New guidelines for sentencing of Health & Safety offences and Corporate Manslaughter New guidelines for sentencing of Health & Safety offences and Corporate Manslaughter New sentencing guidelines push for tougher approach to sentencing for Health & Safety and Corporate Manslaughter, with the potential for fines to be in the millions. On 3 November 2015 the Sentencing Council published the new sentencing guidelines ( the Guidelines ) for Health and Safety offences, Corporate Manslaughter and Food Safety and Hygiene offences. The Guidelines will come into effect from 1 February 2016. The Guidelines reflect a tougher and more methodical approach to sentencing by the Sentencing Council, resulting in the imposition of higher fines for serious offences. There are a number of parallels in the Guidelines to the sentencing guidelines for environmental offences published in February 2014 which has resulted in far more onerous fines on organisations who are in breach of environmental offences and a strict attitude by the court when sentencing. The Guidelines - Health & Safety Offences The Guidelines impose higher fines and a new approach to sentencing for offences under sections 33(1)(a) and 33(1)(c) of the Health and Safety at Work Act 1974 ( the Act ). Section 33 creates an offence for organisations and individuals who are in breach of their health and safety duties to their employees under sections 2 to 9 of the Act. The Guidelines set out a similar approach for offences committed by individuals and organisations. The below focuses on the approach to offences committed by organisations. Under the Guidelines the process for sentencing is taken in the following steps: Step 1: Determining the offence category using culpability and harm factors; Step 2: Starting point and category range of fine based on the organisation s annual turnover plus aggravating and mitigating features of the offence; Step 3: Checking whether the fine based on turnover is proportionate to the overall means of the offender; Step 4: Considering other factors that may warrant an adjustment of the proposed fine; Step 5: Considering any factors which could give rise to a reduction/discounted sentence as a result of assistance to the prosecutor or investigator; and Step 6: Reducing the proposed fine for guilty pleas.
Step 1 The judge will first assess the offence category by assessing the culpability and then harm caused. Culpability is assessed as either very high, high, medium or low: Very high High Medium Low Deliberate breach of or a flagrant disregard for safety law; Offender fell far short of the appropriate standards or there was a serious or systematic failure within the organisation to address risk to health and safety; Covers situations where systems were put in place to address risks but these were not sufficiently adhered to or there was a failure to comply with the appropriate standards; and Offender did not fall short of appropriate standard (for example no warning/circumstance indicating a risk to health and safety) or failings were minor and occurred as an isolated incident. The judge will then consider the seriousness of the harm risked i.e. what risk of harm was created by the offence, not the outcome. There are four categories of harm (numbered 1 to 4) which are assessed by considering the seriousness of the harm risked and the likelihood of the harm occurring. The seriousness of harm risked is split into three levels, the highest being level A, where the result is death or lifelong physical or mental impairment to less serious harm. The judge will then consider the likelihood of that harm occurring (high, medium, low). To finalise the level of harm the judge will also consider two additional factors, namely, whether the offence exposed a number of workers or members of the public to the risk of harm and the whether the offence was a significant cause of actual harm. If the court considers that either factor applies then this may move the offence into a higher harm category. Step 2 The size of the fine imposed is then established by reference to the size of the organisation based on turnover or equivalent and the culpability and harm categories as determined under step 1. The Guidelines split organisations into categories of size: Large (over 50m turnover); Medium ( 10m - 50m turnover); Small ( 2m - 10m turnover); and Micro (less than 2m turnover). There is also a Very Large category for organisations whose turnover significantly exceeds the 50m turnover threshold in this scenario judges have been advised that it may be necessary to move out of the Large organisation ranges to ensure the sentence is proportionate. Once the size of the organisation is determined, the judge will refer to the relevant fine table where the impact of the culpability and the harm category is put in financial terms. The tables give a starting point and category range. These tables are detailed and can be found using this link. By way of an example, for a Large organisation fines range from a starting point of 10,000 with category ranges of 3,000 to 60,000 for low culpability and harm category 4 offences, up to a starting point of 4 million with category ranges of 2.6 million to 10 million for very high culpability and harm category 1 offences.
The size of the fine is then adjusted on the basis of aggravating factors and mitigating factors. Aggravating factors of note are previous similar convictions, a poor health and safety record, cost cutting at the expense of safety and failing to obtain or falsifying proper licences. The Guidelines stress that previous convictions are likely to result in a substantial upward adjustment of the fine. For Large companies this can push the fine over the 10 million mark. Mitigating factors include cooperation with the investigation and voluntarily taking steps to remedy the situation as well acceptance of responsibility. Step 3 The aim of the Guidelines is that any fine must be sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation. For this reason the judge will take a step back at this stage and consider whether the fine is proportional or whether it should be adjusted (up or down) to achieve this aim. Step 4 Other factors that may give rise to an adjustment include those which may adversely impact with health and safety law, such as the organisations inability to improve health and safety conditions because of the fine. Steps 5 and 6 These are procedural considerations as to whether there should be an adjustment to a fine under sections 73 and 74 of the Serious Organised Crime and Police Act 2005, the general rule of law regarding assistance given by an offender and section 11 of the Criminal Justice Act 2003 and the associated Guilty Plea guideline. The Guidelines - Corporate Manslaughter For assessing the size of fine for corporate manslaughter the Guidelines set out a similar, albeit, simpler approach for assessing the offence. For assessing harm and culpability the court will consider four questions: 1. How foreseeable was serious injury? For example were there any near misses in similar circumstances. 2. How far short of the appropriate standard did the offender fall? 3. How common is this kind of breach in this organisation? For example, was it an isolated incident or indicative of a systematic failure. Widespread non-compliance is indicative of a more serious offence. 4. Was there more than one death or a high risk of further deaths, or serious personal injury in addition to death? Where the responses to the above questions indicate a high level of harm or culpability the offence will be classed as category A; if the responses indicate a low level of harm or culpability the offence will be classed as category B. Once the harm and culpability category is determine, the Judge will then determine the starting point and category range for the fine based on the turnover of the organisation (as per step 2 above). For a Large organisation, category A offences have a starting point of 7.5 million with a range of 4.8 million to 20 million. Category B offences have a starting point of 5 million with a range of 3 million to 12.5 million.
For Micro organisations, a category A offences have a starting point of 450,000 with a range of 270,000 to 800,000. Category B offences have a starting point of 300,000 with a range of 180,000 to 540,000. The size of the fine will be adjusted on the basis of the aggravating and mitigating factors mentioned above. There is one key additional mitigating factor for Corporate Manslaughter which is other events beyond the responsibility of the offender. However, this does not include actions of victims as offenders are required to protect workers who are neglectful of their own safety. Steps 3 to 6 of the section 33 offences Guidelines are then followed for Corporate Manslaughter offences. Proportionality Step 3 to the Guidelines for both Health and Safety offences and Corporate Manslaughter requires the further test of proportionality. The proportionality test in the Guidelines is the same wording as the proportionality test in the Environmental Offences guidelines, which came into force in July 2014. The impact of the proportionality test has been significant, especially for Very Large organisations that are outside the recommended range of fines. In a recent Court of Appeal decision in R v Thames Water Utilities [2015] EWCA Crim 960 the Court ruled, on the basis of the proportionality wording, that if necessary the fine imposed must be measured in the millions of pounds and that the court should impose a penalty of up to 100% of the offending organisation s pre tax profit. This is in order to bring home the message to the directors and shareholders of the seriousness of their offence and ensure that they take effective measures to reform themselves. The Court stressed that this approach should be taken with repeat offenders. This edict gives rise to the significant likelihood of fines in appropriate circumstances of being considerably over 10 million in order to ensure future compliance with the Health and Safety and Corporate Manslaughter legislation. Organisations must be aware that a fine will be handed down even if it puts the offending organisation out of business. This is considered an acceptable consequence under the Guidelines in appropriate circumstances. This demonstrates the severity of the new approach taken by the Sentencing Council in the Guidelines. Compensation and Ancillary Orders For both section 33 offences and Corporate Manslaughter, there are a number of additional actions and orders which the judge can hand down in addition to, or in same cases, in place of a fine. The judge may impose a remedial order on an offending organisation and the offender ought to, by sentencing, have remedied any specific failings. If the offending organisation does not sufficiently remedy their failings then they will be deprived of significant mitigation. The judge may also place a compensation order for those who have suffered a loss or damage because of the offence. However, the Guidelines note that in the vast majority of cases this will be dealt with in the civil courts. For Corporate Manslaughter only, the Guidelines state that the court must consider a publicity order as a deterrence and punishment for the offending organisation. The Guidelines require that a public announcement should be made in order that the organisation s shareholders or in the case of a public body the local people are aware of what occurred.
Comment Whilst under the previous sentencing guidelines health and safety offences and Corporate Manslaughter would result in six figure fines, under the new Guidelines fines in the millions will be commonplace. Organisations must be aware that a fine will be handed down even if it puts the offending organisation out of business. This is considered an acceptable consequence under the Guidelines in appropriate circumstances. This demonstrates the severity of the new approach taken by the Sentencing Council in the Guidelines. For example, the recent fine handed down to Baldwins Crane Hire Limited following their prosecution for corporate manslaughter following the death of one of their employees in August 2011. The company was sentenced to a fine of 700,000. It was also ordered to pay all CPS costs and half of the Health & Safety Executive s costs totalling 200,000. Baldwins last reported turnover was 19.3 million, putting it in the medium size category. Under the new guidelines and on the facts of the case, if sentenced after 1 February 2016 the fine is likely to have been higher (save for any mitigating arguments). The offence category would likely be Category A, meaning a starting point for the fine of 3 million and a range of 1.8 million to 7.5 million. Even if a Category B offence, the starting point would be 2 million, with a range of 1.2 million to 5 million. The Guidelines are however, more complex and there is a concern that judges will not be able to correctly implement the necessary steps for determining the appropriate fine and/or understand the nuances to determine the harm and culpability categories. Further, these Guidelines may alter prosecutors approach to health and safety and Corporate Manslaughter prosecutions. They will need to obtain and understand information on an organisation s financial position and are likely to seek cooperation from the offender organisation. There may also be the opportunity for more involved plea bargaining to give greater certainty of the potential range of fine by, for example, agreeing the offence category and/or size of the organisation for the purposes of determining the starting point and fine range (although, of course, the judge may disregard such agreements). The approach that should be taken by organisations is a pre-emptive one to minimise any possibility of a Health & Safety incident at the workplace. To do this, organisations must ensure that they fully comply with the appropriate standards and possess the necessary licensing and training across their projects. Of particular relevance for the construction industry is the new Construction (Design & Management) Regulations which came in force in April. Organisations will need to check that they are fully compliant with the requirements under the regulations. As with environmental offences, the court will look to see if there is evidence from the board of directors demonstrating that the organisation has taken steps to secure the overall improvement of a organisation s compliance with health and safety legislation. In the unfortunate event that a Health & Safety incident of work occurs, organisations need to act in a way to mitigate the damage caused. This includes self reporting to the HSE, co-operating with any investigation and accepting, where relevant, responsibility for their failures. January 2016 For further information please contact: Sheena Sood Partner T: +44 (0) 20 7469 0402 E: s.sood@beale-law.com James Vernon Associate T : +44 (0) 20 7469 0424 E : j.vernon@beale-law.com