High stakes

Health and safety iStock 000013174030XSmall 146x219Significantly higher fines could be imposed for health and safety offences under new guidelines from the Sentencing Council. Helen Devery looks at the likely impact on local authorities and their employees.

Compliance with health and safety law is a key requirement for all UK businesses. The stakes have now been raised following the newly published guidelines from the Sentencing Council on 3 November 2015.

The guidelines, titled “Health and safety offences, corporate manslaughter and food safety and food hygiene offences” outline how the ramifications of safety breaches have just taken on an even more serious overtone. The guidance, which comes into force on 1 February 2016, will dramatically raise the level of penalties that the courts are able to impose, with unprecedented levels of fines being reserved for businesses with high turnovers and custodial sentences for individuals.

The guidelines advocate a staggered approach to sentencing by taking into account the seriousness of the offence in deciding culpability and harm followed by an assessment of the size of the organisation in terms of turnover and profit. 

Culpability is determined by the extent to which the offender failed to meet the standards required of them. For individuals, this will depend on 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 decisions based on profit before safety or targets before safety. 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. 

Harm is also split into four categories and takes into account 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).

Having established the offence category, the court must then consider the magnitude of the offender in order to identify the starting point and range of sentence. For businesses, size is based on turnover, and again there are 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.”

The starting point for the most serious offences for micro organisations is £250,000, rising 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 £4,000,000 increasing to £10,000,000 - suggesting that we will be seeing fines of an unprecedented level.  

Once the starting point and range of sentence has been identified, the court will consider the aggravating and mitigating features of each individual case in order to fix the level of fine. Offences involving high culpability and harm will incur increased sentences.

How will this impact on local government organisations?

The guidance confirms that all defendants must provide financial information to the court as part of the sentencing process. For local authorities, the annual revenue budget will be considered the equivalent of turnover for assessing the size of an organisation. Most local authorities are likely to be considered as large or very large organisations therefore which, for the most serious offences, would give a high starting point for any fine. 

The sentencing procedure confirms that where a fine falls on a public or charitable body the fine should normally be substantially reduced if the offending organisation is able to demonstrate the proposed fine would have a significant impact on provision of its services. Here, the important point is that the defendant must be able to demonstrate the fine would have a significant impact – not just any impact – on services and there is uncertainty how this will be judged by the courts. Additionally, it is not known whether the reduction would be kept within the sentencing range or the fine would be fixed outside that range. With the overall increase in fines, any reduction may well mean that future fines are still substantially higher than ones previously imposed on a public sector defendant. 

Any perception by regulators that courts are, or will be, too lenient on local government bodies may cause them to look more closely at the actions of senior management, officers and employees, which in turn could result in more individuals facing investigation and prosecution.              

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 have 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 being two years. Sentences following conviction for gross negligence manslaughter will be considerably more.   

In September 2015 Hugo Boss was fined £1.2m for breaches of health and safety following the death of a four-year-old boy at one of its stores. The prosecution’s 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 the starting point for the fine would have been £7.5m and could have been as large as £20m. This is a seismic change from previous penalties. 

Given the significant variation in the starting point of fines and custody threshold for individuals, the real battle ground 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).

We may see defendants seeking to proceed to trial despite the increased costs risk that this will bring. Increased costs are likely to be outweighed by successfully reducing the offence category and a trial 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 correct context. 

The impact of these guidelines remains to be seen but it is clear that organisations convicted of the most serious offence can expect to receive significant fines and individuals are more likely to receive a custodial sentence. Those public bodies facing prosecution need to review the potential impact on their reserves for budgets and allocation of resources 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 safe working practices is of paramount importance to protect people and services.

Helen Devery is a Partner at BLM. She can be contacted on 0161 838 6761 or This email address is being protected from spambots. You need JavaScript enabled to view it..