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Commercial Director Responsibilities & Liabilities

Posted by Lynne on August 11th 2014
(Business, Commercial Litigation, commercial litigation and dispute resolution, Employment, health & safety, health and safety, Litigation)

Directors may incur personal liability, both civil and criminal for their acts or omissions in directing the company. There are a plethora of matters for which directors can be held liable; however for the purposes of this article, the more relevant are the Health and Safety at Work etc Act 1974 and the corporate Manslaughter and Corporate Homicide Act 2007 – see below.
It was recently reported in the Western Morning Post that a Rigger was electrocuted whilst installing safety netting on a steel-framed barn extension.

The incident took place in 2011 in Cornwall. The recent inquest explained how the deceased was found at the “bottom of an aluminium ladder in full cardiac arrest after working near three 11,000-volt power cables at the top section of the structure.” Medical evidence showed that Mr Morgan died of cardiac arrhythmia caused by electrocution after coming into contact with one of the cables, the nearest of which was just under two metres away from the steel structure.

Two men are being held liable; the Director of the company faces a manslaughter charge whilst another employee has been summonsed for health and safety offences. In addition, a Plant Hire company also faces charges of failing in its duty to protect people from risks. The charges will be heard at the end of August.

Health and Safety at Work etc Act 1974
Health and safety law places duties on organisations and employers, and directors can be personally liable when these duties are breached.
If a health and safety offence is committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the organisation, then that person (as well as the organisation) can be prosecuted under section 37 of the Health and Safety at Work etc Act 1974.
Those found guilty are liable for fines and, in some cases, 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. This includes health and safety offences. This power is exercised at the discretion of the court; it requires no additional investigation or evidence.
Individual directors are also potentially liable for other related offences, such as the common law offence of gross negligence manslaughter. Under the common law, gross negligence manslaughter is proved when individual officers of a company (directors or business owners) by their own grossly negligent behaviour cause death. This offence is punishable by a maximum of life imprisonment.

Corporate Manslaughter and Corporate Homicide Act 2007
Under this Act, an offence will be committed where failings by an organisation’s senior management are a substantial element in any gross breach of the duty of care owed to the organisation’s employees or members of the public, which results in death. The maximum penalty is an unlimited fine and the court can additionally make a publicity order requiring the organisation to publish details of its conviction and fine.

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