High Stakes for Safety Offences: the future landscape of sentencing in health and safety cases

03 Nov 2015

The Sentencing Council has today issued its much anticipated guidelines on the sentencing of “Health and safety offences, corporate manslaughter and food safety and food hygiene offences”. The guidance which comes into force on 1 February 2016, is set to significantly increase the level of fines imposed by the courts, with fines of an unprecedented level being reserved for corporate offenders with high turnovers and custodial sentences for individuals becoming more common place.

The guidelines advocate a stepped approach to sentencing. The starting point is to assess the seriousness of the offence, which is referred to as the offence category, in terms of culpability and harm.

Culpability relates to the extent to which the offender failed to meet the standards required of them.  For individuals, this will depend on a person’s attitude i.e. whether they knowingly and intentionally ignored relevant standards or were wilfully blind or negligent to them. For organisations, their attitude to safety such as existing health and safety procedures and whether failings were systemic throughout the company will be assessed, as will any short cuts taken to save money.

For corporate offenders the guidelines set out four categories of culpability ranging from very high, which includes a deliberate and intentional breach of the law, to low where an offender only falls short of the required standard with little fault.  The middle categories of high and medium culpability consider offenders whose conduct falls between the opposite ends of the spectrum. Individual categories of culpability are based on a person’s knowledge and whether their actions were deliberate, reckless, negligent or of low culpability.    

Harm is split into four categories (1 – 4) and is determined by considering the risk and level of injury created by the offence.  The category is calculated by assessing the likelihood of harm occurring (high, medium and remote) and the seriousness of the injury (which is split into three levels A – C).  Death, injuries reducing life expectancy and those resulting in lifelong dependency on others will be classed as level A; injuries affecting a person’s ability to carry out day to day activities will be level B and all other injuries level C.

Whilst the guidelines suggest that the courts should consider the risk created by an offence, and not the actual harm suffered, in reality it is anticipated that the injury suffered will go a long way to determining the overall harm category.

Size of the offender

Having determined the offence category, the court must then consider the size of the offender in order to identify the starting point and range of sentence to be imposed. For corporate defendants, size is simply based on turnover with four categories  identified. These are micro (turnover up to £2m), small (turnover £2m - £10m), medium (turnover £10m - £50m) and large (turnover £50m+). However, the guidelines state that where turnover greatly exceeds the threshold for large organisations “it may be necessary to move outside the suggested range to achieve a proportionate sentence."

Once the starting point and range of sentence has been identified the court will consider the aggravating and mitigating features of a case in order to fix the level of fine.

Offences involving high culpability and harm will inevitably mean that the sentences for all organisations will increase under this new regime.

The starting point for the most serious offences for micro organisations is £250,000 increasing to a possible maximum of £450,000 which, for companies whose turnover is under £2m, could exceed not only annual profit but also turnover. For large companies the starting point is £4m increasing to £10m which suggests that fines of an unprecedented level are to be expected. 

Corporate manslaughter offences will attract significantly higher penalties, again based on culpability and harm and the size of the offender ranging from a starting point of £300,000 for micro companies up to £20m for large organisations.

The premise of the guidelines is that offenders will be sentenced within a band according to size. However, an important provision has been included which allows the court to consider the wider financial position of a company and, where appropriate, move outside the relevant fine band.  Consideration should however also be given to the wider impact any proposed fine may have on innocent third parties, for example will the fine result in the loss of jobs or the need to cut services to innocent parties. With the increase in fines this will inevitably be of concern to many organisations and it is possible that many smaller companies will seek to argue this point. To counter such arguments it is open to the court to schedule the payment of any fine over many years.

Individuals will be required to provide financial information and whilst the court may consider an appropriate financial penalty, it is anticipated that more offences will cross custody thresholds especially where an individual’s actions have been found to be deliberate and the safety of innocent people has been put at risk.  For offences that involve a risk of death, life shortening illness or permanent injury the starting point is likely to be custody.

The starting point for breaches of health and safety which fall within the individual culpability category of deliberate or reckless is custody; the maximum sentence is two years.  Sentences following conviction for gross negligence manslaughter will be considerably more.

The guideline effect

In September 2015 Hugo Boss was fined £1.2m for health and safety breaches, following the death of a four-year-old boy at one of its stores.  The accident was described by the coroner as "an accident waiting to happen" and the prosecution case was that the accident resulted from systemic failings within the  organisation.  

Hugo Boss’ turnover in 2015 was £192.8m.  This would place them in the large organisation category and arguably may take them into the very large category.  Given the background to the accident it is likely that culpability would be considered to be “very high” with harm being “category 1”.  This would produce a starting point for any fine of £4m which could rise to as much as £10m or higher if it was decided that Hugo Boss was a very large organisation.

Had the company been charged with corporate manslaughter, then the starting point for the fine would have been £7.5m and could have been as large as £20m.

Some commentators have suggested that the new guidelines will have little, or no, effect on the level of sentence imposed for less serious offences, and may even result in lower fines.

Whilst theoretically this may be right, the difficulty will be in persuading the courts, and more particularly the prosecutor, that an offence falls into the lower, or lowest, offence category. Indeed, if the prosecutor was to agree that an offence falls into the lowest category where the offender only just fell short of the required standard, it may be questioned whether it was appropriate to bring a prosecution at all and if alternative action, such as the issue of an enforcement notice or fee for intervention charge, would have been sufficient and proportionate.

Given the significant variation in the starting point of fines (and custody threshold for individuals) between different offence categories, and the wide range within individual bands, the real battle ground of the future will be the negotiations regarding the basis of plea and agreeing the appropriate offence category. Experience tells us that regulators, whether that be the Health & Safety Executive, local authority or otherwise, pitch the seriousness of an offence high - for example it is almost always submitted that a defendant fell "far" short of the standard required and that breaches existed over time rather than being isolated. Negotiations will, therefore, take on greater significance and it is foreseen that the unwillingness of parties to compromise will result in more cases going to trial or a Newton hearing (which is a trial of a specific issue).

Trial costs v fines

As a result of the sharper rise in the level of sentence as you move up offence categories it is likely that defendants will be more willing to allow matters to proceed to trial, or Newton hearings, despite the increased costs risk that this will bring. Increased costs are likely to be outweighed by successfully reducing the offence category. Likewise, those prosecuted for the most serious offences may see little benefit in offering a guilty plea and may be more willing to allow matters to proceed to trial. Whilst an acquittal may not be secured it will allow a judge to hear all the evidence, rather than the prosecution's distilled version and enable him to place the offence in its proper context resulting in it being placed in a lower offence category.  Again, the increased costs of a trial could easily be outweighed by the corresponding reduction of the fine. The costs of funding a trial will also need to be considered and checks made as to whether the insurance policy will respond to funding a trial given that the fine/penalty will be paid by the defendant company or individual rather than the underwriters.

What do you need to consider? 

The impact of these new guidelines remains to be seen and whilst it is unclear whether they will force more cases to result in contested proceedings, what is clear is that organisations convicted of the most serious offence can expect to receive fines which previously were unheard of and individuals are more likely to receive a custodial sentence.  Those companies facing prosecution need to review the potential impact on their P&L over an extended period and make allowances for the impact that larger fines may have. As with any health and safety related matters prevention is key, so close scrutiny of working practices is of paramount importance to protect people, productivity and profits.

A full copy of the new guidelines can be found by clicking here.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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