Introduction

The Government has now published its long awaited draft Bill, which, if it becomes law, will introduce a new offence of Corporate Manslaughter.

Abolition of the identification principle

The current law links the company's liability to the gross neglect of a senior member of its management team. That person must be someone who can be described as a 'directing mind' of the company. It must be proved that their individual failure was a substantial cause of the victim's death.

One of the problems with this approach is being able to prove that the default of a senior person led to the fatality. In many companies, particularly larger organisations, the decision makers are too far removed from the day to day operation of the business for their to be such a connection.

The new offence

The basis of liability would be a failure by 'senior managers' to organise or manage the organisation's activities.

The failure would still have to be a gross breach of the duty to take care. This preserves the high threshold that currently applies.

Failure by senior managers

A person would be a senior manager of an organisation if he plays a significant role in -

1. The making of decisions about how the whole or a substantial part of its activities are to be managed or organised or
2. The actual managing or organisation of the whole or a substantial part of those activities.

The effect of the proposal is to create a two part test, firstly to come within the definition of senior manager the person must play a significant role and secondly that significant role must relate to the whole or a substantial part of the business.

The intention is to capture those whose role in the relevant management activities is decisive or influential rather than those who play a minor or supporting role.

The term 'substantial part of its activity' will have a different effect within different organisations, depending on their size. Management responsibilities that might be covered by the offence within a smaller organisation, such as a single retail outlet or factory, may well be at too low a level within an organisation that operates on a much wider scale.

Application

The draft Bill applies the new offence to corporations and to a wide range of Crown Bodies but not to incorporated associations such as partnerships.

The proposed sanction would be an unlimited fine. There would be no question of individual directors facing imprisonment.

Abolition of the old law

The Bill proposes that the liability of corporations for manslaughter at common law would be abolished.

Conclusion

Although the idea of a wider definition of Corporate Manslaughter has been welcomed by most people the Government has struggled to come up with a proposal that fulfils their stated intention of holding companies to account for gross failures by their management. The fact that the Home Office's consultative paper on reforming the law of manslaughter was published almost 5 years ago speaks for itself. The new proposal appears to have a number of failings:

Although directors could still be held personally liable for manslaughter under the old law the Bill seeks to impose financial penalties for collective failures. It is felt by many that financial penalties do not create a sufficient deterrent.

The definitions of "senior manager" and "significant part of the business" are complex and are likely to give rise to disputes and interpretation.

The wording of the offence seems to overlap substantially with provisions in the Health & Safety at Work Act 1974 which itself carries unlimited fines for failings in a way a company's activities are carried out.

Consultation

The Government has invited representations regarding the draft by 12 July.

This bill should be of concern to all senior management. We intend to put forward our own representations but if any reader wishes to let us have their views then please let us have your e-mail.