The UK's first corporate manslaughter case was committed to the Crown Court in June this year. Will it provide a wake-up call for directors and businesses?

When junior geologist Alexander Wright died while collecting soil samples from inside a pit in September last year, his employer, Cotswold Geotechnical Holdings, became the first company to be charged under the 2007 Corporate Manslaughter (in England and Wales) and Corporate Homicide (in Scotland) Act, which came into force on 6 April, 2008.

Appearing in court last month, sole director of Cotswold Geotechnical Peter Eaton was charged with unlawfully killing Wright by gross negligence under the Corporate Manslaughter Act. He was also charged with killing by gross negligence under common law, while he and the company faced one health and safety charge each. The case was adjourned until August.

The Corporate Manslaughter Act was introduced to make it easier to hold large organisations accountable for fatalities, something that had previously proved impossible in high-profile cases such as P&O Ferries and the capsize of the Herald of Free Enterprise in 1987.

According to the judge overseeing the case, P&O was "infected with the disease of sloppiness", but despite the loss of 192 lives, he was unable to convict the company of manslaughter within existing legislation because the failings took place beneath the CEO level. Serious train crashes in the 1990s served to further increase pressure to change the legislation in order to successfully convict companies. "There was a lot of public outrage that these disasters could happen and nobody could be brought to book," says Nigel Pearson, UK and Ireland underwriting manager for Chubb Specialty Insurance, providers of the IoD's director's liability insurance cover.

"The law previously only allowed organisations to be convicted of a very serious offence if one individual in the organisation had committed the crime of unlawful killing and that person was so senior within the organisation that they could be described as the 'directing mind and will'," explains Madeleine Abas, a partner at law firm Osborn, Abas, Hunt. "In cases where companies were shown to have had appalling sloppiness in managing health and safety it was not possible to convict them of manslaughter because the man at the top had distanced himself from the operations."

Judith Hackitt, chair of the Health and Safety Executive, welcomes the Act. "The changes helped to remove some of the ability to use the structure as a smokescreen. It is right and proper and our commitment is that we want to see people held to account in businesses of all sizes in cases where they have been negligent and have ignored the law," she says.

Under the new law a company can fall foul of the Act if systemic failings in how it organises its activities are proved. "Investigators can aggregate the failings of a number of people. If an organisation gets things wrong on a variety of levels they can combine to form the opinion that senior management failed," explains David Young of Eversheds law firm.

"Organisations still have to fall grossly short of the relevant standard of care so the threshold is, in theory, quite a high one to cross but it is a lot lower than it used to be," he adds.

According to Nathan Peacey, a partner at law firm Bond Pearce, the term "senior management" will be a sticking point. "If you take the example of a national retailer with many regional managers—is a regional manager a part of senior management? Has he got enough say over the whole or a substantial part of the company's activities and how they are managed and organised and therefore caught in that definition? There is no simple answer to that," he says.

But despite the tremendous media attention Cotswold Geotechnical has received, many think the case will not test the legislation mainly due to the size of the organisation concerned. "This case is not remotely a test of the new legislation," claims Abas. "You have the top man being accused personally of being there and giving out very dangerous instructions to a very junior employee. The only test of this legislation will come when it is either a very large company or another household name or a large organisation where the chief executive has delegated operational matters to a management board. A case where the top guy isn't charged himself will be the test," she says.

But Chubb's Pearson disagrees. "Maybe the acid test will come when there is a corporate manslaughter prosecution against a large company, but in this case they will have to test what gross breach means and they will have to test whether the activities of a senior manager were a substantial element in that breach. There is no question it will test those aspects and we will have a clearer view at the end of it."

Although the legislation is aimed at large corporations, SMEs are not immune. "The real reason behind the law was to make it easier to prosecute larger companies but it also makes it easier to prosecute smaller companies," says Abas. "A small business that doesn't have a lot of resources—where people wear different hats and stretch themselves for the good of the company—will be vulnerable in the aftermath of a fatal accident if an investigation finds that they have not been well organised."

But remember, the Corporate Manslaughter Act holds companies responsible—there is no separate liability for directors. Abas explains: "Directors are already very well taken care of in terms of liability for manslaughter if they themselves have been grossly negligent, and there are offences under the Health and Safety at Work Act for directors if they have behaved appallingly in relation to health and safety."

Where companies are convicted of corporate manslaughter there is scope for them to face unlimited fines. Another option for the judge is to impose what's called a publicity order, the details of which are up to the judge. In this situation, the judge might ask a company to take out an advertisement in a national newspaper to announce its conviction or it could be ordered to write to all clients and suppliers about its gross negligence.

Hackitt says organisations can avoid getting into trouble by doing the right thing. "Directors need to lead on health and safety from the top of the organisation. If they are doing that and doing it consistently, properly and credibly, then it is hard to imagine they could find themselves in court charged with corporate manslaughter," she says. "But this is not about eliminating all risks in business. It is about knowing what the risks are, making sure people are aware of them and encouraging staff to behave responsibly and sensibly and not taking unnecessary risks."

She believes that the issue for small businesses is not keeping up with new regulation, but making sure that they have access to advice and guidance on what it is they have to do to comply. As a part of the new HSE strategy the organisation has made all online information freely available to businesses.

According to Abas, the legislation should provide a fresh way of thinking for companies. "Yes, it is easier to prosecute them if they have a death. Yes, they should expect a more painful investigation if they suffer a fatality. But if they want to take something positive from this, it is that it is a wake-up call for them to really understand the safety of their
organisation, or how they start to understand it better."

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