How much is the life of an employee worth? It's a question that may seem odd, but one that companies are increasingly asking themselves in the light of changes to the law on corporate responsibility and corporate manslaughter.
The number of prosecutions for corporate manslaughter is rising and it is no longer just large organisations that are facing action through the courts. The Corporate Manslaughter and Corporate Homicide Act 2007 reduced the bar for prosecution by removing the need for it to be proven that a senior individual within the company concerned had acted negligently.
Since the introduction of the new legislation, there has been a slow but significant uptick in the number of successful prosecutions. Recently, a building firm became the first to be convicted of corporate manslaughter in 2015 after one of its employees fell through a skylight. The firm was fined £220,000 and its owner received an eight month suspended prison sentence. There is already another corporate manslaughter case pending a trial date.
Already punitive, the fines and sentencing are likely to toughen still further following a consultation by the Sentencing Council on new penalties for health and safety breaches, food safety offences and corporate manslaughter. Should they be adopted, the council's proposals would see significantly increased sentences and fines. The maximum fine for a company with a turnover in excess of £50 million would rise to £20 million, while other breaches of health and safety legislation that resulted in a loss of life could result in fines of £10 million.
Perhaps more serious for small and medium sized companies and their directors is the plan to align sentencing with the financial means of the defendant, its determined culpability and the potential that its continued operation could be harmed by fines and sentences.
The proposed change to the law would see judges deciding whether a fine would have the desired financial impact on the defendant company. The Sentencing Council has said that it wants to see fines "bringing home to the offending organisation the importance of achieving a safe environment for those affected by its activities".
The uptick of successful prosecutions has seen a dramatic increase in the media profile of corporate manslaughter. We ran a Nexis search into the number of times corporate manslaughter has been written about by UK National publications since 2008. While the frequency dipped in 2010, since 2011 there has been a steady and significant increase in media interest around the subject.
Like many regulatory issues, media interest has increased sharply in correlation with the size of the fines being issued in successfully cases. Not yet halfway through the year, 2015 is already to be a record year for media interest in the subject.
While the sentencing changes are still some way off, it is clear that the judicial attitude towards corporate responsibility is continuing to harden, and that this clearly contributes to increased media interest and coverage of cases. Directors need to ensure that their companies are relentlessly focused on reducing risk to their staff, their clients and the general public if they are to reduce the risk of falling foul of current or future legislation, and the media profile that goes with it. With such high media interest, the damage negative media profile during an investigation can cause to your brand can be irreparable, even if you are eventually found not guilty. Reduce the risk to your employees, or risk reputational damage to your brand.
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