Spurred by the U.K.'s Corporate Manslaughter and Corporate Homicide Act of 2007, which goes into effect April 6, companies doing business in the United Kingdom are scrambling to ensure their corporate travel policies and practices conform to duty of care regulations that safeguard their business travelers.
Passed in July, the act applies to all U.K. companies and foreign multinational firms that do business in England, Wales, Scotland or Northern Ireland.
"The law states that organizations whose gross corporate failures in health and safety and duty of care of employees, which lead to the death of individuals, will face prosecution for manslaughter and an unlimited fine," said Paul Tilstone, Institute of Travel Management executive director in London.
"Corporations are already changing their practices because of this law. It's scared people and made them realize that there already is existing legislation in this country mandating duty of care."
The act will apply only to deaths and negligence within the United Kingdom, according to Lucan Herberg, senior lawyer for the U.K.'s Ministry of Justice. Foreign companies doing business in the United Kingdom can be prosecuted only if it is shown that the responsibility for negligence is at the door of senior-level managers "who play a significant role in the whole or substantial activities of the company," Herberg said. If no senior manager operates from the United Kingdom, then that company would not be prosecuted under the act, he added.
[PULL_1]Even with this limited scope, the act could prove more than troublesome for travel buyers both inside and outside the United Kingdom if their firms have branches there, according to Caldwell Associates attorney John Caldwell. "Companies in the U.K. are pushing travel management companies for stronger protection," Caldwell said, "and travel management companies are pushing back, saying they will only accept the responsibility for their own actions and not that, for example, of a car rental company. It's a possible train wreck for travel managers.
"U.S. companies have to be proactive," Caldwell continued. "They ought to toughen up their controls over their policies dealing with travel, such as whether someone should drive a car after a long flight or drive long distances. And, as far as they can, companies should push off as much responsibility for this on travel agencies." Nevertheless, Caldwell said, getting completely around responsibility by outsourcing travel management is not likely to work: "You can't contract away your obligation."
Currently, no law similar to the U.K.'s exists in the United States, nor is there a movement for such duty of care legislation, Caldwell said. Legally defined, duty of care is the obligation to exercise a reasonable degree of prudence and caution while performing any acts that could forseeably harm others. In practice, it at least means that companies should have documentary evidence that they have informed employees of relevant policies, including travel policies, Tilstone said. "If an employee books outside of policy and something happens, a corporation could be liable if that employee says he didn't know what the policy was and should have been informed," Tilstone said.
Implicit duty of care provisions have existed in the U.K. for a long time, but many companies have not paid serious attention to the responsibilities, said Torsten Kriedt, vice president of innovation and intelligence for Advito, the consulting arm of BCD Travel.
Several accidents prompted the legislation and underscored the government's difficulty in prosecuting a corporation for negligent death even when negligence was evident.
"In practice, it proved impossible to get a prosecution under existing law," Herberg said. "It was necessary to identify a single individual in senior management." Under the new law, prosecutors must show merely that a substantial part of the failure within the organization was at the senior level, he said. Even so, the new law is not likely to mean a spate of prosecutions, partly because the threshold for prosecution is "gross negligence" and consent to a prosecution must first be obtained by the relevant Director of Public Prosecutions, Herberg said. "We imagine there will only be a single-digit number of prosecutions each year," Herberg said. "They will be reserved for the worst cases."
Kriedt noted his firm is receiving many calls from clients in the U.K., Europe and the United States asking what it all means. He added that it's "scary" that many big organizations "do not have the proper policies ... They have only a cost focus and not a security focus. Only 10 percent to 20 percent of organizations globally are really implementing such policies."