Large fines on the horizon for health and safety offences

United Kingdom

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Summary and implications

The highly anticipated Health and safety offences, corporate manslaughter and food safety and hygiene offences definitive guideline (the Guideline) was published on 3 November 2015 and comes into force on 1 February 2016. The Guideline applies to all organisations sentenced on or after 1 February 2016 irrespective of the date of the offence. It sends a clear message about the importance of health and safety sentencing, highlighted by the high starting point of £4m for fines relating to the most serious offences committed by large companies. 

The introduction of the Guideline is likely to result in an increase in the level of fines imposed on large organisations with possible fines for offences demonstrating very high culpability and falling into the most serious harm category ranging from £2.6m to £10m. This continues the trend set by the recent fines imposed in health and safety and environmental cases.

Background

The Sentencing Council’s rationale for introducing the new Guideline stemmed from a lack of familiarity with offences of this type on the part of magistrates and judges, due to the relative infrequency with which they sentenced these types of cases. Furthermore, inconsistencies were identified in how various factors were weighted and applied in reaching sentencing decisions across the country.

The Guideline identifies a number of steps for the courts to go through, which will enable them to determine the starting point for fines and the range of possible fines within each category. 

The three limbs to be considered in setting appropriate fine levels are as follows:

  1. Degree of culpability.
  2. Level of harm.
  3. Turnover of the relevant organisation.

Culpability

The first of these steps is to determine the offence category by reference to the culpability (or blameworthiness) of the offender, which involves consideration of a number of different factors, and harm factors.

In respect of organisations, the culpability element is determined by a series of objective factors, which consider the extent to which the offender failed to meet the standards required of them.

In order to establish whether the culpability of an organisation is low, medium, high or very high, the court will consider the following amongst other matters:

  • What measures were put in place.
  • The extent to which failures ran through different levels of the organisation.
  • Whether there were any warning signs indicating a risk to health and safety.

Harm

The assessment of harm requires the court to consider:

  1. the risk of harm created by the offence to establish an initial harm category. This is achieved by identifying (i) the seriousness of the harm risked by the breach and (ii) the likelihood of that harm arising;
  2. whether the offence exposed a number of people to the risk of harm at one time; and
  3. whether the offence was a significant cause of actual harm.

Turnover

Having determined the offence category, the court will then be required to focus on the organisation’s turnover or equivalent to reach a starting point for a fine within the category range.

The Guideline groups organisations into the following categories by turnover or equivalent:

  • Micro: not more than £2m.
  • Small: between £2m and £10m.
  • Medium: between £10m and £50m.
  • Large: £50m and over.

Where a defendant organisation’s turnover or equivalent significantly exceeds the threshold for large companies, it may be necessary to move outside the suggested range to achieve a proportionate sentence.

The court should then consider aggravating and mitigating factors, which may result in an adjustment from the starting point. It is important to note that relevant convictions are likely to result in an upward adjustment.

Going forward it will be very important to manage incidents and approach prosecutions in a way that mitigates the financial and reputational consequences.