Outsourcing Health & Safety – a step too far?

Michael Scott & Danielle Lodge question the wisdom of outsourcing health and safety responsibilities

Outsourcing involves the engagement of a service provider to manage and perform services or functions which would normally be performed by the customer in-house. Customers traditionally retain their core functions and look to outsource support services such as IT, cleaning, security and maintenance. Whereas it is relatively straightforward to set out contract terms transferring responsibility for the outsourced service to the service provider, it is much less easy where the customer and service provider both have statutory duties.

Complex legal issues can arise where customers seek to outsource all or part of their health and safety functions. The customer cannot assume that a one-sided contract, with no duty to co-operate or to provide information, which seeks to transfer all health & safety risk to the service provider, through widely worded obligations and indemnities, will allow the customer to escape from its duties under health and safety law.

The customer has a statutory duty to "conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, that persons not in his employment who may be affected thereby are not thereby exposed to risks to their health or safety". Note the key word "undertaking" which was held in R v Associated Octel Co Limited [1995] to include all operations of the customer, regardless of who performed such obligations.

Despite any contract terms to the contrary, inevitably there will be some steps that only the customer can take to manage the risks. The Octel case and other case law, make it clear that the customer's duties under health & safety law do not end when the contract is signed.

The customer's on-going obligations (some of which are set out in the Management of Health & Safety at Work Regulations 1999) will include the duty to co-operate with service providers on-site, to co-ordinate measures taken by those on site to comply with health & safety law and to inform those on site of any risks to health and safety arising out of or in connection with the conduct of the customer's "undertaking". Rather than seek to artificially transfer risk to the service provider, the FM contract should be drafted to encourage communication and co-operation on all health and safety matters.  Both parties need to be fully informed to be able to understand and manage risks and be certain that all reasonable steps are being taken jointly to prevent accidents.

Customers are misguided if they think they can avoid liability under the Act by outsourcing all obligations and then doing nothing and not getting involved. Such approach is likely to lead to conviction as, for any accident, almost certainly there will be some step the customer could reasonably have taken to prevent the risk occurring. Although the point appears as yet untested in the courts, based on case law and the long-established legal doctrine known as ex turpi causa, non oritur actio (from a dishonourable cause, an action does not arise) it seems that, in the event of an accident, the customer would have real difficulties in enforcing any contractual indemnity against the service provider, especially where the customer is itself convicted.

R v Associated Octel Co Limited [1995] I.C.R. 281