Understanding Directors' Duties For Health and Safety

12/10/2017

Although much has been written about directors' duties under the Companies Act 2006, under UK company law legislation, there is no requirement for a director to consider health and safety matters.  However, it is inconceivable to think that a company director would not be under an obligation to consider health and safety when making decisions on behalf of an organisation.

The question is, where do the directions on directors' duties for health and safety matters originate from?  

The UK Corporate Governance Code

The latest draft of the UK Corporate Governance Code was published in April 2016, which sets out the principles of good governance for all corporations with a premium listing of equity shares.

Under the provisions of the Corporate Governance Code, Boards are required to assess and monitor risks facing the company and put policies and procedures in place to mitigate and manage those risks.  Controlling health and safety risks would naturally fall into this process.

If the Corporate Governance Code is departed from for any reason, an explanation must be provided in the company's annual report (normally in the director's report).

Under the Code, directors of a company are individually and collectively responsible for health and safety risk management.

To ensure health and safety risks are managed, best practice is for the Board to take a four-point approach:

1. Have a clear plan for effective health and safety management

2. Introduce and communicate policies and procedures based on the plan for mitigating and managing health and safety risks

3. Ask for and analyse reports of the health and safety management systems on a regular basis

4. Instigate an annual formal Board review of health and safety practices

The Health and Safety Executive’s guidance on directors' duties

Another source of information regarding director’s liabilities comes from the Health and Safety Executive (HSE).  The regulatory body have published guidance, entitled: 

“Leading Health and Safety at Work: Leadership Actions For Directors and Board Members (INDG417).”  

The guidance comes with a website that provides a checklist for board members, a summary of the legislation and a costs and benefits assessment on health and safety legislation compliance .

Directors' liability under the Health and Safety at Work etc Act 1974

Section 37 (1) of the Health and Safety at Work et Act 1974 (HSWA) states:

“(1) Where an offence under any of the relevant statutory provisions committed by a body corporate is proved to have been committed with the consent or connivance of, or to have been attributed to any neglect on the part of , any director, manager, secretary or other similar officer of the body corporate or a person who was purporting to act in any similar capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be preceded against and published accordingly.”

The court’s interpretation of “consent or connivance of” and neglect

The court is not blind to the commercial reality that directors can only be responsible for certain parts of the business and a major function of their position is to delegate control to others.  For example, a director based in the London branch of an organisation with branches spread across the country can argue they cannot be held responsible for a breach at another site, where risk management was fully delegated.

This point was highlighted in Huckerby v Elliot [1970] 1 All ER 189 (DC), a case concerning a prosecution under the Finance Act 1966 in relation to a failure to hold the requisite gaming licence. A director was charged with an offence contrary to section 305(3) of the Act in that the offence was attributable to her neglect.

Lord Chief Justice Parker stated:
 
"...I know of no authority for the proposition that it is the duty of a director to, as it were, supervise his co-directors or to acquaint himself with all the details of the running of the company.  Indeed, it has been said by Romer J in Re City Equitable Fire Insurance Co Ltd [1925] Ch 497 at 428-430 that amongst other things it is perfectly proper for a director to leave matters to another director or to an official of the company and that he is under no obligation to test the accuracy of anything that he is told by such a person, or even to make certain that he is complying with the law."
 

Lord Chief Justice Parker also described connivance as a state of mind in which a director "is well aware of what is going on but his agreement is tacit, not actively encouraging what happens but letting it continue and saying nothing about it".

 
In Attorney-General's Ref (No 1 of 1995) [1996] 1 WLR 970 the Court of Appeal considered section 96(1) of the Banking Act 1987 which is in identical terms to section 37 of the HSWA 1974.  Lord Taylor stated that for consent, a defendant has to be proved to know of the material facts which constitute the offence by the body corporate and to have agreed to its conduct of the business on the basis of those facts.

With respect to neglect n the Scottish case of R v Wotherspoon [1978] JC74 (at p78) the Court stated:
 
, in considering in a given case whether there has been neglect within the meaning of section 37(1) on the part of a particular director or other particular officer charged, the search must be to discover whether the accused has failed to take some steps to prevent the commission of an offence by the corporation to which he belongs if the taking of those steps either expressly falls or should be held to fall within the scope of the functions of the office which he holds.  (Emphasis added).

Lord Justice Latham approved the approach set out in Wotherspoon in R v P and another [2007] All ER 173, stating:

"If there is a proper system set up for health and safety that will usually be sufficient for [a director] to say "I have done my duty.  I have set up that system", in the absence of material to make it plain to him that something was actually wrong with it."

In summary

If a health and safety breach occurs, a director may be able to prove they have managed the risk by showing:

• there is a health and safety management system in place  

• employees have been given the skills and training to do the work expected of them and are being supervised by someone with suitable experience  

• here is a system in place that monitors the safety management system, ensuring it remains appropriate  

• there is are policies and procedures in place to ensure employees remain competent in their roles 
  
  

Fisher Scoggins Waters is a London based law firm who are experts in construction, manufacturing, and engineering law.  Partner Michael Appleby, represented one of the defendants in R v P and another which resulted in the subsequent acquittal of the defendant.   If you have any questions about health and safety matters or require an emergency response to an incident, please phone us on 0207 993 6960.

(1)  http://www.hse.gov.uk/leadership/