Health & Safety Executive increasing risk of bankruptcy for businesses

23 June 2017

Vikki Woodfine, a leading lawyer and partner at DWF LLP, outlined how the Health & Safety Executive (HSE) is increasing the risk of insolvency for businesses at a recent expo.  Although recent events at Grenfell Tower will mean that any attempts at blunting the "teeth" of the HSE are going to be unwelcome.  That said it remains that companies should be treated fairly.

The Safety and Health Expo was held at the ExCel London centre earlier on in June. Here, Ms Woodfine explained how HSE were increasingly labelling minor infractions as serious offences with a view to maximising the value of the fines levied against businesses. This over-zealousness, coupled with new, higher fine levels is putting more businesses at risk of insolvency.

How is HSE pushing firms towards insolvency?

Fines for health and safety offences can either be levied at whole businesses, or individuals within the organisational structure.

 Using the example of a haulage driver, Ms Woodfine described how the fines could amount to a fortnight's salary and possibly disqualification from driving.

Not only could this jeopardise their livelihood, it would increase the chance of a 'driver conduct hearing' being requested. One possible outcome in this scenario would be the removal of the company's operating licence.
A top bracket fine imposed on a medium-sized company could cost anything up to £4m. Fines are typically reduced for businesses who plead guilty and avoid a hearing. However, the starting point for reduced fines is still likely to be around £250,000, if not more.

With such sums likely to push the majority of businesses to the brink of insolvency HSE's approach has led the majority of those affected to consider going to court to argue for a lesser fine.

Ms Woodfine said: “We are often seeing the HSE start the vast majority of cases by saying that they are ‘high-culpability, category one harm’. The defence then seeks to say ‘low-culpability, category three' harm. The hope then is that the judge will decide 'medium-culpability, category two' harm."

This means that while companies are still not required to pay the full amount, the payment due is still substantial. Legal costs of an appeal also must be factored into the equation when calculating risk of bankruptcy caused by HSE.
What must HSE change to reduce the risk of bankruptcy for businesses?

Ms Woodfine, who is also a lead commentator for health and safety info portal Croner-i, has called on HSE to adopt a fairer approach to assessing businesses.

Any breaches should be perceived from a more realistic point of view, rather than one focused on generating the maximum amount through fines.

This would accomplish more than just reducing the risk of insolvency for businesses called up on minor health and safety infractions. It would also save on public funds that are currently being spent on legal fees for contested cases.
Worried about bankruptcy? If you want to get the specialist guidance you need at a time like this, call on the expert Company Rescue team.

Categories: Insolvency, Liquidation, Creditors Voluntary Liquidation CVL