosecution under both the Corporate Manslaughter & Homicide Act and the Health and Safety at Work Act. Some insurers provide cover for prosecution costs awarded against the insured whereas others believe this forms part of the punishment and therefore it is against public policy to provide insurance cover.

Under your insurance policies you may not be covered if an act is deliberate or you have failed to take reasonable safety precautions. Please speak with us to understand the level of insurance cover you have or can obtain.

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