Legal spotlight - May 2021

IN DECIDING an appeal against sentence handed down to a not for profit organisation for breaching section 2 of the 1974 Health and Safety at Work etc Act, the Appeal Court held that it was not unreasonable to increase a fine from £1 million to £2 million to reflect the size of the organisation in order to make the fine proportionate to the offender's means and for the statutory sentencing purposes, before applying aggravating and mitigating factors.

The Appeal Court was asked to reconsider the £600,000 fine imposed on Places for People Homes (PPH), after 5 workers suffered chronic vibration related injuries. PPH was found to have failed to ensure, so far as was reasonably practicable, the health, safety and welfare of its employees in relation to the risks associated with the use of vibrating tools and equipment at site service locations over a five year period. It failed to carry out a sufficient risk assessment; to provide suitable health surveillance for its vibration tool operatives and to provide suitable instruction or training on the safe use of such tools. Concerns raised by operatives were also ignored.

The Sentencing Council’s definitive guideline for health and safety offences (the Guideline) sets out a staged approach to determining an appropriate fine, with starting points and sentencing ranges linked to an organisation’s turnover. In this case, financial information produced disclosed that PPH’s turnover was in the region of £290 million. In terms of the Guideline, a large organisation is one with a turnover in excess of £50 million.  It provides, however that:

“Where an offending organisation's turnover or equivalent very greatly exceeds the threshold for large organisations, it may be necessary to move outside the suggested range to achieve a proportionate sentence."

At step one of the Guideline the judge determined the case to fall into ‘high culpability: harm category 3’, thereby providing a starting point of £540,000 for a large organisation. She raised the starting point to £1m to reflect the number of workers exposed to the risk of harm as well as the actual harm caused to the five named individuals. At step two, the judge doubled the starting point to £2 million to reflect the fact that the organisation’s turnover, at nearly six times higher than the £50 million threshold, “significantly exceeded” it. This took the starting point £550,000 beyond the range for a high culpability: harm category 3 case. She then reduced the starting point to £1.25 million to acknowledge the extensive mitigating factors.

In addressing step three, the judge was satisfied that the fine was proportionate to the overall means of the offender. However, in applying step four of the Guideline, which requires the court to consider factors which may warrant adjustment of the proposed fine, the judge accepted that there would be an adverse impact on the people who were the beneficiaries of PPH and so she further reduced the fine to £900,000. The one third discount for the guilty plea brought the ultimate fine down to £600,000; a penalty which PPH deemed to be manifestly excessive.

The Appeal Court confirmed that while there is no “bright dividing line” between “large” and “very large” organisations, in most cases it should be obvious. Where that is the case, the Appeal Court said that the extent of the increase will be guided by the relevant sentencing principles, including those of making the fine proportionate to the means of the organisation; sufficiently large to constitute appropriate punishment; and sufficient to bring home to the management and shareholders the need for regulatory compliance. In essence, the larger the company the greater the fine may need to be to achieve these aims, although the “extent to which any increase is required will depend upon the particular circumstances of each individual case and it is not something for mechanistic extrapolation”.

In this case, an uplift from £1million to £2 million was deemed appropriate.

In the particular circumstances of this case the Appeal Court agreed that the fine should be reduced; the level of fine would adversely impact on PPH’s ability to provide support to the vulnerable and this was not given sufficient consideration by the sentencing court. However, the case demonstrates the willingness of the courts to find that an organisation is ‘very large’, and to double the starting point of a seven figure fine, where the annual turnover is lower than we have seen in other cases of this kind. Crucially too, the Appeal Court did not put a cap on this and in some cases an even greater multiplier may be required to ensure the aims of sentencing are achieved.

Organisations cannot ignore this; the public and political appetite to hold organisations to account for their safety and health failings continues to grow. 

Kevin Bridges is a partner and head of health and safety at Pinsent Masons. www.pinsentmasons.com