From the TUC

If you can make directors liable for cold-calling, why not for killing workers?

24 Oct 2016, By

Everyone hates cold callers, especially ones that try to get you to make claims for accidents or PPI you did not know you had.

Every year the Information Commissioner gets hundreds of thousands of complaints for these and recently companies have faced a fine of up to £500,000 for cold-calling. So far 20 firms have been fined, but 15 of these have simply declared themselves insolvent and paid nothing. Often the company reappears under a different name with the same address and the same directors.

At the weekend, the Government announced that they were going to make individual directors liable for the fines by amending the Privacy and Electronic Communications Regulations and will come into effect next spring.

Now, that really annoyed me when I heard of that. Not that I don’t think it is a great idea, but because I have been calling for this to happen in respect of health and safety for over a decade. For years directors have been able to make a company insolvent to avoid a fine for a health and safety offence, or even to avoid paying compensation where they did not take out insurance.

Here are just a few of the cases that I know about.

  • In 2006 North West Aerosols placed itself in voluntary liquidation four months after a fatal accident at its Liverpool factory. Two years later the company was convicted under the Health and Safety at Work Act  and ordered to pay just £2 in fines and £1 in costs. The judge said that if the company had been profitable, he would have considered a fine of at least £250,000.
  • In 2012, holiday company Pontins escaped a fine which the judge said would have been around £500,000 for a health and safety offence because they became insolvent after the death occurred. No directors faced any charges.
  • Just this year, Diamond Wheels (Dundee) Ltd went into insolvency after it was fined £50,000 following the death of one of its workers.
  • Also this year the Supreme Court ruled that there was nothing that could be done after a company declared insolvency after breaching their statutory duty to obtain and maintain effective insurance. The company’s employers’ liability insurance policy had excluded claims arising from the use of electric woodworking machinery, including the electric circular saw with which apprentice joiner William Campbell had been injured. The court ruled that the director of the company could not be made liable so the apprentice got nothing.

This trend is likely to get worse now that the penalties for health and safety offences have been increased to a reasonable level. It is far too easy in the UK to allow directors of a company just to declare the company insolvent and either walk away or else buy back the assets and continue under another name as though nothing had happened. In our evidence to the Sentencing Council when they consulted on the new guidelines we specifically called for action on this, however it is really a matter for the Government to sort out. They need to ensure that directors have a positive duty under the Health and Safety at Work Act in the same way as the company has, and also ensure that the law is changed to allow directors to be made liable after insolvency where the company is guilty of a corporate manslaughter or health and safety offence or where there is compensation payable that is not covered by insurance. After all, if they can do it for annoying cold callers, surely they can do it for those who kill workers.