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Prosecution cases against UK businesses are increasing, not only against companies, but also against their individual managers and directors. If you own or manage an SME business, you should give careful through to what you can do to stay within the law – and protect yourself should a claim arise.
Take the case of Peter Mackereth, technical director of manufacturing firm Pyranha Mouldings. In March 2015, Mackereth was found guilty of negligence that led to the death of a worker trapped inside an industrial oven. He was convicted after by Liverpool Crown Court found he had failed to provide adequate risk assessment and training that would probably have saved the worker’s life.
The business was fined £200,000 and Mackereth was given prison sentence of nine months (suspended for two years) and fined £25,000. Few UK SMEs could deal with such a loss without serious risk of bankruptcy.
The Health and Safety Executive (HSE), which is responsible for bringing such cases to trial, reports several such prosecutions every month. In June 2015, for example, Ross Kitson, a director of Kitsongas Limited, was sentenced for carrying out illegal gas work on a property in Dudley.
An investigation by the HSE discovered that neither Kitson nor his company were registered as Gas Safe, and were therefore putting the lives of the home owners at risk. Kitson’s company has since ceased trading.
Most D&O cases involve health and safety negligence, especially since the Corporate Manslaughter and Corporate Homicide Act since came into force in April 2008. However, managers, directors and company owners can also be held responsible for claims involving sexual harassment and discrimination, shareholder lawsuits, and violation of data protection.
Even where a case isn’t proven, the costs associated with defending a claim, not to mention time and emotional energy, can be crippling.
So what can you do to protect yourself?
As a company director, manager or owner, the first thing to do is take every precaution against serious accidents or incidents happening in the workplace. This normally involves risk assessments followed by training and written guidelines.
However, in reality it can be difficult for small to medium sized companies to cover every eventuality in every area. Businesses are strongly advised to take out D&O insurance cover, which will minimise the damage in the case of a serious legal claim.
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