The introduction of the Sentencing Guidelines for health and safety offences, over two years ago in February 2016, suggested the promises of higher fines and greater consistency. While it may seem a more limited reality, the pledge to hand down significantly higher fines has certainly been realised. During 2016-2017 a total of 38 cases received fines over £500,000 and the average fine in 2016-2017 was £126,000, more than double that in 2015-2016.
The single largest fine to date is that of the £5 million applied against Merlin Entertainments for their failings in the Alton Towers incident in June 2015, when five members of the public were seriously injured on The Smiler rollercoaster ride.
Behind this increase has been the changes in the court’s approach to sentencing, with an increased focus on turnover, culpability and the risk of harm created by the offence. It seems this created an element of confusion rather than the consistency promised. The Sentencing Council initially intended for the ‘average’ health and safety case to fall within medium culpability. However, the reality in our experience is that these cases are increasingly being classed as high or even very high culpability, significantly escalating starting points and sentences.
When looking at the actual figures for fines and in terms of assessing turnover, the Sentencing Guidelines categorise organisations as follows:
Courts must consider whether the proposed fine based on turnover is proportionate to the means of the offender; conversely, the fine is intended to be sufficiently substantial to have a real economic impact. Finding the balance between these two opposing factors seems to be proving difficult.
In the construction industry, where the risk of harm is significant and there are associated challenges, such as the extensive use of labour only workers and higher rates of illiteracy, it follows that a prosecution is more likely to arise. These cases are notoriously difficult to defend and those hit hard are the small to medium businesses. The general consensus is that they are seen as easy prey by the enforcing authorities.
Construction remains a high risk industry. It represents only 5 per cent of employees in Britain, yet accounts for 27 per cent of fatal injuries to employees with 30 fatalities recorded in 2016-2017 according to RIDDOR. Almost 20 per cent of workplace fatalities were due to a fall from height in 2016-2017.
Whilst the threat of a fine significant enough to put an organisation out of business is an incentive for full compliance with health and safety legislation, is this really achievable particularly in the construction sector, where compliance can be challenging in practice?
Successful prosecution statistics in the construction sector
There have been 149 successful prosecutions for breaches of health and safety legislation since the introduction of the Health and Safety Sentencing Guidelines on 1 February 2016 to 23 February 2018. Almost 80 per cent of these were against an organisation either in its own capacity, or including an individual offence against a director. Our research into the statistics reveals that prosecutions against individuals have increased, certainly in the last 12 months.
The following shows the breakdown of prosecutions between the respective categories of turnover:
The majority of organisations prosecuted had less than a £10 million turnover, which is unsurprising as these organisations are less likely to have robust and up to date health and safety policies and procedures in place. However, 11 per cent of organisations prosecuted were in the large and very large turnover category, a figure that has been relatively consistent since the introduction of the Sentencing Guidelines.
Irrespective of turnover, the impact of a potential fine on an organisation is at the forefront of our advice and we are always mindful of the reputational impact a regulatory investigation and prosecution can have.
Sentencing of organisations
The data demonstrates that, as might be expected, the higher level fines are confined to organisations in the very large category, with an average fine of around £1 million. There is a stark reduction in the average fine for a large category organisation, which is calculated at just £250,000. This average actually increases to £300,000 for a medium turnover organisation, with £30,000 for small organisations. Strikingly, the average fine for a micro turnover organisation is over £70,000.
Whilst there are numerous factors to consider when analysing the average fines for the respective turnover categories, not least culpability and risk of harm, when the type of injury sustained is factored in to the figures, an analysis of sentences shows just how arbitrary the fines can be. To view our Sentencing tracker for further information on all fines imposed and breaches committed since 2016 please click here.
For the micro organisations, surprisingly 12 of the fines issued were in the £100,000s, amounting to just over 15 percent of the fines issued. This proportion of six figure fines is relatively high, when considering the starting point for the fine ranges for micro organisations are generally in the tens of thousands of pounds, save for the most serious cases. Aggravating factors, such as poor health and safety records, are more likely to be of concern for micro organisations on sentencing, resulting in an upward adjustment in the fine issued.
The fines for organisations in the very large category could be considered lenient when taking into consideration the fact some starting points in the Sentencing Guidelines for large turnover organisations are higher than the fines issued. A comparison of fines against the proportionate turnover also reveals that these are lower for very large turnover organisations.
The statistics for organisations with particularly high turnovers may suggest those very large organisations have the ability to present more persuasive mitigating factors, thereby reducing the fine. This is consistent with the point above that the larger companies have more effective health and safety policies and procedures in place in the first instance.
Sentencing of individuals
Fines and sentences against individuals tend to be against those operating in micro organisations rather than large organisations. On the whole, sentences tend to be suspended or community service.
Prosecutors can struggle with large organisations to show that one specific individual should be held accountable for an injury caused by a breach of health and safety legislation. This is often easier to demonstrate in the management structures of a micro organisation, as directors or senior managers are likely to have a closer involvement with the alleged defective system of work, policy or practice. It is also relevant that a micro organisation may not have the means to pay a substantial fine or they have fallen heavily foul of the legislation due to less robust systems being in place, and so the prosecution considers individual offences more closely.
As a sector, construction has paid the most in health and safety prosecution fines. The question to consider is what will be next in a regime where setting a starting point for a fine is intended ‘to bring the message home to the directors and shareholders of offending organisations’? We recommend that all our customers seek advice on compliance with health and safety and regulatory legislation, to ensure that they are prepared for any potential exposure.