Directors beware. Corporate Manslaughter can get personal

The Corporate Manslaughter and Corporate Homicide Act 2007 means businesses can be found guilty of corporate manslaughter as a result of gross breach of a duty of care arising from serious management failure. The legal costs associated with defending a corporate manslaughter case can mount up.

A rising risk

While you can count the number of corporate manslaughter convictions so far on one hand, figures published by law firm Pinsent Mason also show that the number of cases opened by the Crown Prosecution Service jumped by 40% last year. Indicating that, as use of the legislation is stepped up, convictions may also start to rise.

Publication of the same research prompted The British Security Industry Association to reinforce the importance of protecting the six million lone workers in the UK, urging homecare businesses to ensure they have robust health and safety procedures in place, safeguarding their workforce.

The recent Mid Staffordshire Hospital scandal and resulting media furore, resulting in the potential for corporate manslaughter charges to be made against senior health staff, together with the Pinsent Mason figures, serve to highlight that potential litigation should not be dismissed lightly and a corporate manslaughter case is certainly better prevented than resolved.

Prevention is better than cure

Among the actions that can be taken to mitigate both organisational and personal risk, the board and management team need to be fully aware of, and accountable for, potential risk. This includes having a written and well published health and safety policy, and access for employees to relevant and competent health and safety advice.

judges hammer

Employers should also carry out risk assessments for all employees, and any other people, including service users, who are affected by business activities and to consult on potential risks and the preventative measures put into place to counter them, to ensure that they are aware of how to deal with situations and that they feel they are adequately protected.

Added to these measures, a regular full review of health and safety procedures is essential, during which shortcomings should be addressed, actions taken and a robust system applied to monitor implementation. Well documented training is imperative to ensure staff, including board and senior management, are competent in their responsibilities.

Added peace of mind with directors and officers' insurance

As well as the need for employer's, public and professional liability insurances, in our increasingly regulated world we have seen a distinct change of focus from corporate to personal accountability. Claims can be made against both the organisation and individual directors, whose personal assets could also be put at risk. Whatever the size of business, liability associated with corporate manslaughter is potentially unlimited and can be severe both personally and professionally.

Towergate offers Limited Companies specialist directors and officers' insurance designed to help protect company directors, officers and others against corporate and personal liabilities, including:

  • The Corporate Manslaughter and Homicide Act 2007: In the event of an incident, cover is provided for investigations carried out by the Health and Safety Executive (HSE) and help with legal costs incurred in the defence of a corporate manslaughter case.

  • Reputation Protection and PR Expenses: In this digital age it's easy for stories and accusations to spread quickly and spiral out of control over the Internet and social networks. With little time to initiate effective damage limitation, having the correct cover can help to prevent, or limit the effects of, adverse publicity anticipated following an HSE investigation.

  • Employment Practices Liability (EPL): Generally picking up cases not covered by Employment Law Cover, EPL helps protect against losses and defence costs from employees' claims for issues such as unfair dismissal.

Making sure you're covered - personally

It's worth considering you don't have to have acted wrongly to be personally sued. Towergate's directors and officers' insurance policy responds against both actual and alleged actions.

Even with the best intentions and processes in place, directors and officers' insurance can offer peace of mind to you and your management team; putting fully qualified legal experts at your disposal should things go wrong.

To find out more about the benefits and protection provided by directors and officers' insurance, contact a Towergate advisor who can talk through your cover options on 0344 346 0409.

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