For FBOs the recent significant increases in Food Law Penalties means that Food Law compliance can no longer be assigned to “AOB” in the Annual Report. If Guidance exists courts are obliged to apply it. A year on from the implementation of the Sentencing Council’s 2016 sentencing publication, the ‘Health and Safety Offences, Corporate Manslaughter and Food Safety Hygiene Offences Definitive Guideline’, it is clear that the courts are getting familiar with imposing heavy fines in Health & Safety cases, such as the Alton Towers tragedy (the Operator was fined £5 million), but what has been the effect on fines for food safety and food hygiene offences?
Can any help be found in the Guidance issued in March from the Sentencing Council’s Reduction for a Guilty Plea Definitive Guideline? Can they offer FBOs a viable chance of reducing their financial exposure?
The 2016 Guidelines in practice.
When assessing penalties for offences committed after 1 February 2016, the most serious level of harm includes offences not only where there has actually been a serious adverse effect on consumers, but also where there is a high risk of an adverse effect occurring. Courts must consider culpability, seriousness and likelihood of harm, plus the size of the business and its turnover when imposing fines. A “large” business is one with turnover or equivalent of £50 million or more and the fine is a percentage of that turnover.
The guidelines have resulted in a sea change in both the frequency and level of fines. There were 292 fines issued during 2016, totalling £61,000,000 - a 148% rise since 2015. In 2013, the average fine was a mere £17,095 and only 5% of fines were over £2,500; contrast this with the average fine in 2016 of £211,000 and we begin to understand the sweeping changes that the new guidelines have created. The most serious of health and safety breaches have risen to a level that can seriously threaten the existence of some food companies; since the introduction of the new guidelines, the average fine for the more serious examples of Health and Safety breaches has risen to £2,000,000.
Impact on FBOs.
So how have Food Business Operators (FBO) fared? Food company fines contributed just over £2,000,000 to UK manufacturing’s total payouts in 2016 of £12,000,000 and there have been a number of cases that have been covered by the media. In March 2016, Asda pleaded guilty to three breaches of the Food Safety and Hygiene (England) Regulations 2013 (the “Regulations”) and was fined £300,000 after inspectors found dead mice and flies at its north London home delivery depot. Just eight months later Asda admitted a further four breaches of the Regulations and was fined £664,000 when inspectors found a mouse infestation in an in-store bakery. The breaches included failing to keep the premises clean, failing to ensure adequate procedures are in place to control pests, placing unfit food on the market and construction of premises which failed to control pests.
When considering the level of fine in the latter case, the judge found high culpability and high potential harm. Particular attention was given to the surprising 72 call outs for pest controllers in the last year and the court was not persuaded that this was illustrative of taking responsibility of the issues. Due to ASDA’s exceptionally high turnover, it was fined £250,000 for each offence but, due to an early guilty plea, the final sum was reduced.
In January 2017, food supplier Pioneer Foods was fined £275,000 after pleading guilty to 11 food safety and food hygiene offences, including selling listeria-contaminated meat. The company discovered the contamination in October 2015 through in-house testing but failed to immediately notify authorities. It became apparent that poor drainage meant that wastewater from raw meat areas flowed back into the cooked meat production room.
It is clear from the examples above that the courts are becoming increasingly confident in handing out large fines and the consensus is that we will see more and more of these in the months and years to come. As offences can be based on perceived risk and not just actual harm, combined with the fact that the fines are connected to the turnover of the company, means that food companies must become increasingly diligent to vulnerabilities with their food production and storage processes and this should be a priority at board level.
The 2017 Credit for Guilty Plea Guidance.
Applicable in England and Wales from 1 June 2017, the new credit Guidelines aim to clarify the reduction in sentence available to a defendant who pleads guilty, with a larger reduction available the earlier the guilty plea is entered. The new guidelines are focussed on the first hearing. Where a guilty plea is indicated at the first stage of proceedings, a reduction of one-third should be made to the sentence. This is a substantial reduction for organisations potentially facing seven-figure fines.
The first stage is stated to be “normally the first hearing at which a plea or indication of plea can be recorded”. However, when breaches of food safety and food hygiene offences by large food companies come to light, it is often difficult to quickly collate all the information and records relating to the offence due to the volume of material and the structured and complex management hierarchies, let alone getting the right senior management together to make a decision on plea within weeks of a Summons being served. The decision could affect many aspects of how the business operates. Nevertheless, if faced with that scenario it should be noted that there is an exception in the guidelines that states that if the court is satisfied that there were particular circumstances which significantly reduced the defendant’s ability to understand what was alleged or otherwise made it unreasonable to expect the defendant to indicate a guilty plea at an earlier stage then in these cases, a reduction of one-third will still be possible.
Ensure you understand the case before you plead.
Regulators and EHO’s often attend a site unannounced and have wide investigatory powers; it is vital that companies are ready to respond to these visits in an organised and well informed manner. This is not an excuse for lack of preparation. FBOs must be able to locate and produce evidence of their Food Safety and Health & Safety systems and procedures at any time (For more help see our guide ‘An Inspector Calls: Raids and Inspections by Regulatory Authority’).
However, there is some help in the Guidance to ensure that a well-prepared FBO can have enough time to make an informed decision, once they have been able to take advice and understand the case against him – rather than simply being pushed into making a knee jerk decision at the first hearing.