Health and Safety Sentencing

Wednesday, 13th April 2016

Companies and individuals can now expect larger fines and longer prison sentences for breaches of health and safety law. Larger companies in particular risk multi-million pound penalties for the most serious breaches of health and safety law. Directors and safety managers must take note of the reforms, and consider what effect such fines would have on their business if they were to be prosecuted and if necessary conduct a review of health and safety procedures.

Background

Reform to the sentencing of health and safety offences has been on the horizon for a long time. A Sentencing Council consultation closed in February 2015, and resulted in the publication of new definitive guidelines in November 2015. The new guidelines came into force on 1 February 2015, and the full title is as follows:

"Health and safety offences, corporate manslaughter and food safety and hygiene offences Definitive Guideline"

The aim of the guidelines is to provide a single reference point for the Court and to clear up historic confusion about how health and safety offences should be sentenced. Whilst there has been guidance before now, magistrates and judges have often been unfamiliar or wary of sentencing these offences, which led to historic inconsistency.

Unfortunately for directors and companies, the new consistency appears likely to result in higher fines across the board.

Context

The new guidelines have come at an important time. Last year, the fining powers of magistrates were effectively unharnessed.

Previously, magistrates were limited to the statutory maximum of £20,000 in most health and safety cases. However, on 2 March 2015, section 85 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (more commonly known as LASPO) came into force.

The effect of this section was the removal of any cap on magistrates' sentencing powers. Any offence (i.e. not just health and safety) which was previous limited by a maximum is now entirely unlimited.

This new freedom, combined with a workable, systematic approach that magistrates can follow is almost certain to raise the confidence with which offences are sentenced. With that greater confidence (and the high "starting point" fines contained within the guidelines) it is almost certain that consistently higher fines will be appearing in the future

Approach

Notwithstanding the above, a number of points can be taken from the guidelines themselves which will be of interest to directors and safety managers.      __________________________________________________________

Firstly, "culpability" plays a key part in the process of calculating a fine, and is divided into 4 categories - "very high, high, medium and low".

In the case of a large company, a change from low to high culpability can raise the starting point of a fine from £35,000 to £540,000 (in the case of a "low harm" offence). Even the move from low to medium culpability can result in a 6 figure increase in starting point when dealing with a "high harm" offence - from £300,000 to £1,300,000 in the case of large company.

Minimising culpability will therefore be important for companies hoping to reduce exposure. A critical difference can be seen between medium and high culpability. High culpability includes "systemic failure within an organisation to address risk to health and safety". Medium culpability, by contrast, includes circumstances where "systems were in place, but these were not sufficiently adhered too or implemented".

On that basis, the very act of having systems in place (even if they are ultimately flawed or lacking) can reduce a company's exposure to health and safety fines dramatically.

Secondly, directors and companies must be aware that fines will now be directly linked to the turnover of the company itself. The guidelines arrange different starting points for companies of varying size - the following table shows the different starting points for various example offences.

Offence type/
Size of Organisation

Low culpability/ harm category 3  Meduim culpability/ harm category 2  High culpability/ harmcategory 1  Very high culpability/ harm category 1 
 Micro Organisation [2]  £1,200  £30,000  £160,000  £250,000
 Small Organisation [3]  £3,000  £54,000  £250,000  £450,000
Meduim Organisation [4]   £14,000  £240,000  £950,000  £1,600,000
Large Organisation [5]   £35,000  £300,000  £1,100,000  £4,000,000

As an example, for even minor offences, large organisation can expect to face fines over 10x the size of those faced by small organisation. Directors of large companies should be aware of the potential sums at stake.

There is a more difficult problem for the directors of "very large" companies - those with a turnover that "greatly exceeds" £50 million. The guideline states that in these circumstances it "may be necessary to move outside of the suggested range to achieve a proportionate sentence".  __________________________________________________________

[2] Turnover of less than £2 million
[3] Turnover of £2-10 million
[4] Turnover of £10-50 million
[5] Turnover of £50 million  __________________________________________________________ 

The guideline therefore contemplates fines in excess of £10,000,000 for very large companies in the most serious case. It remains to be seen how this will be implemented in practice, but a hint can be taken from later in the guideline - "a fine must be sufficiently substantial to have a real economic impact, which will bring home to both management and shareholders the need to comply".

It appears to be possible that a "profit-wiping" fine or worse could be on the agenda for very large companies with repeated health and safety failings.

Finally, the guideline formalises mitigating and aggravating factors that companies should be aware of. There is a strong focus on voluntary remediation after the event, co-operation with the investigation and an acceptance of responsibility. Proper management of the immediate aftermath of an event can be vital in reducing the ultimate penalty. Companies would be well advised to have an emergency process to follow when an incident occurs, which should include establishing the facts, identifying potential short term remediation and taking proper legal and professional advice. 

Importance

It is now clear that health and safety will remain an issue at the top of the corporate agenda. Businesses and individuals cannot afford to risk the potential fines and imprisonment which will be likely under the new regime, and any suggestion of "saving costs" on health and safety should be treated with a great deal of suspicion.

 

Key Contact

Jack Baumgardt

Solicitor

[javascript protected email address]
+44 (0)117 321 8021


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