No matter your line of work, there are many reasons to meet and manage statutory health and safety obligations. Non-compliance can result in much more than a financial penalty and could lead to serious criminal and civil sanctions, not to mention the significant impact of adverse publicity.
Businesses can achieve 'best practice' by being proactive - adopting a preventative approach to safety compliance by developing an appreciation of risk, not just injury. They must look at the attitude and culture of their staff, invest in appropriate safety compliance management training, review their existing policies and practices and have a clear understanding of what is expected from their senior individuals when looking at legal safety compliance.
In this article, we look at five of the main key questions facing businesses considering implementing a health and safety policy.
Why should businesses be proactive about their health and safety policies?
There are legal, moral, financial and reputational reasons for proactively meeting health and safety requirements, which affects both a business and its senior individuals. Health and safety concerns an assessment of 'risk'; not just actual injury. Criminal liability for a failure to meet health and safety obligations in the UK is based on potential exposure to 'risk', so there is no requirement for someone to be physically injured before a decision may be made by the regulators to prosecute an organisation for its failure to meet its legal safety obligations. This makes regulatory investigation for a failure to assess relevant risks a real prospect, even without anyone being hurt.
- Legal reasons: all companies have legal obligations under the Health and Safety at Work Act 1974 to do everything reasonably practicable to ensure the health, safety and welfare of employees, as well as the health and safety of non-employees. This obligation extends to corporate boards who have, to an extent, control of premises to provide access and egress from that premises, and ensure any plant or substance is safe and without risks to health. The obligations relate to associated regulations, for example, fire safety, building safety, product safety and environmental waste. There are also legal obligations owed by individuals such as a duty to take reasonable care of themselves and others affected by their work activities. There are further specific obligations owed by for senior individuals. If an offence has been committed with the consent of a director, is a result of connivance or is attributable to any neglect on the part of any director, manager or any person who purports to act in that capacity, they as well as the company will be guilty of a criminal offence. Businesses can also be prosecuted for corporate manslaughter if their management or organised activities caused a death through a gross breach of duty of care to the deceased and where the role of 'senior management' within the business must have been a substantial factor in the breach. There is a corresponding offence of gross negligence manslaughter for individuals who could face a maximum of life imprisonment if convicted. There is also the risk of civil proceedings being pursued for personal injury if someone is injured as a result of the organisation's or a relevant individual's negligence (usually a failure to mitigate reasonably foreseeable risk).
- Moral and ethical reasons: Organisations will want to ensure that they avoid injury being caused to any individual working with or for the business, as well as wishing to avoid loss of business time while individuals are absent from work. There is a need to consider occupational health and mental wellbeing as an employer as well as the risk of psychological harm caused by an accident. By paying attention to health and safety at the outset, the workforce is likely to be happier, healthier and more productive.
- Financial reasons: The level of fines for health and safety non-compliance are much higher than they were a few years ago before the introduction of the Health and Safety Sentencing Guidelines in 2016. Many large organisations are now facing fines worth millions of pounds for simple breaches of health and safety legislation and associated regulations which cannot be indemnified by insurance. It is, however, important for companies to ensure that they have appropriate insurance cover to address any potential personal injury claims following a health and safety incident. This includes 'director and officer' insurance. Civil claims of this nature could run into many millions of pounds, and the right insurance cover is likely to assist with the mitigation of liability or, at the very least, assist with reaching an amount for settlement. Along with the financial repercussions of compensation claims, medical expenses, administrative and legal fees, fines, and increased insurance premiums, there is also a need to look at the intangible finance of health and safety. The effect of poor health, safety, and well-being on absenteeism, staff turnover, and disruptions to production, as well as damage to brand reputation and future business must not be overlooked.
- Reputational risk: Any health and safety investigation and/or prosecution may not only result in huge fines and potential imprisonment for individuals, but the risk posed to a company's reputation is difficult to guard against and could result in adverse PR, loss of new business or tenders and a drop in share price if it is publicly listed.
Who will be held accountable for managing healthy and safety risks within our business?
The Health and Safety Executive (HSE), the main regulatory body for health and safety compliance in the UK, expects business owners (including executive boards and directors), managers and supervisors, contractors and staff on all levels within a company to share the responsibility of effective health and safety management.
- Business owners, building owners and members of corporate boards usually hold the most responsibility when it comes to workplace health and safety. They are legally required to keep their employees and anyone who might be affected by their business safe from harm, including customers, visitors to the workspace, temporary workers and contractors. A failure to include health and safety as a key business risk in board decisions can have catastrophic results. Many high-profile safety cases over the years have been rooted in failures of leadership.
- Other potential duty holders that have similar obligations include:
- Corporates (members of boards of directors, boards of trustees etc)
- Individual directors
- People in control of the building/activity area
- People with contractual obligations, particularly for maintenance and safety, or those that are subject to a tenancy agreement
- Employees also have their own obligations to take reasonable care of themselves and others affected by their work activities and do what is reasonable to assist their employer in complying with their own overarching obligations.
Legislation such as the Building Safety Act 2022 and the Regulatory Reform (Fire Safety) Order 2015 demonstrates the direction of travel in UK health and safety regulations. They point towards holding individuals to account for health and safety compliance – starting with board directors.
Why worry about accountability if I am not a statutory director?
As well as responsibilities for directors and managers, there are similar responsibilities for anyone potentially 'in control' of premises or an area used for work activities, specifically those with responsibility for maintenance or safety by way of a tenancy or contract. This can include non-executive directors, governors, officers, trustees and insolvency practitioners as well as tenants of commercial buildings and occupants of residential buildings. A relaxed approach to health and safety compliance could easily become a 'shortcut to disaster'.
- A non-executive director should act as a scrutineer, ensuring the processes to support boards facing significant health and safety risks are robust. For many organisations, health and safety is a corporate governance issue. The board should integrate health and safety into the main governance structures, including board sub-committees, such as risk, remuneration and audit.
- The Financial Reporting Council’s guidance on Risk Management, Internal Control and Related Financial and Business Reporting requires listed companies to have robust systems of internal control, covering not just ‘narrow’ financial risks but also risks relating to the environment, business reputation and health and safety. The corresponding Institute of Directors / Health & Safety Executive’s guidance on Leading Health and Safety at Work reiterates this message.
- Trustees, governors and their equivalents in the private and public sectors have similar responsibilities to that of directors: to ensure there is an adequate health and safety policy in place that enables the business to fulfil its legal duties and emphasises the determination to manage its activities so that standards of health and safety are continuously improved. They should also monitor conditions and health and safety performance to determine whether the policy is adequately resourced, effective and is being developed to meet changing requirements.
- Any suggested relaxation of health and safety rules places both companies and individuals at risk. Those accountable persons identified above (collectively known as "dutyholders") will still have specific obligations to meet and any delay in meeting those obligations through a more relaxed approach to compliance or cost cutting at the expense of safety would serve as an aggravating factor in the event of a prosecution. This would most likely result in increased fines and longer prison sentences for individuals.
- In addition, in the event of a 'corporate manslaughter' fatality, the courts will usually consider the extent to which there are attitudes and accepted practices within the organisation that were likely to have encouraged a failure to meet the duty of care owed to individuals. A relaxed approach to health and safety compliance is likely to encourage failure or to have produced a tolerance of failure that can and will be relied upon by a regulator when deciding on prosecution.
Is it important to have a health and safety policy?
All employees must follow the company's health and safety procedures, use safety equipment provided and must not put others at risk through their own actions. Businesses can make employees aware of the health and safety rules by ensuring that a written policy is available explaining how risks are managed, that all staff receive training and protection, and that 'suitable and sufficient' risk assessments are carried out.
- The regulators do not expect businesses to remove all risks, but they must do everything ‘reasonably practicable’ to protect people from harm where the time, trouble and effort required to do so would not be grossly disproportionate.
- A documented health and safety policy is a legal requirement if you employ five or more people. If you have fewer than five employees you do not have to write anything down, though it is considered useful to do so.
- The policy is usually signed by the most senior member of the organisation, usually the Chief Executive or Managing Director, on behalf of the business. A clear, robust policy can be used to illustrate a proactive and preventative approach to safety compliance and show how the business is leading health and safety 'from the top'.
- Boards should also review health and safety performance at least once a year. The review process should examine the organisation’s current safety priorities, plans and targets, promote effective reporting to the board and identify any weaknesses or major shortcomings within its existing safety management system.
What penalties could businesses face for failing to manage health and safety risks?
Breaching health and safety regulations is a criminal offence and companies could face significant consequences if they fail to comply. The penalties could include:
- Multi million pound fines (for large organisations).
- Imprisonment for directors and managers (or a maximum of life imprisonment for gross negligence manslaughter).
- Potential confiscation or compensation orders imposed following a health and safety conviction.
- Directors being disqualified from being a director for up to 15 years.
- The adverse impact of a criminal conviction on a company's reputation.
- Risk of being sued following an incident resulting in someone being physically hurt. This could take the form of a civil claim for personal injury based on negligence which should be covered by appropriate insurance (but does not cover criminal fines).