The Corporate Manslaughter and Corporate Homicide Act 2007 came into force on April 6, 2008 and for the first time, companies and organisations can be found guilty of corporate manslaughter as a result of serious management failures resulting in a gross breach of duty of care. The maximum penalty is an unlimited fine and the court can also make a publicity order requiring the organisation to publish details of its conviction and fine.

Peter Millington, Director at Sentinel Corporate Risk, said: “Many company chiefs are unaware of the personal liability they face as a director and there is a common misconception that being a director of a limited company in some way restricts the director’s personal liabilities.” Under the Act prosecutions are of the corporate body and not individuals; however the liability of directors, board members or other individuals under health and safety law or general criminal law is unchanged. As such, prosecutions often under the Health and Safety at Work Act 1974 can result in individuals being liable for unlimited fines and imprisonment.

In addition, the Company Directors Disqualification Act 1986 section 2(1) empowers the court to disqualify an individual convicted of an offence in connection with the management of a company. Furthermore individual directors are also potentially liable for other related offences such as the common law offence of gross negligence manslaughter, which is punishable by a maximum of life imprisonment.

What support is available to directors and companies?

“Businesses need to put Health and Safety at the top of their agenda and it should be part of the organisation’s culture, values and performance standards. The Institute of Directors and HSE have published guidance for directors on their responsibilities for health and safety and this is a good starting point for any business.” said Peter.

“Whilst it is against the public interest to insure against any criminal conviction, a Directors and Officers Liability Policy can provide protection against the significant legal costs that would otherwise be picked up by the individual or company.

With policies starting from £350 per year and stand-alone policies not incurring any ‘benefit in kind’ tax liability on individuals, this protection should be an essential part of businesses corporate insurance programme.”

For further information on Directors and Officers Liability Policies, contact Sentinel Corporate Risk on 01772 789455.