Directors Liabilities - How much risk are you prepared to take?
Fire Safety: Is a company director also a ‘responsible person’?
Many professionals harbour a dream of one day being promoted to director level within their organisation, but not all of them appreciate what responsibilities they are taking on when stepping into that role. Whilst every business is different, they all face similar litigation and regulatory challenges. Challenges that we predict are likely to become more rather than less onerous in the years to come.
In this series of blogs we consider some of the regulatory perils and pitfalls that any prospective director should be alert to before taking their seat at the top table.
One of the primary areas of risk that all businesses should take seriously is the management of their health and safety obligations.
There are a number of ways in which a director can be personally liable for offences committed by or in connection with their company. Perhaps most commonly, where a health and safety offence is committed by a company with the consent, connivance or is attributable to any neglect on the part of any director, manager or other similar officer in the organisation, then that individual as well as the organisation can be prosecuted (Section 37 of the Health and Safety at Work Act 1974).
It should be of concern to prospective directors that in recent years there has been a noticeable increase in prosecutions brought against directors and other senior managers by the enforcement agencies . There is also evidence to suggest that the rate at which individuals are being sentenced to prison for health and safety offences has increased since the sentencing guidelines were introduced in February 2016.
If an individual is successfully prosecuted for a health and safety offence this can also lead to the disqualification of that offender from being a director, or taking part in the formation or management of a company for a period of up to 15 years (Section 2 of the Company Directors Disqualification Act 1986) .
The Institute of Directors and the Health and Safety Executive issued revised guidance in 2013 for directors for the effective leadership of health and safety in their organisation, in their publication entitled ‘Leading Health and Safety at Work: actions for directors, board members, business owners and organisations of all sizes’ . Within the guidance they set out a helpful four point plan to help organisations promote health and safety and meet their legal obligations. Stage one involves “planning”; where the board is encouraged to set out the key issues for their business and decide on how to best communicate, promote and champion health and safety. Stage two involves “doing”; where the board must introduce new systems and practices to ensure that risks are dealt with sensibly, responsibly and proportionately. Stage three involves “checking”; where monitoring and reporting systems are introduced to ensure the effectiveness of any new systems. Stage four involves “acting”; where boards are encouraged to review the performance of their health and safety policy at least every year.
The stakes have never been higher for individuals and companies investigated for health and safety offences. Accordingly, we strongly encourage prospective directors to look before they leap when planning for effective leadership of health and safety within their organisation.
If you are a corporate or an individual who requires legal assistance we have a team of Health and Safety specialists at Kingsley Napley who would be happy to help; please contact Melinka Berridge or Jonathan Grimes for further information.
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