New sentencing guidelines published on 3 November aim to ensure a consistent, fair and proportionate approach to sentencing organisations or individuals convicted of corporate manslaughter, health and safety and food safety and hygiene offences.
Offences that come under the guidelines are very varied and could include a building firm that causes the death of an employee by not providing the proper equipment for working at height, a restaurant that causes an outbreak of e. coli poisoning through unsafe food preparation, a manufacturer that causes injury to a new worker by not providing training for operating machinery or a gas fitter whose sub-standard work leads to the risk of an explosion in someone’s home.
The Sentencing Council's guidelines ensure that, for the first time, there will be comprehensive sentencing guidelines covering the most commonly sentenced health and safety offences and food safety offences in England and Wales. Until now, there has been limited guidance for judges and magistrates in dealing with what can be complex and serious offences that do not come before the courts as frequently as some other criminal offences.
The introduction of the guidelines means that in some cases, offenders will receive higher penalties, particularly large organisations committing serious offences - such as when an organisation is convicted of deliberately breaking the law and creating a high risk of death or serious injury. It is not anticipated that there will be higher fines across the board, or that they will be significantly higher in the majority of cases to those currently imposed.
According to the Sentencing Council, the increase in penalties for serious offending has been introduced because in the past, some offenders did not receive fines that properly reflected the crimes they committed. The Council wants fines for these offences to be fair and proportionate to the seriousness of the offence and the means of offenders.
In order to achieve this, the guidelines set out sentencing ranges that reflect the very different levels of risk of harm that can result from these offences.
In a statement, the Council said: "Corporate manslaughter always involves at least one death, but health and safety offences can vary hugely; they may pose the risk of minor harm or lead to multiple fatalities. Food offences are also wide ranging. They could involve poor hygiene or preparation standards in a restaurant kitchen that put customers at risk of illness or that cause fatal food poisoning.
"The sentencing ranges also take into account how culpable the offender was. This could range from minor failings in procedures to deliberately dangerous acts. While prison sentences are available for individuals convicted of very serious offences, most offences are committed by organisations and therefore fines are the only sentence that can be given.
"The guidelines use the turnover of the offender to identify the starting point of the fine. Turnover is used as this is a clear indicator that can be easily assessed."
However, turnover is never the only factor taken into account. The guidelines require the court to 'step back', review and adjust the initial fine if necessary. It must take into account any additional relevant financial information, such as the profit margin of the organisation, the potential impact on employees, or potential impact on the organisation’s ability to improve conditions or make restitution to victims. This means sentences will always be tailored to the offender’s specific circumstances. Fines may move up or down or outside the ranges entirely as a result of these additional mandatory steps.
Legislation requires that any fine imposed must reflect the seriousness of the offence and take into account the financial circumstances of the offender. All factors being equal, a similar level of fine given to a large, wealthy corporation on the one hand and a sole trader with a modest turnover on the other would be unfair, just as the same speeding fine given to a premiership footballer and someone on an average income would not achieve the same level of punishment or deterrence.
The UK’s record on worker fatalities is good, but where such offences are committed, the Council believes fines should be available which reflect the seriousness of the offence. As well as causing fatalities, health and safety offences may risk or cause a wide spectrum of injury and illness, including a life-changing disability or health condition for victims.
While addressing remedial action with offenders is the responsibility of the Health and Safety Executive rather than the courts, the guideline does provide for remedial orders to be made by the court in addition to or instead of punishment in cases where they may be appropriate. The guideline also includes a range of mitigating factors which allow for voluntary positive action to remedy a failure on the part of offenders to be reflected in sentences.
Sentencing Council member Michael Caplan QC said: "These guidelines will introduce a consistent approach to sentencing, ensuring fair and proportionate sentences for those who cause death or injury to their employees and the public or put them at risk. These offences can have very serious consequences and it is important that sentences reflect these."
Rod Ainsworth, director of regulatory and legal strategy at the FSA said: "We welcome these guidelines. They will ensure that there is consistency in sentencing for food safety and food hygiene offences across the country. They will also ensure that offenders are sentenced fairly and proportionately in the interests of consumers."
Helen Devery, national head of regulatory at law firm BLM, added: "The new guidelines published today by The Sentencing Council have been highly anticipated and set out a dramatic increase fines for all levels of health and safety convictions. Most notably there will now be a stepped approach to sentencing following a comprehensive assessment of the incident including culpability, harm, size of the offending organisation, potential financial implications following determination of the fine and whether the fine will have an impact on third parties, i.e. employees.
"Interestingly, the Council has also stated that it will take a new approach to managing concerns over fines deemed too low in the past and ‘it will consider the financial position of the offending company and may have to, where appropriate, move outside the relevant fine band…’. Offenders can expect to see a higher starting point and range of sentencing under the new guidelines, particularly for those involving high culpability and harm. The starting point for micro-organisations for the most serious offences is £250,000 rising to a maximum of £400,000. Large companies can expect a new minimum fine of £4million - £10million for serious offences.
"The impact of these guidelines will be closely monitored and we are likely to witness much more scrutiny around these cases. Businesses need to be prepared to manage the impact of these increases if that is indeed possible and to work harder than ever to avoid incidents and their impact on their people, productivity and profits.”
Jonathan Grimes, a partner specialising in corporate manslaughter, health & safety law at Kingsley Napley LLP, commented: "The new guidelines send a clear message to company directors that they need to take their health and safety obligations seriously or risk facing significant penalties. From February 2016, fines will be calculated based on company turnover 'to have a real economic impact' according to the Sentencing Council.
"The amounts we are talking about represent a massive hike in the fine levels we have seen to date. Of course, the Sentencing Council wants the new regime to act as a further deterrent to companies in the habit of cutting corners or operating lax procedures. I hope this is the case. My fear is that in practice such harsh penalties may well encourage corporate defendants to contest allegations where previously they would have pleaded guilty. This would be an unfortunate and doubtless unintended consequence.”
Stuart Ponting, litigation & regulatory partner at DLA Piper, said: "This is, without question one of the biggest changes to health and safety enforcement that we have seen in decades. It will radically change the way that companies are held to account and they simply cannot afford to ignore it.
"For the first time, fines will be formulaically linked to their turnover meaning that for the larger companies, their fines will rocket from hundreds of thousands into the millions and fines measured in the millions will become the norm.
"With the new guidelines, penalties for corporate manslaughter can now be expected to reach as high as £20 million and it may well be that a company facing this level of financial and reputational damage struggles to ever repair the harm done.
"The impact for businesses who do not comply is stark. All businesses must now re-invest and re-focus on health and safety and reinvigorating their compliance and assurance programmes is a good starting point."
Kevin Elliott, solicitor and head of Eversheds LLP's corporate compliance team, commented: "It is clear the courts are being encouraged to ensure that fines are sufficiently substantial to have real economic impact. This is intended to bring home to both shareholders and management the need to have a safe working environment. Under these guidelines the penalties for an established shortcoming will be huge and in line with the kind of penalties financial institutions have had imposed on them following financial misdemeanours."
Mike Appleby, partner at Bivonas Law, is a leading health and safety lawyer. He asserted: "Under the new guidelines the court will first determine the offence category by reference to ‘culpability’ and ‘harm’. The range of fine to be imposed will then be assessed by reference to the company’s size based on its turnover.
"Fines for medium and large sized companies are set to rise dramatically for corporate manslaughter and health and safety offences. Over the last couple of years the Court of Appeal has been clear that it believes larger fines are needed to bring the message home to directors and shareholders.
"In recent years there has been a growing trend to investigate the personal accountability of senior individuals. Boards will be concerned that for convicted directors and senior managers imprisonment is a real possibility if there has been a fatality.
"Because of the high stakes expect more trials and fact finding hearings where the level of guilt is disputed. This will lead to a greater scrutiny of prosecution evidence than has occurred in the past.
"Now is a good time for Boards not only to review how they manage health and safety risk but also to review their procedures for responding to a criminal investigation and ensuring they get the right legal advice.”
Neal Stone, deputy chief executive of the British Safety Council, said: "This guideline has been eagerly awaited since the consultation closed at the beginning of the year. We believe that this definitive guideline is clear in presenting the business case for good health and safety. It will help to concentrate minds with the argument that it is better to prevent injury and ill health than face the costs associated with getting it wrong.
"The British Safety Council fully supports the principle underlying criminal sanctions set out in the guidelines, that is, penalties should reflect the culpability of organisations and individuals found to have been in breach and the harm caused.
"However, our concern relates to the relatively low level of awareness among businesses of these new guidelines and the possible outcomes in relation to sentencing, and specifically in relation to individuals potentially receiving custodial sentences. In this respect, ensuring that executive and senior managers are sighted and aware of these liabilities is an important element not only in relation to good governance but also in relation to the opportunity to gain understanding of what good health and safety means to your organisation and the people working within it.
"The real test is whether the significant increase in penalties will contribute to greater compliance and a reduction in workplace injuries and ill health occurrences. Our role is to assist organisations to achieve compliance and this will be our focus.”
Following publication, the guidelines will come into force in courts on 1 February 2016.