SMEs under threat from 2007 Corporate Manslaughter & Homocide Act

The fine of £338,000 levied in February against a small Gloucestershire engineering business for a breach of health and safety will not go down in history as one of the largest. But being the result of the first conviction of a company for the death of an employee under the UK’s corporate manslaughter and homicide Act, the case of Cotswold Geotechnical could prove worrying for all directors - including finance directors.

The 2007 Corporate Manslaughter & Homicide Act, which came into force in April 2008, has made it an offence for a company to organise its activities “in such a way as to cause a person’s death, where such organisation amounts to a gross breach of a duty of care”.

Cotswold Geotechnical was found guilty on 15 February for failing to ensure the safety of a geologist employed by the business, Alexander Wright, who died in September 2008 when a deep trench on a development plot he was working in collapsed on him.

By focusing on the part members of the senior management team play as individuals in causing a “substantial element in the breach of duty”, the legislation makes it easier for mid-sized companies to be pursued for failures - such as those that prosecutors said led to Cotswold’s geologist’s death - by creating the concept of a collective level of blame without the need to pin blame on a single person. It was precisely this technicality that caused the collapse of corporate manslaughter charges against companies in the Zeebrugge ferry disaster and the Hatfield rail crash.

Unanswered questions

Though the Cotswold case is a symbolic first, it does not answer many fundamental questions around future liabilities for finance directors.

“Companies already face fines under the 1974 Health & Safety at Work Act, which still applies,” says Jonathan Grimes, partner at law firm Kingsley Napley. “But what this case hasn’t quite tested is a concept that the 2007 Act enshrines: the ability of judges to fine a company out of existence if they see fit.”