Businesses are being urged to restore investment in their Health & Safety (H&S) programmes as a new regime of far larger fines for non-compliance is introduced.
Businesses which may have slashed their H&S training and prevention budgets as part of previous cost-cutting initiatives will now find themselves exposed to penalties five or even ten times higher than under the previous regime.
Safety compliance experts at national law firm Shoosmiths believe that few firms will be aware of the changes which came into effect on 1 Feb 2016.
Fines will be determined by a combination of harm, culpability and company turnover. Fining a company on the basis of its turnover, rather than its profitability, could have a disproportionate impact on companies whose profit margins are already under incredible pressure.
Ron Reid, a partner at Shoosmiths and head of their regulatory and compliance team, commented: 'In the last few weeks before 1 Feb, there was the decidedly unusual spectacle of defence teams pushing to have their H&S cases heard early, before the new sentencing structure came in. There will be plenty more businesses though who I think are blissfully unaware of quite how big an impact this new regime could have on any of them who fall foul of current regulations.'
'The government's intention to clamp down on indiscretions in this space, pursuing both organisations and individuals, is laudable. However, aligning the fines to company turnover - as the new guidelines do - seems like a rather blunt approach to take to the issue. After all, we're talking about turnover here, not profitability.'
'A medium-sized company, according to the guidelines, is defined as having turnover between £10m and £50m. Such an organisation may operate in a very low margin sector but could nevertheless be subject to a fine for corporate manslaughter of between £3m and £7.5m (up from a starting point of £0.5m under the previous guidelines). That's a game-changing amount.'
'Even the more frequent, routine safety breaches which may not have life-changing effects will become more costly affairs. Such a breach, considered to be in one of the lower harm categories, for the same medium-sized organisation will carry a fine starting at £100k. Under the previous guidelines, such an amount was what you expected to be fined for a breach which resulted in death.'
'We should never lose sight of the human cost in many of these most serious cases. Plus, the intention of these harsher penalties is to send an unequivocal message to management and stakeholders that such failures will not be tolerated. Someone has to pay. Nevertheless, the impact of a fine, especially for some of the lesser offences, could, in some cases, be seen as disproportionate.'
For those organisations that do find themselves in court regarding H&S failings, there is the sobering realisation that prosecutions in this space enjoyed a 96% success rate last year. The majority of the legal argument therefore will not focus on guilt and liability - but on placing the offence into the appropriate categories for both harm and culpability. The difference in the size of the fine from one category to the next could be significant.
Senior individuals should be aware too. Between 1975 and 2009, just eleven people were imprisoned or given suspended sentences relating to H&S breaches. Since 2009, when the legislation was last tweaked, 157 people have been sentenced, including 26 alone in the six month period up until October 2015.
Reid continued: 'There is no doubt that the government is doing a fine job of making it perfectly clear that H&S is not something to be trifled with. The new regime represents a seismic change in terms of the financial penalties - and there is no accounting provision for being able to put funds aside for the possible payment of future fines.'
'The best way to approach this topic is simply by reversing the recent trend of diminished investment in H&S. Any organisation who thought that paying the occasional fine was a better option than investing in prevention will need an urgent rethink.'