Updated: 3rd February 2021
Employers have a duty to ensure the health and safety of their employees and members of the general public when they are on business premises. The Health and Safety Executive (HSE) bring prosecutions against hundreds of firms each year for breaching health and safety legislation, and penalties can be severe.
Furthermore, office-holders can also be held responsible for health and safety breaches on an individual basis. The financial ramifications are serious, as not only does the company face a hefty penalty if found guilty, the Health and Safety Executive also has the power to recover their costs from the company.
In addition to financial penalties being imposed for breaching health and safety laws, your company may have to pay Fees for Intervention if a ‘material breach’ is discovered. The Health and Safety Executive can recover their costs from the time of an inspector’s visit, and at every stage of an investigation thereafter.
Fees for Intervention are currently based on an hourly rate of £129. When you consider the time needed to complete a full health and safety investigation, this means a huge sum of money could become due in addition to the fine.
Officers of the company can be held personally liable for breaches in health and safety regulations, and HSE may prosecute the company and its officers at the same time. The consequences of being found guilty of health and safety errors can include imprisonment in the most serious cases, as well as disqualification as a company director for up to 15 years.
HSE fines of up to £20,000 are common, and in cases of serious negligence they can be unlimited. This has serious implications for the future, potentially resulting in company insolvency and personal bankruptcy.
If your company is about to enter insolvency but is thought to be viable in the long-term, you may be able to negotiate extended terms with unsecured creditors via a Company Voluntary Arrangement, or CVA.
A licensed insolvency practitioner would analyse your company’s finances, including the HSE fine, and establish whether or not you are eligible. CVAs allow you to remain in control of the company, and reducing the repayments of unsecured debt included in the agreement could alleviate some financial pressure.
Fines for breaching health and safety regulations are the full responsibility of the company, and cannot be mitigated by insurance. A company’s problems can be further compounded by adverse publicity on their lack of health and safety compliance, and long-term damage to their reputation.
The implications of a serious health and safety breach are, therefore, huge. If the company has already entered insolvency this does not preclude action by HSE, who will look at the seriousness of each case and the company’s previous record of compliance.
Begbies Traynor is the leading professional services consultancy in the UK, and can offer guidance on how to proceed in these circumstances. Call one of our expert team to arrange a same-day consultation in complete confidence.