The Health and Safety Executive (HSE) launched a three month consultation on proposals to extend the scope of cost recovery from businesses that are found to be in material breach of health and safety laws.

The HSE states in its consultation paper that “it is reasonable that duty holders that are found to be in serious material breach in standards – rather than the taxpayer – should bear the related costs incurred by the regulator in helping them put things right.”

A material breach has been defined within the consultation as “when, in the opinion of the inspector, there has been a breach of health and safety law which requires them to make a formal intervention.”

Under the proposals the HSE will be under a statutory duty to recover costs from businesses where the HSE has had to formally ‘intervene’ in writing, such as through an improvement or prohibition notice, due to a material breach.

The proposed hourly fee for intervention of £133 per hour will be used by all staff working on interventions. The estimated average cost for inspection which results in a letter is estimated to be £750, but this could be thousands in larger cases.

The proposals at present only refer to the HSE’s cost recovery and do not require local authorities to recover their intervention costs. However, this may change depending on what feedback the HSE receives to the consultation paper.

It should be noted that only where there has been a serious material breach will the duty fall on the HSE to recover costs, not where the breach has been a technical non-material one or where it is held that there has not been a breach at all.

Any costs beyond the formal intervention, such as if a prosecution follows, will not be affected by the new proposals, with such costs to be recovered through the courts as usual.

The HSE has stated its intention to invoice businesses for their costs and for payment to be made within 30 days. Failure to make payments on time will result in the usual commercial recovery process, including court proceedings to recover costs if necessary. However, in order to assist with cash flow the HSE intends to invoice on a regular basis, rather than one large invoice after an intervention has taken place, but will then refund or credit a business for any fees paid if it is later held that there has not been a serious material breach.

The HSE would deal with any queries and disputes regarding costs to be recovered by setting up a resolution procedure. However, where the dispute is not upheld, the HSE would seek to recover its costs for handling the dispute.

The new proposals will apply to small businesses and new start-ups, in spite of the three year moratorium on new regulations announced in March 2011, although only in situations where material breaches have put any person’s health and safety at risk, including employees.

Responses to the consultation were accepted up until 14 October 2011. It is intended that the new regime will come into place on 6 April 2012, subject to successful passage through Parliament.

On a practical point, if costs recovery becomes law, businesses will need to be mindful of their dealings with the HSE on a routine level. A routine inspection/visit could become costly and therefore the way in which routine visits are managed is likely to become a much more involved process on the part of senior managers. The aim will be to avoid a finding of “material” breach which may require more robust representations being made at an early stage. Businesses will also want to be mindful of the investigation process and what is involved on the part of the HSE in order to successfully challenge any costs recovery.

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