The Health and Safety Executive (HSE) introduced the Fees for Intervention (FFI) scheme on 1 October 2012. Six months on, what has been the experience of clients?
Under FFI, employers contravening health and safety law must pay the HSE's enforcement costs at the rate of £124-per-hour until the breach has been rectified. Invoices are rendered every two months.
The HSE issued 1,419 invoices in the first two month period (October/November 2012) with a total value of £727,644. Around 70% were for sums between £200 and £500.
This scheme only applies to organisations where health and safety regulation is enforced by the HSE, rather than local authorities.
In October 2010, the Department of Work and Pensions announced that following the comprehensive spending review it was cutting the HSE's grant by 35% over four years from April 2011 - roughly equivalent to £80m. To recoup some of this loss, the Government introduced FFI to recover the costs from businesses failing to comply with health and safety regulation.
The scheme applies to all businesses and organisations inspected by the HSE. Inspections by other regulators, such as local authority environmental health officers, are not affected.
The FFI does not apply to businesses already paying fees to the HSE for their work through other arrangements, such as COMAH charges.
The intention is that the HSE recovers the cost of its regulatory work from duty holders found to be in 'material breach' of health and safety law. It only relates to interventions that occur after 1 October 2012. This will be either from a proactive or a reactive visit where the inspector judges that there has been a material breach serious enough for them to notify the duty holder in writing of that contravention.
What is a material breach?
A material breach is defined in HSE guidance as where an inspector is 'of the opinion that there is or has been a contravention of health and safety law that requires him to issue notice in writing to that effect'; therefore it includes a letter, an Improvement or Prohibition Notice or a prosecution.
Before deciding to notify the duty holder, an inspector must apply the principles of the HSE's Enforcement Policy Statement and its Enforcement Management Model and have regard to guidance issued (all of which can be accessed via the HSE website) to ensure the decision on the level of any enforcement action is proportionate in all the circumstances.
Any notification must make clear which contraventions are considered material breaches.
What have the invoices issued so far covered?
Inspectors have invoiced for the time they have spent identifying the breach, advising on putting it right, investigating, and taking enforcement action. Included is all time spent on carrying out visits, all time on the site during which the material breach was identified, the writing of letters, notices, reports, taking statements and getting specialist reports for complex issues.
Chargeable time runs from the start of the visit when the material breach is identified until it is corrected. Payment is due within 30 days. Non-payment is a civil debt, not a criminal penalty.
Disputes and appeals
There is a dispute procedure in place. If a dispute is raised the enforcement action taken will be reviewed by a senior manager in the HSE. If you are not satisfied with the response, then a further appeal lies to a panel comprising two HSE staff and an independent representative.
If this appeal is unsuccessful, you will have to pay the HSE's time spent in dealing with the dispute at the FFI hourly rate. If the dispute is upheld, the HSE will refund any invoices or part invoices that have been paid.
According to the HSE, appeals relating to the first run of invoices have been in 'single figures'. The appeal's panel has not yet sat.
Are the numbers of invoices issued likely to increase?
The answer must be yes. As we warned the construction industry last year before, the scheme came into force, the annual 'construction industry blitz' that sees HSE inspectors target construction sites was certain to prove expensive.
This year's month-long exercise of unannounced visits between 18 February and 15 March saw 631 enforcement notices served. As inspectors become more familiar with the system the general expectation is that FFI will be implemented more often across the board.
The experience of clients has been very mixed.
A number have accepted there was a breach at the time of inspection and paid the resulting invoice. However, by far the most common complaint has been from clients who believe, often fervently, that prior to FFI an inspector would have given some advice and a few days to put a relatively minor matter right, instead they are invoking FFI immediately.
A further concern has been a lack of consistency in approach in HSE visits to sites operated by large organisations, including differing approaches as to what amounts to a material breach in very similar circumstances.
This is leading to strained relationships between some clients and the HSE, even among those that have traditionally worked in close partnership with the HSE, have very good health and safety records, and a firm commitment to constantly improving performance.
A number of clients have also reported the serving of improvement notices where they believe they would not have received one in the past. That causes a dilemma for them, because the cost of appealing such a notice is not an inconsiderable expense, and just disputing the invoice in such circumstances is no longer an option, as the notice itself will prove the material breach.
The effect of an invoice
An invoice is not a matter of public record, so does not have the same effect on a client's reputation as an enforcement notice.
However, careful consideration should be given to making payment just as expediency for two reasons.
Firstly, invoices will be issued every two months until the inspector is satisfied the breach has been remedied, so paying the first one does not mean there are not more to come and will make it difficult to challenge later ones.
Secondly, it is very important to realise that the HSE has stated it cannot give any assurance that the fact an invoice has been paid will not be used in evidence in any subsequent criminal prosecution - so effectively used as a confession.
In order for an FFI to apply, the breach must be either of a Health and Safety at Work Act 1974 or Regulations made under it. If an invoice is received it should be checked carefully to ensure that any exemptions do not apply. Exemptions, for instance, include the Working Time and Consultation with Employees Regulations.
Actions to be taken
Management must fully understand the consequences of a material breach being found and the issuing of an invoice.
Managers must be made aware of the need to promptly report the circumstances of any visit by the HSE, either by way of a routine inspection or as a consequence of an accident or incident. They should keep careful notes of the circumstances of such inspections in order to be able to be in a position to challenge any suggestion that there has been a material breach and to dispute any invoices received.
Consideration should be given as to the training of managers to conduct such inspections, and reporting systems should be developed and implemented.