On 3 November 2015 the Sentencing Council published the long awaited Definitive Guideline for the Sentencing of Health and Safety, Corporate Manslaughter and Food Safety and Hygiene offences. For the first time, courts in England and Wales will have comprehensive sentencing guidelines covering the most common regulatory offences.
The Guideline continues the recent trend of significant increases in the level of fines being imposed by the courts. For large organisations turning over £50 million or more, the new guideline penalties for health and safety offences envisage fines of up to £10 million and up to £20 million for those convicted of Corporate Manslaughter. For very large organisations, the Guideline suggests increasing these amounts even further.
Purpose of the Guideline
The intention of the Guideline is clear - to ensure a transparent and consistent approach in the sentencing of these types of offence.
Prompted by repeated concerns that the criminal courts lacked consistency in their sentencing approach, often resulting in fines that were disproportionate to the financial resources of offenders and/or undermining the seriousness of offences, the new Guideline seeks to give a clear framework to courts.
The Guideline sets out sentencing ranges that seek to reflect the very different levels of harm and culpability which may arise in these types of offences and sends a stark message that non-compliance will be met with very stiff financial penalties. Whilst the Guideline may be highly unpopular, it is likely to provide a greater degree of predictability that has been lacking for decades.
Summary of the Guideline
The most notable feature of the Guideline is that fines are now intrinsically linked to the turnover of the defendant company. For larger companies, fines may rocket from hundreds of thousands into the millions of pounds and fines measured in the millions will become the norm.
From 1 February 2016, when the court embarks on its consideration of the appropriate financial penalty, it is required to consider a number of separate steps including:
- the seriousness of the offence by determining the risk of harm (low, medium or high) and culpability of an offender;
- the appropriate starting point and category range for an offence, based on a company's turnover, using tables provided in the Guideline. There are five categories of organisation ranging from micro (where turnover is not more than £2 million) to "very large" (where the offending organisation's turnover very greatly exceeds the threshold for large organisations, namely £50 million and over).
- a range of factual elements providing the context of the offence to establish if further adjustment of the fine within the category range is required (the aggravating and mitigating features).
- whether the proposed fine fulfils the objectives of sentencing these types of offences (i.e. reflecting the seriousness of the offence and the financial circumstances of the offender). The court may adjust the fine upwards or downwards, including outside the range, by looking at factors such as profitability and the impact of the fine on the ability of the offender to improve conditions in the organisation.
- any factors which indicate a reduction, such as assistance to the prosecution and a reduction for guilty pleas.
Courts will expect full financial accounts to be served and will consider wider financial information such as details of director remuneration, assets, loans etc to establish a clear picture of the company's financial resources. The Guideline is clear - the fine must be sufficiently substantial to have a real economic impact and bring home to management and shareholders the need to comply with health and safety legislation.
What to do next?
The new Guideline comes into effect on 1 February 2016 and will be applied regardless of the date the offence was committed. Before then, clients should take time to review their existing systems and consider how the importance of safety can be shared in such a way to improve performance so that accidents can be avoided.
Where concerns are identified, an increase in compliance and assurance, consideration of behavioural safety initiatives or culture change programmes, re-investment and re-education in health and safety policies, procedures and training will all be vital to try and ensure that the worst-case scenario is avoided or it if can't be avoided, that at least the company will be able to significantly mitigate the impact of an otherwise eye-watering fine.