No. 716/2016
7 December 2016
Our Ref: C1/16
New 2016 Health and Safety Court Penalties Beginning To Take Effect – Update
Report:
To: All Branches
Dear Colleagues,
As reported to Branches and Safety Reps in LTB 724/15, earlier this year new Sentencing
Council Guidelines came into effect. As a result, large companies can now face much higher
fines for Corporate Manslaughter and Health and Safety Offences at both at the Magistrates
and Crown Courts. The more serious Cases will be dealt with at Crown Court level with fines of
over £10 million for the most serious health and safety offences and more than £20 million for
corporate manslaughter convictions now possible, under new sentencing guidelines, issued on
1st February 2016. This is an end of year update.
The Sentencing Council’s guidance, which came into force on 1 February 2016 and applies
regardless of the date of the offence, give Judges a framework of tiered penalties for different
sizes of organisation, taking account of the level of risk, harm and culpability.
The new guidance extends to all health and safety offences, where the previous Judges’
guidance covered just fatalities. It is modelled on the sentencing guideline for environmental
offences, which was introduced in 2014.
Once the court has established a starting point using the new guidance factors, it must take
into account financial information, such as the profit margin of the organisation or the potential
impact on employees, and any aggravating or mitigating factors. The sentencing guidelines
contain a total of nine steps that judges must complete to arrive at the fine.
In the past, some offenders did not receive fines that properly reflected the health and safety
crimes they committed and the new guidelines are aimed at bringing in appropriate penalties.
The guidance wants fines to be proportionate to the seriousness of the offence and the
financial means of offenders.
The Guidelines place Convicted Health and Safety Offenders in one of four bands depending on
turnover:
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micro (with a turnover of up to £2m)
small (a turnover of between £2 million and £10 million)
medium (up to £50 million)
large (more than £50 million).
This means the sentences will be far bigger, especially for medium and large employers.
For micro organisations the starting point for a fine after a high culpability corporate
manslaughter offence will be around £500,000.
A small organisation convicted of corporate manslaughter may face a fine of £1 million to £2
million.
A medium sized company convicted of a high culpability Corporate Manslaughter Act offence
can expect a fine of between £2 million and £7.5 million.
For the large organisations (such as for example Royal Mail Group and British Telecom
Group) the fine for a corporate manslaughter conviction with a high level of culpability,
serious safety failures and lack of risk controls could result in a £20 million fine upwards.
In June, the Appeal Court threw out an appeal by Thames Water against a £250,000 fine and
the Judges said that in future, organisations with a turnover in the hundreds of millions could
face fines up to levels equal to 100% of the company’s pre-tax net profit for the year in
question, even if this results in fines in excess of £100 million.
The largest fine for a corporate manslaughter conviction under the old sentencing regime was
£600,000 for CAV Aerospace in August 2015 but under the new guidelines the fine would have
been much higher and certainly several millions of pounds.
Large organisations could also face fines reaching many millions of pounds for serious health
and safety at work act offences. For example, the prosecution and conviction of Siemens
Windpower under the old sentencing regime resulted in a fine of £375,000 but under the new
guidelines the sentence might well have been between £2 million and £6 million.
Likewise, the prosecution of Baxters resulting in a fine of £60,000 for a non-fatal accident
might, under the new guidance, increase to a fine between £500,000 and £3 million.
The sentencing council stated at the launch of the new rules that if there was a quantifiable
economic benefit derived from the offence then this amount should be added to the fine. It
also suggests that, in some particularly bad cases, putting the offender out of business may
also be an acceptable consequence.
The courts will consider the impact of the fine on employment of staff, service users,
customers and the local economy, but not shareholders or directors.
If a company has recent safety convictions then the fine is likely to increase, the
guideline says. The list of aggravating factors that would make a fine worse include
cost cutting at the expense of safety, a poor health and safety record and targeting
vulnerable victims.
Mitigating features that could reduce seriousness include a good health and safety record, a
high level of cooperation with the investigation and evidence of steps taken to remedy a
problem.
Lawyers are collectively saying that “health and safety managers should tell their
Company boards that, “a tougher line is being taken for breaches of health and
safety law, not just against companies, but also convicted individuals where the
prospect of imprisonment is brought much closer following a fatality”.
The HSE Chief Executive’s Report to the December HSE Board concluded that HSE completed
316 prosecutions between 1 April and 31 October 2016, including a number of prosecutions
with individual fines over £1 million, under the new Sentencing Council Guidelines to Courts
and Judges. These convictions included the following examples amongst others:
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ConocoPhillips (UK) – Failure to control three Gas Releases over two days endangering
the lives of 66 Workers – (£3m)
Watling Tyres Ltd – fatality following Compressed Air explosion (£1m)
Foodles UK Ltd – accident on the Star Wars film set (£1.6m)
Merlin Attractions Operations Ltd – Rollercoaster accident at Alton Towers (£5m)
Balfour Beatty – collapsed trench (£2.6m)
Tata Steel UK Ltd – amputation after machinery accident (£1.8m)
Cristal Pigment UK Ltd – fatality following release of toxic vapour (£1.8m)
Scottish Power Generation – serious burns after steam release from valve (£1.75m)
Tarmac Trading Ltd – two road traffic accidents involving pedestrians, including one
fatality (£1.3m)
Parker Hannifin Manufacturing Ltd – fatality when moving machine in the factory (£1m)
Tesco Stores Ltd – Maintenance Worker fell through skylight(£500k)
Travis Perkins Ltd – Death of a Customer, crushed by a company vehicle (£2m)
McCains Frozen Foods - engineer sustained serious arm injury whilst inspecting a
factory machine belt (£800,000)
Also note:-
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BT – Three separate Safety convictions in five months in 2016, two falls from height, one street
works (£1.3 M)
Royal Mail – Two Safety convictions in 2015/16, one worker chemical burns, one worker crushed
foot by an FLT (£105,000)
Comparison with Competition Fines:
When comparing Health and Safety Fines with Unfair Competition Fines, there’s a long way to
go. For example, Supermarkets and Dairy firms were fined £50million over price rigging on
Milk and Cheese by the UK Office of Fair Trading and last year Royal Mail was fined £40m in a
French price-fixing scandal by the French competition authorities after GLS, its parcel delivery
subsidiary took part in one of the largest price fixing cartels in corporate history, colluding with
20 courier and shipping firms to set customer prices for a period of six years. However, the
new sentencing guidance is beginning to drive up fines towards those well established in
competition offences and it’s worth repeating the advice of many UK Lawyers; health and
safety managers should tell their Company boards that, “a tougher line is being
taken for breaches of health and safety law, not just against companies, but also
convicted individuals where the prospect of imprisonment is brought much closer
following a fatality”.
Yours sincerely
Dave Joyce
National Health, Safety & Environment Officer