February 2016 will see the most fundamental change in health and safety enforcement for over 40 years, since the Health and Safety at Work Act came into force in 1974.
A new sentencing Guideline for health and safety offences and corporate manslaughter sets out a nine-step codified approach tied to corporate turnover and will inevitably herald huge increases in fines for medium and large businesses. This will apply to all health and safety offences committed by companies and individuals as well as to corporate manslaughter offences sentenced in the courts from 1 February 2016 onwards.
We set out below details of the new approach and provide practical comment on the likely implications for companies and individuals facing health and safety and manslaughter prosecutions
Size of company/fine ranges
There are now five categories of business ranging through micro, small, medium and large to very large.
A large company is one that has a turnover or equivalent of £50 million and over. A very large organisation is one with a turnover or equivalent that “very greatly exceeds the threshold for large organisations” and where it may be necessary to move outside the suggested fine range to achieve a proportionate sentence.
Fines for health and safety offences by large companies will generally fall within a wide range of fines from £6,000 to £3 million, with starting points for each of the categories ranging from £10,000 to £1.2 million depending on the degree of culpability and harm.
The fine ranges within which the courts may deviate from the starting points tend to span from around half the relevant starting point, as a minimum, to three times that starting point.
For example, the starting point for a large company considered guilty of a high culpability, harm category two offence (see below) would be £1.1 million, with a possible range from £550,000 to £2.9 million.
As can be seen, the potential to increase fines above the starting point greatly exceeds the potential to move in the opposite direction.
Degree of culpability
There are four categories of culpability:
- Very high: deliberate breach of or flagrant disregard for the law.
- High: falling far short of the appropriate standard e.g. failing to put industry standards in place, ignoring concerns raised, failing to make changes following an incident, allowing breaches to continue for a long time. Serious and/or systemic failure within the organisation to address risks to health and safety.
- Medium: falling short of the appropriate standard in a manner that falls between high and low categories e.g. systems were in place but these were not sufficiently adhered to or implemented.
- Low: falling not far short of the appropriate standard e.g. significant efforts were made to address the risk but were inadequate on this occasion, there was no warning/circumstance indicating a risk to health and safety. Failings were minor and occurred as an isolated incident.
Most prosecution case summaries we encounter argue that our clients have:
- Fallen far below the appropriate standard.
- Failed to take heed of (often extremely arcane) “industry guidance”.
- Allowed breaches to continue for a long period.
These assertions are often made on a flimsy evidential footing but are nonetheless grimly pursued by prosecutors.
If the prosecuting authorities’ approach in this regard continues after the introduction of the new Guideline, with much more so obviously at stake for defendants, we anticipate an increased number and intensity of disputes between prosecution and defence legal teams.
The courts might be attracted by the medium culpability category as a way of fudging such disagreements but we suspect the new codified approach will force the courts to be transparent on these issues and to make clear decisions between competing arguments.
There are three levels of harm:
- Level A: death or physical or mental impairment resulting in lifelong dependency on third party care for basic needs. Significantly reduced life expectancy.
- Level B: physical or mental impairment, not amounting to level A, which has a substantial and long-term effect on the sufferer’s ability to carry out normal day-to-day activities or on their ability to return to work. A progressive, permanent or irreversible condition.
- Level C: all other cases not falling within Level A or B.
It is significant to note that, in this context, harm is the “seriousness of harm risked”. It will be the risk of the identified injury (e.g. risk of death) that will be considered.
The Guideline also requires the courts to decide on the likelihood of that harm arising (high, medium or low) in order to arrive at a final harm category (1 to 4). This, in conjunction with the corporate offender’s turnover, will provide the financial starting point for sentencing purposes.
Prior to the introduction of this Guideline a large organisation convicted of a health and safety offence causing death could expect to be fined a sum of money that “will seldom be less than £100,000 and may be measured in hundreds of thousands of pounds or more.” In practice, the courts have tended to impose fines between around £250,000 to £350,000 on large companies guilty of failings which cause death.
Under the new Guideline those same companies can expect a fine of £1.2 million, with a range of £500,000 to £3 million. Where the fine will end up within the range will be dependent on an assessment of factors that mitigate and/or aggravate the offence. An equivalent fine for a very large organisation is likely to be significantly increased proportionately to a range of several million pounds.
The new Guideline explicitly reminds the courts to consider primarily the harm risked rather than any harm actually caused. This should result in the current distinction, between the level of fines for offences causing very serious injury and death and for those involving little or no actual harm, narrowing substantially in the months following February 2016.
Our experience is of prosecutors often over-arguing factors relevant to culpability and harm. Florid phrases such as “death was eminently foreseeable” and “this was an accident just waiting to happen” are commonly used and may prompt more direct challenge by defence teams in 2016. The logical process by which the courts decide on likelihood of harm will also be subject to scrutiny and debate. Should an objective measure be applied, e.g. incidents per man hour, or a more subjective approach? Either way, prosecutors will doubtless look to see if defendants’ own risk assessments can be used against them.
An offence will be category A where a high level of culpability arises and category B where there is a lower level of culpability.
The factors determining which category the offence falls into are:
- How foreseeable was serious injury?
- How far short of the appropriate standard did the offender fall?
- How common is this kind of breach in this organisation?
- Was there more than one death, or a high risk of further deaths, or serious personal injury in addition to death?
The starting point for a fine of a large company will be:
- Category A: £7.5 million, with a range of £4.8 million to £20 million.
- Category B: £5 million, with a range of £3 million to £12.5 million.
The fines for a very large organisation are likely to be significantly and proportionately higher.
It has been the case since the introduction of the Corporate Manslaughter Act 2007 that companies convicted of this most serious offence, especially smaller companies, would risk being put out of business by the resultant fine.
The new Guideline will make that prospect, and the prospect of companies being fined out of existence for very serious health and safety offences, more likely.
The same categorisations of culpability and harm as for companies apply to the assessment of sentence for individuals convicted of health and safety offences. The applicable sentence ranges at the lowest end from a conditional discharge and/or fine measurable in relation to income, through to community service and/or greater fine and then up to two years’ imprisonment.
The worst offences of harm category 1 with very high culpability will lead to a sentence within a range of one to two years in custody, with a starting point of 18 months in custody to be increased or decreased by reference to aggravating and/or mitigating features.
While imprisonment remains available through most of the ranges of offence, any person convicted of high or very high culpability, leading to or risking death, can expect a term of imprisonment of one to two years, without a fine as an alternative.
Just as most companies will be at risk of much higher fines from February 2016, so individuals are more likely to receive custodial sentences.
Even more, therefore, will depend on the quality of support provided to individuals suspected prior to the authorities’ decision to prosecute.