Health and Safety – Sentencing – Corporations
Companies will face fines of up to £20,000,000 and jail terms of two years under strict new sentencing guidelines which were published on 3 November 2015 and come into force next year.
Courts have had the power to impose unlimited fines for breaching health and safety regulations for some time, but judges have had to rely on case law rather than sentencing guidelines when determining the appropriate level of financial penalty. As a result an inconsistent pattern of sentencing has emerged. In order to regularise the approach being taken by judges the Sentencing Council have published new sentencing guidelines for all health and safety, corporate manslaughter and food safety offences.
The levels of fines which are recommended for serious cases are truly staggering. Corporate manslaughter convictions involving large businesses will attract fines between £4,800,000 and £20,000,000.
The guidelines are available to download, but what I have set out below is my view of the approach that would be taken in three typical scenarios.
Scenario 1: A construction site is set up renovating an old mill building. The company carrying out the works is a very large business with a turnover of £500m, it employees several sub-contractors on site and a site manager. HSE inspect the site and serve an improvement notice due to the inadequacy of protection for workers operating at height. In spite of this, work continues in the same fashion and a worker falls to their death. An HSE investigation concludes that the death was preventable and that had the company complied with industry standards or the improvement notice the death would not have occurred.
In scenario 1, the judge would be entitled to take the view that the harm caused was at the top end of the scale and the risk of the harm occurring was high (Category 1). The business turnover would place it in the “Large Corporation” category. The starting point for the fine would be £4,000,000.
Scenario 2: A factory worker loses a hand in a machine which was being operated properly, but which had been incorrectly reassembled following a routine service. At the time of the accident the business was wholly unaware of the defect and it would have not been apparent to any person using the equipment. The company has a good health and safety record. The turnover of the business is £20m.
Scenario 3: As per scenario 2, but the business is aware of the defect and orders production to continue until the machine is repaired.
In scenario 2, the judge would most likely conclude that due the unforeseen nature of the accident the harm caused would be towards the lower end of the scale (Category 4). The level of turnover would place the business in the Medium Category. The starting point would be £3,000.
In scenario 3, the judge would conclude that there had been a flagrant breach of health and safety legislation despite a warning. Although the injury is the same as scenario 2, the level of culpability would be such that the starting point could be a minimum of £450,000 or even £800,000 if the judge felt that culpability was ‘very high’.
The scenarios demonstrate the effect of culpability upon the level of fine. Any business ignoring health and safety regulations, or failing to respond to warnings will be hit with a significant financial penalty, in this case a rise of up-to £797,000 for the same injury.
It should not be forgotten, that in addition to the unlimited fines, the Court has the power to imprison responsible persons for up to two years. The new guidelines set out the starting points for individual directors and employees.
In scenario 1, a responsible person, such as a site manager, could expect a prison sentence of 18 months custody. In scenario 2, a small fine would be appropriate and in scenario 3, 12 months custody would be the starting point for those responsible.
The new guidelines will have serious implications for businesses and they should be alert to the fact that tougher sentencing is definitely on the way. The sentencing council indicates that fines should be large enough to have a real economic impact “which will bring home to the offending organisation the importance of achieving a safe environment for those affected by its activities.”
All businesses should concentrate on implementing adequate health and safety measures that both protect their workers and the public from injury, and their business from exposure to financial and custodial penalties. The key is evidencing compliance and demonstrating that effort has been made to comply with regulations and industry standards.