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Are your franchisees and staff safe?

Since 6 April 2008, the Corporate Manslaughter and Corporate Homicide Act 2007 can now find an organisation as a whole or a group of senior managers responsible for gross negligence leading to death. It’s time to revisit health and safety…

Before 6 April, an organisation could only be found guilty if it was proven that an individual was responsible for causing death. Nicola Broadhurst, Partner in Mundays LLP, explains the individuals were those “who could be said to be the organisation’s ‘directing mind’, and who had themselves been negligent.” The problem being it “proved extremely difficult when dealing with large corporations such as in the rail tragedies at Hatfield, Potters Bar and Ladbroke Grove.”

By removing the need to find a guilty individual, an organisation can be found guilty if “it owed a duty of care to the deceased [and] there was a gross breach of this duty of care resulting in death, mainly due to the way its activities were managed or organised by its senior management,” adds Nicola.

What does this mean for the franchise industry?
Franchisors and their franchisees should be aware that “it will now be easier for either business to be convicted of corporate manslaughter following the death of an employee or third party, as a result of its business activities,” says Duncan Vaughan, Partner and Head of the Franchising Team at Pannone LLP. He continues: “Focus is now going to be on how senior managers – who need not be directors or board members – manage health and safety within the business.”

Franchisees may be liable under the Act if death occurs due to their activities. Duncan raises the questions: “What if the management systems have been imposed by the franchisor? Could the franchisor be liable?” If this is the case, he adds: “The prosecution would have to prove that the franchisor owed a relevant duty of care to the victim. As in the majority of cases the franchisor would be a wholly separate legal entity; this may be a difficult, but a possible, task depending upon the circumstances of the incident.”

It’s your duty!
Any organisation with a duty of care must be aware of the Act’s implications. Nicola summarises ‘duty of care’ as the following: “Duty owed to employees or other contractors; duty as an occupier of premises; duty owed in connection with the supply of goods; services or the use of machinery and vehicles and a duty owed where an organisation is responsible for a person’s safety.”

Long-term effects
Both Nicola and Duncan strongly advocate that health and safety must be made a priority and staff should be regularly trained in these areas. Nicola reiterates that, “educating senior managers as to their responsibilities under health and safety legislation,” is essential; “an offence cannot be avoided by delegating away responsibility.”

Franchisors must understand “where operational systems are dictated to franchisees, safety information must be passed to franchisees to allow them to safely conduct their business,” explains Duncan. He recommends: “Investment in health and safety now could avoid the fines, costs and reputational damage, which will follow a conviction for corporate manslaughter. A real risk is the media is likely to report the conviction as against the franchisor’s brand rather than distinguishing it as against the franchisee.”