Companies’ concern over Corporate Manslaughter Act
18 January 2008
Due to come into effect in April of this year, the Corporate Manslaughter and Corporate Homicide Act 2007 (the Act) is cause for concern for a number of UK plcs, as legal bills may rise significantly if claims are made.
The Act will clarify the criminal liabilities of companies where serious failures in the management of health and safety result in a fatality. Companies that are successfully prosecuted will be fined and face a publicity order, requiring them to publicise the details of the offence.
James Pryke, Casualty Broker for Lloyd’s broker Heath Lambert, said: “Claims can be made in the event of negligence. If a company is found guilty of corporate manslaughter then [the estate of] an employee could claim that the employer was negligent. If a criminal act is committed then a fine would be imposed on an organisation and no insurance cover would be available.”
Senior staff in organisations will, however, be able to protect themselves in the event of certain claims under Directors’ and Officers’ (D&O) liability cover. It is something that is still being considered by insurance companies, and decisions to include this Act under D&O liability cover are yet to be concluded upon.
Pryke commented: “Essentially, I don’t feel that the insurance industry will turn around and say that they won’t be able to provide cover for the Act. What needs to be established is what insurers can and cannot do. Will there be a new policy altogether from April 2008 or will they just add additional clauses?
“It isn’t a completely new development; it is moving the Health and Safety Act 1974 along to the next level. There will be cover for it but not everyone is up to speed yet.”
According to Callum Taylor, Management Liability Underwriting Manager at Hiscox, a third of small and medium enterprises (SMEs) are concerned that their businesses could become a victim of the UK’s growing compensation culture.
Taylor said: “We don’t yet know how often or how rigorously judges will implement this law, but one thing that is very clear is that the Act is going to be another worry to add to the many already faced by businesses. However, it is essential that companies stay abreast of the ever-changing regulatory environment and use the next three months to prepare for the Act’s introduction.”
The Act may also affect companies with staff who drive as part of their work, with the possibility of employers facing prosecution if a member of staff is involved in a fatal accident. An estimated six people per week die in crashes caused by tired drivers, according to government statistics.
Last updated on 21 Dec 2009
