The Sentencing Council for England and Wales has launched a consultation on new guidelines to be used by courts when passing sentence for corporate manslaughter and health and safety offences. This follows a review of sentences passed by the courts during recent years.
The guidelines will apply to both companies and individuals and will cover offences ranging from workplace accidents, and dangerous products that cause death or serious injury, to near misses where there was a culpable risk of injury but no injury, in fact, occurred. They also cover food safety and hygiene offences.
As we explain, if implemented, the guidelines will result in much higher fines being imposed upon large corporate entities.
The guidelines incorporate and develop the principles recently discussed by the Court of Appeal in R v Sellafield; R v Network Rail (see our e-bulletin on this case here) including an increased focus on the financial means of the offender.
The consultation will close on 18 February 2015 following which final guidelines will be issued. Acopy of the draft guidelines and information for anyone wishing to comment on them can be found at the Sentencing Council's website here.
The guidelines represent a much more mathematical and structured approach than has existed to date in sentencing health and safety offences, and is similar to the approach adopted for the guidelines which govern the sentencing of environmental offences.
The draft guidelines reiterate the public policy objectives for setting fines as discussed by the Court of Appeal in R v Sellafield; R v Network Rail namely that:
- Sentences (for all offences and all categories of offender) should be proportionate to the offence. A fine must therefore reflect the seriousness of the offence and take into account the financial circumstances of the offender.
- Sentences should punish and deter wrongdoing. The guidelines reflect a perception that at least some workplace accidents are the result of companies cutting corners to save money. The Sentencing Council considers that in order to correct this fines should be calculated so as to remove the economic benefit of cutting corners and "should be sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with legislation and achieve a safe environment for workers and members of the public".
The guidelines propose to meet these objectives via a multi-stage approach to sentencing. When considering the appropriate fine to impose on a company, a Judge will be required to consider a step-by-step process to (i) determine the category of offence by reference to the level of the company's culpability and the risk of harm it created; (ii) identify the size of the company, or the financial means of the individual. In the case of corporate entities the starting point will be turnover. The court will then consider aggravating and mitigating factors to make adjustments to the starting point; and (iii) adjust the level of fine to ensure it meets the public policy objectives set out above and to take account of any other relevant factors.
1. Category of offence – culpability and risk of harm
The Council considers the appropriate way to determine the culpability of an organisation is to consider a series of objective factors to determine how short of the relevant standard the offender fell.
Therefore, where objectively it is determined that an organisation was guilty of a deliberate breach, or a flagrant disregard for the law, this would result in a "very high" category of culpability.
The objective factors indicating a "high" level of culpability would include:-
- Failing to put in place measures that are recognised standards in the industry;
- Ignoring concerns raised by employees or others;
- Failing to make appropriate changes following prior incidents;
- Allowing breaches to subsist over a long period of time.
In contrast a "low" level of culpability would be appropriate in cases which include evidence that there was:-
- Significant efforts made to address the risk, although they were inadequate on this occasion;
- No prior event or warning indicating a risk to health and safety.
The second part of the assessment is to consider the harm created by the offence. Health and safety law is based upon the avoidance of a material risk and, therefore, an offence is committed where there has been a material risk, irrespective of whether or not an injury has actually occurred. As a matter of principle the Council considers that it would not be right to have a significant disparity in the approach to sentencing two offences which were identical, except that in one actual harm was avoided. Pragmatically, however, the Council states that it still considers that the harm caused by the offence is central to assessing seriousness. Therefore, the Council has proposed a two stage approach to assessing harm:-
- The Court must consider the risk of harm created by the offence. This means assessing the seriousness of the harm risked by the breach and the likelihood of that harm arising; and
- Considering whether the offence exposed a significant number of people to the risk of harm and whether the offence was a significant cause of actual harm.
The consultation document contains a table which identifies various categories of seriousness of harm risk together with various degrees of likelihood of harm ranging from high to remote. In this way it is proposed that an assessment of the seriousness of the harm created can be made.
The relative severity of wrongdoing will have less impact on sentencing in corporate manslaughter cases. The offence by its nature requires the most serious kind of harm (i.e. death) and a very high level of culpability by both the company and its senior management. Nonetheless, the guidance does incorporate some flexibility by creating two different categories (A and B) of corporate manslaughter. Where an offence has caused more than one death or the risk was more easily foreseeable, it is more likely to be placed in category A which would lead to a higher fine. Where, for example, the company's conduct was not the only cause of the relevant incident or there were other factors it may be found to be a category B offence resulting in a somewhat lower fine.
2. Starting point and range of fines
The Court will then look at the financial circumstances of the offender. The starting point will be the company's turnover as evidenced in its annual accounts. The guidance recognises that in some cases turnover will not properly reflect the financial health of a company and that it should consider profit or some other measure. However, we envisage the onus will be on the company to persuade the court of this on a case by case basis.
The guidelines seek to classify corporate entities by reference to turnover: "micro" up to £2 million turnover, "small" £2 million – £10 million, "medium" £10 million – £50 million and "large" more than £50 million. The guidelines also envisage that higher fines may be appropriate for "very large organisations" being "those whose turnover very greatly exceeds [£50 million]". Although there is no clarity on what is meant by "very greatly exceeds", examples given in the guidance suggest that a turnover of £300 million would not necessarily make a business "very large" but a turnover of £900 million might well.
The guidance then provides a table of appropriate fines with a financial starting point for each level together with a range. A fine in any given case would be identified by assessing the size of the company, the level of culpability and the harm category. For example, the starting point for a fine for a micro company, which has been assessed as having a very high culpability and the maximum harm category (category 1) is £250,000 with an indicative range of sentence between £150,000 - £450,000. The starting point for a large company, assessed on the same basis, would be £4 million with a range of £2.6 - £10 million.
It will hopefully be rare that a corporate entity is assessed as having very high culpability/maximum harm category. The effect of the proposals can be assessed more accurately by considering serious cases, but where there has been no deliberate failure by the company. For example, in the case of a large company which was prosecuted under the Health and Safety at Work Act for causing death or very serious personal injury, and where the culpability was found to have been high together with a medium assessment of the harm category, a starting point for the fine would be £1.1 million with a range of £550,000 - £2.9 million. The starting point and upper range represent fines which are much larger than large organisations have traditionally received, and indicates a desire by the Council to bring consistent sentencing in line with the principles set out by the Court of Appeal in the Sellafield and Network Rail cases.
In the case of manslaughter for the more serious category of offence the starting point is identified as £7.5 million with a range of £4.8 - £20 million.
The guidance also encompasses sentencing of individuals (ranging from sole traders to directors of large companies) who are convicted of a health and safety offence. The maximum penalties will remain 2 years imprisonment and/or an unlimited fine.
The guidelines indicate that, as for companies, the courts should take account of the extent of the individual's culpability and their financial means (measured by weekly income). So, for example, an individual offender who has negligently caused a fairly serious injury might expect a fine at up to 7 times his weekly income. An individual who has caused death or serious injury through deliberate breach of the law would, unsurprisingly, expect a custodial sentence of 18 months or more.
Perhaps more surprisingly, 6 months' imprisonment is the starting point for an individual who caused a high risk of death or serious injury but through conduct that is considered to be merely negligent (the second lowest category of culpability, behind deliberate action and recklessness). According to the guidance, the Sentencing Council found it difficult to determine an appropriate punishment for negligence type offences of this kind where the offender's culpability was low, but the harm caused or risked was very high. Ultimately they considered the offence of causing death by careless driving was an appropriate analogy and set the threshold for imprisonment accordingly.
3. Review of the fine
Having determined the appropriate fine by reference to the guidelines, the Judge is then required to step back and consider any other factors that may call for the fine to be increased or decreased. This will include for example:
- The wider impact a fine may have on employees and innocent third parties. The guidance confirms that a fine should not necessarily be reduced if the effect would otherwise be that the company would fail (leading to loss of employment) but this will clearly be considered. Where the offender is state-owned and/or provides a public service (so that the ultimate effect of any fine will be to the detriment of all taxpayers) this may lead to a reduction (as it did in R v Network Rail).
- Pleading guilty at an early stage which will still secure a discount of up to 1/3 of the total fine.
Assuming the guidelines are implemented in their current form, large companies are likely to face bigger (and potentially very much bigger) fines than was previously the case. The Sentencing Council's expectation is that the increase is likely to be in fines imposed on large companies for the most serious offences although, in practice, we consider that fines for large corporates would increase more generally. It also appears likely that fines will increase for somewhat less serious offences (e.g. where a company has created a medium risk of death or serious injury or a high risk of a lesser injury through less culpable conduct). There are a number of circumstances in which the starting point for fines in cases where there was no risk of death will be over £1 million.
There is also now likely to be a clearer correlation between the size of the business (measured by turnover) and the level of fine. The guidance provides clear bands for fines to be imposed on all sizes of business except those defined as "very large". It provides that fines for "very large" businesses may be higher than the maximums set out in the guidance but it does not say by how much or indicate precisely how large a business must be to come within this category.
Although the Sentencing Council does not expect the guidance to lead to higher fines being paid by smaller businesses, it does confirm the court's discretion to order that fines be paid by instalment. It is at least possible that if this option becomes more widely used it will lead to higher fines for smaller businesses as it will reduce the risk of a large fine payable immediately bankrupting the company.
In determining the relevant harm category the Council's statement that, as a matter of principle, there should not be a significant disparity in the approach to sentencing identical offences but where one has resulted in actual harm and the other has not, does not, in our view, reflect the practical approach adopted by courts to date. Not only is it much less likely that a company will be prosecuted where no harm has actually occurred, that fact has had a substantial impact in those non harm cases which are prosecuted. The proposals indicate a shift in position for near miss cases which are prosecuted.