With new sentencing guidelines in place, the construction industry is on the receiving end of large fines. How can you manage your subcontractors effectively to ensure you’re not at risk?
“Sentencing guidelines must recognise that health and safety offences are criminal acts that should be treated no differently to other crimes involving violence.”
So said the response to the Sentencing Council’s consultation exercise on reforming the way the courts punish offenders.
This new sentencing regime is biting hard in the construction sector. Already subject to heavy enforcement, the industry has received more than a third of the fines handed down since February 2016.
For large companies, the guideline makes frightening reading.
Courts are now working with defined financial starting points identified primarily on the basis of turnover, arriving at fines within prescribed ranges reaching £10m (or more) in the worst cases.
The Health and Safety Executive acknowledges that large contractors manage safety well. But with an estimated 89 per cent of construction businesses consisting of fewer than 10 employees, the safety approach of the wider industry remains a concern.
Sites on which fewer than 15 people work account for more than two-thirds of fatal accidents in the industry – a disproportionate figure on any assessment.
CDM 2015 sought to address this trend, but how can you secure your position when projects include the management of smaller businesses?
5 rules for subcontractor management
Reliance on subcontractors is expected and, done properly, is perfectly acceptable. No business can possibly resource every aspect of a project.
The key is how those subcontractors are selected and managed. Failure to achieve compliance in this respect is just as capable of founding a prosecution as an incident involving your own employees – a worrying prospect.
What can you do?
- Vet potential subcontractors You need their credentials, both industry-based and health and safety-specific. You need to know how they will approach your job, where they see the risks, how they will control them and how the work will be done. You must also validate individuals. Who is doing the work? What training, experience and certification do they have?
- Check competency This is a key for the HSE; you can only rely on subcontractors if they are truly competent. Competence is a combination of experience, qualifications, training, knowledge of the task, ability to prevent risk situations arising, the acknowledgement of limitations, and organisational capability.
- Give them time Be realistic about what is required and how long it will take. This means balancing the commercial pressures of scheduling against maintaining a safe method of working. Little aggravates a health and safety prosecution as much as the perception that corners were cut for financial gain.
- Keep talking Communication before, during and after a project is vital. Your subcontractor needs to know precisely what is expected at each stage, how their work fits into the overall project and what the wider risk profile of the site (and their part within that) is. At the end of a project, ask: what worked well? What didn’t? How will you change things next time? Learn from each job and apply that wisdom in the future.
- Monitor, monitor, monitor You cannot simply award a works package and then take a hands-off approach. Tempting as it might be, you cannot discharge your legal duties in this way. You do not have to supervise but you must actively monitor. At a very basic level, how else will you know your subcontractor is doing what they promised to do in the way they promised to do it?
With 6 per cent of the national workforce but 33 per cent of work-related deaths, the construction industry remains a major enforcement target for the HSE.
As if to accentuate the point, the HSE’s inspection charges in construction have increased by 26 per cent in the past year. And while enforcement notices appear to be declining in number, construction businesses cannot afford to ignore the courts’ new-found sentencing might.
The courts’ sentencing on environmental matters has long adopted the approach taken in health and safety matters and vice-versa.
With that in mind, I leave you with the words of Mr Justice Mitting in a recent water pollution case in the Court of Appeal: “Starting with turnover but having regard to all the financial circumstances, including profitability…the objectives of punishment, deterrence and the removal of gain must be achieved…this may well result in a fine equal to a substantial percentage, up to 100 per cent, of the company’s pre-tax net profit…even if this results in fines of £100m.
“Fines of such magnitude are imposed in the financial services market for breach of regulations.”
A sobering thought.
Rhian Greaves is legal director at Clyde & Co