Bringing Justice to the Boardroom The Case against Voluntary Guidance and in Favour of a Change in the Law to Impose Safety Duties on Directors a report by the Centre for Corporate Accountability for ucatt october 2007 index

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Bringing Justice to the Boardroom

The Case against Voluntary Guidance and in Favour of a Change in the Law to Impose Safety Duties on Directors
A report by the Centre for Corporate Accountability for UCATT

October 2007


1. Executive Summary 1

2. Introduction 3
3. Chronology and Background to Government/HSC decision-making 5

on directors duties

4. Benefits of Legal Change 12

A. Improved Safety and Reductions in Injury rates 12

B. Increased Accountability of Directors 15
5. Responding to the Arguments against Legal Change 21

A. “Voluntary Guidance Works”? 21

B. “The Costs of Legal Change Outweigh the Benefits?” 23

C. “Directors are motivated by things other than the law and 26

their personal liability?” 27

D. “Safety Breaches are not individual failures?” 27

E. “Legal change would result in a ‘disproportionate risk averse 27

and bureaucratic response’”?

F. “Directors might respond to by “introducing ‘systematic delegation’ 27

on health and safety?”

G. “Existing sanctions will motivate directors?” 27

H. “New proposed sanctions will motivate directors even further” 27

I. “The Corporate Manslaughter and Corporate Homicide Act will also 27

motive directors”

J. “The new duties in the new Companies Act will impact on directors 28

and health and safety?”
6. Conclusion 29

Table 1: Levels of reduction in numbers or rates of injury as reported

in HSE case-studies undertaken between 2003-2005 14

Table 2: Convictions of Directors under section 37 of the Health and 17-19

Safety at Work Act in the last five years, 2002 – 2007.

Table 3: Manslaughter Convictions of company directors in the last 20

five years, 2002 - 2007

Table 4: Percentage of small and medium sized companies with a health and safety 22



Box 1: The Current Legal Position 4

Box 2: HSC Guidance on Directors Responsibilities, 2001 5

Box 3: Excerpt from Select committee Report, 2004 7

Box 4: Excerpt from Government Response to Select committee

Report, 2004 7

Box 5: Except from Report by Prof. Phil James 8

Box 6: Excerpt from Minutes of the HSC Meeting, April 2007 9

Box 7: Time Line summary of government and HSC action 11

Box 8: Business Benefits of Director Leadership 15

Box 9: Voluntary Guidance’s Perverse Incentive 16

Box 10: The GSB Surveys – understanding the figures 22

Box 11: Financial Benefit from Legal Change 26
Box 12: What Change in the law is required 30

Copies of all documents referred to in this report can be downloaded from:

Executive Summary
On 29 October 2007, the Institute of Directors and the Health and Safety Commission (HSC) will publish new ‘authoritative’ guidance on the responsibilities of directors for health and safety in their companies and organisations. This new voluntary guidance supercedes earlier guidance published by the HSC in 2001.
This report argues that the decision to publish new guidance - rather than introduce legislation as the government promised to do seven years ago in its ‘Revitalising Health and Safety Strategy Statement” - fails to take into account of both the limited impact of the 2001 voluntary guidance as well as the significant health and safety gains and increased accountability that would be brought about by legal change.
The reports sets out how many of the key arguments used by the Health and Safety Executive (HSE) – the civil servants who support the HSC and who have been assertively arguing against legal change –are misleading.

In particular, the report shows1 how the HSE has failed to publicise survey results it had itself commissioned which concluded that, despite the 2001 voluntary guidance, only 44% of organisations have a health and safety director at board level. Instead the HSE has highlighted the figure of 79% - which only applies to the very largest organisations, those with an average number of over 4000 employees.

The majority of companies have no health and safety director at board level - not a small rump of organisations as the HSE suggest. It is clear that the voluntary guidance has not worked.
The failure of voluntary guidance should be seen alongside more of HSE’s commissioned research that shows that “legal regulations and their enforcement constitute a key, and perhaps the most important, driver of director actions in respect of health and safety at work.”2 And directors/managers themselves clearly recognise this. A more recently HSE published study shows that 61% agree or strongly agree that individuals believing they could possibly be imprisoned constitute an essential or important argument for enforcement to have a deterrent effect, whilst 52% cite individual legal consequence as essential or important.3
This report also explains how the HSE - again failing to appreciate more of its own research findings - which show that board level health and safety leadership has brought about average reductions of at least 25% in injury rates/levels of injury. This would suggest that legal change on directors’ responsibilities could be highly significant in bringing about the government’s targets of reducing injury levels by 20% by 2010, which at present the HSE is “not on track to meet.”4.

Legal change will also bring about greater accountability. The report shows how important this is – as HSE’s prosecution database indicates that on average, only 7 directors/senior managers have been convicted of health and safety offences in each of the last five years. Over the five year period – in which around 350 construction workers died and 9000 suffered major injuries – only 13 construction company directors have been convicted for a health and safety offence. The HSE says that there may be some other convictions involving directors, but they are unable to provide details of these.

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