Compliance 2007 : in a nutshell

This article appeared in Project Scotland in February 2007. Tom Stocker and Robyn McIlroy from Pinsent Masons give their views on some of the major priorities for the industry in 2007.

As if the construction industry didn't have enough to grapple with last year, 2007 will see big changes in the areas of health and safety, employment and tax laws with the introduction of new corporate homicide laws, CDM regulations, the new Construction Industry Scheme, enhanced maternity rights and legislation to increase paid holiday entitlement.

The Corporate Manslaughter and Corporate Homicide Bill ("The Bill")

2007 is likely to be the year that the corporate homicide laws are changed to make it easier to prosecute companies for work related fatalities. An organisation will be guilty of corporate homicide if a gross management or organisational failing causes a person's death. The new offence will apply to management failings by an organisation's senior managers.

A gross failure is defined as conduct which "falls far below what can reasonably be expected of the organisation in the circumstances".  In assessing whether there has been a gross failure, the law will require a consideration of whether the organisation complied with health and safety legislation and guidance.

Going forward, most work related deaths will be investigated as corporate homicide cases. From a practical perspective, organisations should check their health and safety policies to ensure they are up to date and do not represent a "hostage to fortune" in the event of a work related death.

Construction Design and Management Regulations 2007 ("CDM2007")

For the construction industry, it will be particularly important to comply with CDM2007 which comes into force on 6 April 2007. CDM2007 substantially increase the responsibilities on many parties to a construction project, in particular the role of the client and the "co-ordinator". Adequate resources and time must be given to prepare for and plan the carrying out of the construction works. Competency is an important principle; no person should be appointed and no person should accept an appointment unless they are competent.

The principal contractor will need to ensure that the contractors they engage are competent and adequately resourced and to plan, manage and monitor the construction phase in a way that ensures, so far as is reasonably practicable, it is carried out safely and without risk to health.

New Construction Industry Scheme ("CIS")

From 6 April 2007 the introduction of the new CIS under which certificates and vouchers will be no longer required, annual returns will cease and instead contractors will need to make a monthly return to HMRC showing payments made to all subcontractors and declaring that none are "employees". HMRC says that the first thing that a contractor will have to do when taking on a worker is to decide whether they are an employee or are self-employed. Failure to ensure that monthly status declarations are correct could lead to disputes with HMRC and possibly backdated tax liabilities.

The Work and Families Act 2006

This will introduce a range of family friendly measures from 6 April 2007 including entitlement to nine months Statutory Maternity Pay, Statutory Adoption Pay and Maternity Allowance;  the introduction of 'Keeping in Touch' days so that where employees and employers agree, a women on maternity leave can go into work for a few days, without losing her right to maternity leave or a week's statutory pay and the introduction of the right for carers to request flexible working arrangements.

Holidays

Presently the Working Time Regulations 1998 allows employers to include public holidays in the statutory entitlement to 20 days holiday. That will change this year with an increase in minimum holiday entitlement from 20 days to 24 days from 1st October 2007, and from 24 to 28 days on 1st October 2008. This will require employers who currently include the eight bank holidays as part of workers' 20-day annual leave entitlement  to add the eight bank holidays to the 20-day annual leave entitlement. The DTI estimates that 6 million workers will benefit from this change.

In light of the significance of these legislative developments it would be sensible for organisations to review and where relevant update their health and safety and employment policies and procedures. The updating of policies and training of staff need not be expensive or distracting, but it is essential.

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