Perhaps the most innovative approach has been taken in relation to health and safety breaches following the work of the Right Honourable Chris Grayling MP. Before you roll your eyes and say this is all ‘health and safety gone mad’ please consider this...carefully.
The Health and Safety (Fees) Regulations 2012 introduced the ‘Fee For Intervention’ (FFI) cost recovery scheme which came into force on 1 October 2012. This has recently been reviewed and is set for further scrutiny in 2015. The regulations place a duty on the Health and Safety Executive (HSE) to recover its costs from duty holders which fall under its gaze including public and limited companies, partnerships of all forms and even Crown and public bodies.
Other bodies which enforce health and safety law such as local authorities and the Maritime and Coastguard Agency are unable to avail themselves of FFI. Whilst the recent review considers that there is a strong case for extending this scope to businesses presently covered by other enforcement regimes in the longer term, at present there remains an uneven playing field.
There is a high degree of uncertainty as a consequence of these limitations in the application of FFI. You therefore need to know if your business is directly regulated by the HSE, what regulations apply to your business and who polices them.
You then have to make sure that you are compliant and take reasonable precautions to eliminate or mitigate risks to health and safety of staff and other people.
How does the scheme work?
HSE Inspectors look at work activities and investigate incidents and complaints. There is a target of around 22,000 inspections per year to be targeted at higher risk sectors and businesses where there is a record of poor health and safety performance. Construction, manufacturing and motor vehicle repair services are the favourite targets for inspections with some 23,472 being carried out over 2013/2014.
Where breaches are insignificant then an Inspector can give verbal advice. However, if the Inspectors visit a business and see a material breach of health and safety law then the business or organisation will receive a written Notification of Contravention (NoC) and will have to pay a fee. For some breaches there is formal enforcement action in the form of a Prohibition Notice, which stops an activity taking place. Improvement Notices require improvements within a certain time. Alternatively, for the more serious breaches, Inspectors can also bring legal proceedings in the Criminal Courts. The HSE are quick to point out that compliant businesses or those where the breach is not material will not have to pay any fees.
What is a material breach?
This is when an Inspector forms the opinion that there is or has been a contravention of health and safety law that requires them to issue written notice of their opinion to the duty holder. This notification may be the notification of a contravention, an improvement or prohibition notice, or a prosecution.
It must contain a) the law that the opinion relates to, b) the reasons for the opinion including which contraventions are considered material ones and c) notice that a fee is payable to the HSE.
What are the costs?
The hourly rate usually applied is £124 per hour and will take in the total amount of time it takes the HSE to identify and conclude its regulatory action, including office based work. If third party involvement is required, such as an expert to give an opinion on specific issues, then the actual fees charged by them would be applied. Similarly, the Health and Safety Laboratory will charge at its own rate if it becomes involved. Costs will therefore fluctuate from case to case, depending on the complexity of the issues and whether there are multiple breaches. As this represents the HSE carrying out its statutory functions, VAT is not charged.
Clearly there is a further tension here. It would be easy for businesses to conclude that the HSE, in face of shrinking budgets was forced into a corner to place the costs of non-compliance from the public to the private purse and that this has become something of a ‘cash cow’ for the regulator. The review appears to have been conscious of this potential and it has been suggested that there is “no compelling evidence” to suggest this perception exists.
When invoices are issued, businesses can challenge them and they are reviewed. No fees are payable whilst the invoices are in the process of appeal, but the review informs us that relatively few invoices are actually amended.
The cost of health and safety breaches can be significant. FFI is unlimited and if you are prosecuted through the Courts you can also face
- Significant fines and Court surcharges
- Payment of HSE investigation and prosecution costs
- The potential risk of costly Confiscation Orders where appropriate and in some instances compensation
- In some cases directors can now face custodial sentences.
If you are in any doubt about how FFI might affect you or if indeed you are facing an investigation by the HSE, then please feel free to contact the Regulatory & Criminal Investigations team at Irwin Mitchell.