What does this mean for you as a “Duty Holder” and for the Business?
Generally, Corporate Liability refers to the responsibility a company (or corporation) has for legislative violations or breaches of regulation, i.e., health and safety breaches, environmental breaches and even breaches of employment law.
However, the liability of individual people within the organisation (Directors, Managers, and even Supervisors) is complex and varies according to the jurisdiction/nature of the violation.
Fines for the Corporation:
- Typically, fines are not taken directly from any person directly unless they have been found personally liable, i.e., due to gross negligence, fraud, or criminal conduct and this is mostly because they have been found to be the person responsible – the Duty Holder.
- Directors are also protected by the Corporate Veil, meaning the company itself is a legal separate entity from the directors, who are not then personally liable for the company’s debts or fines. However, this protection can be pierced under certain circumstances, i.e., where a director is found to be personally at fault.
A Director’s Personal Liability through a Breach of Duty:
- If a director (as a responsible person or duty holder) is found to be grossly negligent or knowingly failing to ensure compliance with legal requirement, such as health and safety legislation (i.e., causing a person harm through their actions or inactions), they could be held personally liable for the consequences, including being fined, having to do unpaid work or community service or, where serious enough, even be given a custodial sentence.
Civil Liability:
- If a director breaches their fiduciary duty, i.e., they acted in bad faith and/or made decisions that harmed the company or shareholders, they could be held personally liable for any financial damage they cause, with reparations needing to be personally met through that person’s personal assets.
Insurance Coverage:
- Many companies have Directors and Officers (D&O) insurance, which helps cover the legal fees and potential damages or fines that directors may face in the event of a lawsuit or regulatory investigation. This type of insurance, however, typically does not cover criminal conduct or fraud.
In brief, corporate fines/punishments can be passed directly to the “Duty Holder, or Responsible Person” if they have been found personally liable, due to the actions they were responsible for taking being either deliberately or through negligence, ignored. These could result in charges such as gross negligence, fraud, or criminal conduct.
Directors may also be personally liable if they are directly involved in the wrongdoing, but this is subject to the specifics of the case, local law, and whether the director was acting outside their role or in violation of their duties. The following three examples demonstrate where personal responsibility was deemed to be appropriate findings of the court.
- A waste disposal company ignored issued Prohibition Notices (PN’s), could not produce evidence of having Employer Liability Compulsory Insurance and made no effort to improve workplace conditions.
- The company was found guilty of failing to comply with 3 PN’s, breaching S2(1) and 3(1) of the Health and Safety at Work etc. Act and S1(1) of the Employers’ Liability (Compulsory Insurance) and fined £65,000 with £13,280 costs
- A company director was found guilty of noncompliance with 2 PN’s and breaching S2(1), 3(1) by virtue of S37(1) of the Health and Safety at Work etc. Act, and S1(1) of the Employers’ Liability (Compulsory Insurance) Act. He was given an 8-month custodial sentence suspended for 12 mths, ordered to conduct 150 hrs of unpaid voluntary work and disqualified from being a company director for three years.
- A company has been fined £2 million and its directors jailed after two employees drowned in a tanker of pig feed, demonstrating the courts’ increasingly robust approach to those who avoid the cost of implementing proper safety measures.
- The company was given the fine after being convicted of corporate manslaughter.
- The Managing Director was jailed for 20 months having been convicted under Section.37 of the Health and Safety at Work Act.
- A second Director was jailed for 13 years and disqualified from being a company director for 15 years after being convicted of gross negligence manslaughter and a health and safety offence.
- The Transport Manager received a one-year suspended sentence for breaching the Health and Safety at Work Act.
- Two companies were fined £190,000 and £120,000 following the death of a roofer who fell from height. This would not have happened if there had been adequate protections, such as scaffolding or safety barriers, in place. At each company, responsible persons (directors) were found personally responsible.
- One was convicted of gross negligence manslaughter and jailed for five years.
- A second was jailed for 15 months.
To avoid the possibility of prosecution as above, ensure your business does not fall foul of health and safety law in 2025:
- Conduct risk assessments as and when required (prior to undertaking activities).
- Provide training regarding the risks involved and how to manage them.
- Supervise risk management, as necessary, until competence is demonstrated.
- Formally review risk assessments and associated safe systems of work, regularly.
- Update training provided (toolbox talks, in-house or external formal training).
- Keep / update records of all the above processes.
If you need help with any health & safety related issue, do not hesitate to contact your health & safety consultancy. We can provide advice/assistance with:
- Your legal requirements with regards to safety and health.
- The management of health and safety – generally or specific to business activity.
- The risk assessment process and how to conduct and record risk assessments
- Required conduct – as per legal requirements to meet when managing an activity.
- Required health surveillance – as per the activity.
- How to evidence due diligence conducted.
- Training needs and how they can be met (provided and recorded).