Susan Dearden: In this podcast we are going to take you through what the Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Sentencing Guidelines are about
Amber Strickland: If you haven't seen the guidelines then download a copy for free from the Sentencing Council's website at www.sentencingcouncil.org.uk.
They aren't difficult to follow and they apply to all cases sentenced after 1st February 2016 in the magistrates or crown court for health and safety offences, corporate manslaughter offences and a breach of regulation 19 of the Food Safety and Hygiene Regulations in England.
The guidelines apply to organisations as well as individuals. In this podcast though, we are going to focus on their impact on organisations only and a second podcast will run through a case study.
Susan Dearden: The first point to note that the guidelines provide a number of grids with starting points and bands for fines depending on the turnover of the company being sentenced. So if you have a turnover of £50m or more, you need only to refer to the Large business grid and for this podcast, we will refer only to that grid. There are separate grids for businesses with lower turnovers.
Having identified the right grid, the guidelines then present the court with directions to identify where in the grid the starting point and fine range ought to fall based first on the degree of culpability of the convicted business – low, medium, high or very high. The range of fine for a large company in the very high culpability part of the grid is between £240,000 and £10m. The low culpability part of the grid takes the fine range down to between £3,000 and £700,000. So it is worth taking the time now to ensure that the procedures and policies you have in place are comprehensive and audited because there is a huge financial incentive to trying to ensure you will never be above the low or medium culpability brackets.
Amber Strickland: You will have noticed that the range in a culpability bracket is wide – Sue mentioned a range of £9,760,000 for an offence which is high culpability and a range of £697,000 for a low culpability offence for a large business.
The court will narrow that range by also looking at what harm was risked in committing the offence for which you are convicted. This is an important point because until now, the harm caused has been much more relevant. From 1st February it is the risk created that will determine where in the culpability brackets you fall, and that might then be increased if harm was actually caused. Harm will take account not only of what injury was likely, but also: how likely an accident was; how many people were put at risk, and for how long.
In this context it is important to look at your risk assessments. Very often there is a standard clause which identifies risk of death at the top of a list of the harms that a particular activity might create. As defence lawyers we are going to be in difficulties in arguing that the harm risked should be in a lower harm category if you yourselves have suggested that the harm risked is very high in your risk assessment. So review your risk assessments with this in mind. Obviously they need to be right – but they also need to be realistic. These assessments are likely to be prime evidence taken into account by the court in looking at how many people were put at risk and how high the risk was. When you are looking at ranges of fines of the levels mentioned, don't score an own goal by overstating the position. Be realistic.
Susan Dearden: So, taking account of your size by turnover, your culpability and the harm that you risked, you will have a starting point and fine band. There are then a number of factors the court must look at to consider if the fine should be at the high end of the band or the low end of the band. Factors that will make the fine worse are things like previous relevant convictions, cost cutting at the expense of safety and a poor health and safety record.
Amber Strickland: And factors that will bring the fine down in the band include things like the absence of any record, a good health and safety record, evidence that good health and safety procedures were in place, cooperation with the prosecution and acceptance of responsibility.
Susan Dearden: To this point, we have been referring to prescribed bands. The court at this point will then stand back and review where it has got to. Just to remind you - factors taken into account so far will have been the business size based on turnover, culpability, harm, and factors that make the offence less or more serious. What the court is now required to look at is whether or not the fine it is looking at is proportionate to the overall means of the offender. What it will have in mind is whether or not the fine is sufficiently substantial to have a real economic impact which brings home to management and the shareholders the need to comply with health and safety legislation.
In looking at this the court will have a look at whether your turnover is substantially more than £50m pa. If it is, then it might multiply the fine it is looking at in order to achieve a proportionate sentence. It will also take account of your profitability.
For very large businesses this is quite an alarming prospect and the Court has made clear that a fine up to 100% of pre-tax profit may well be appropriate in some cases. In terms of practical steps you can take, I would suggest that if you are a very large or a very profitable business, think about what evidence you can put into the court to persuade them that the fine shouldn't spiral upwards at this point. This might be a statement from the FD or a report from an independent accountant providing some context to the published accounts – you know your business best and you need to explain whether or not the market is getting harder, and what the implications of a heavy fine might be so that all of this is taken into account and keeps the fine down. Fines are not covered by insurance – they do come straight off the bottom line.
In looking at whether or not the fine is proportionate to the size and profitability of a business the court will look at whether the fine will impact on the employment of staff, service users, customers and the local economy – but this is all going to be in evidence which you put before the court. Don't just assume that the Court will know this or assume this from your accounts.
Amber Strickland: The court will take account of any assistance given in helping to bring others to justice – this isn't something that is often of relevance in a health and safety case but it is worth knowing that this sort of assistance may help you – and that this sort of assistance may help others if they are convicted and are in a position to help convict you.
Susan Dearden: We now come on to the biggest reduction in the fine that you might be able to take advantage of and which in the guidelines is the next step for the court. This is the discount for an early guilty plea.
Amber Strickland: There is another set of guidelines for this discount. They were issued in 2007 and range down from a maximum 30% discount. But when you are looking at fines measured in £m a 30% discount is worth having. So when might this apply? Most people assume that the earliest reasonable opportunity for you to plead guilty will be on your first appearance in court for an offence. In many cases that is right. In some cases it may be later than that – for example when the prosecution hasn't provided disclosure of evidence that helps you to determine whether or not you should plead guilty.
Susan Dearden: However, the Reduction in Sentence for a Guilty Plea Guidelines go further than this and make clear that the first reasonable opportunity for an offender to indicate a willingness to plead guilty may be AT THE INTERVIEW STAGE before you have even been charged. For example, if an accident at work has injured your employee, you would be expected to investigate it and have available to you all the evidence to enable you to reach a decision early as to whether or not you have committed an offence. So if you don't acknowledge in interview what you have got things wrong, you might be jeopardising this very significant discount. It must be something therefore that you are thinking about and which steers your strategy and approach from the outset.
If the evidence against you is overwhelming that might also bring the guilty plea discount down a bit – conventionally to a maximum of 20% even if you indicate guilty early.
So my recommendation would be that from the outset you think about the early guilty plea discount, what it might mean and how you can use it to your advantage. At the moment, even if this might give you a discount of £m there isn't a cap on what the discount is worth in cash terms. I suspect this is something that in time will be revised so that there is a cap on the value of an early plea discount – but at the moment if a 30% discount is worth over £6.6m (which it would be for businesses with a turnover of £50m convicted of corporate manslaughter with a high level of culpability) – more than that for large businesses, it is worth having.
Don't jeopardise it by being defensive where that stance is not justified. Get early objective advice and be realistic in your position.
Amber Strickland: We have explained that these guidelines will apply to health and safety and corporate manslaughter offences sentenced after 1st February.
The Court's approach will be to look at how culpable you are and what harm was risked and caused to put the offence into a fine bracket with a starting point and that starting point can go up or down depending on a range of factors that will make the offence more, or less serious.
The court will then take account of your overall size if your turnover is substantially more than £50m per annum, and of your profitability to ensure that the punishment it is considering really does punish the company and its shareholders. If an early guilty plea has been indicated though this might bring the fine down by as much as a third. If you have been convicted of more than one offence arising from one set of circumstances, then the court will at this point look at what is fair in the round – you won't receive double the fine because there are 2 charges – it is more likely to split what the appropriate fine is between charges, or fine one charge and not the others. This is what is referred to as applying the totality principle
Susan Dearden: And finally, the court will consider if any ancillary orders ought to be made in addition to the fine. These aren't new and they aren't common in health and safety matters though for example they might include a remedial order requiring a business to put right any failings identified in the case. I would normally though have expected things to have been put right before this point because to do so would be a mitigating factor bringing the fine down.
The court is required by the guidelines to given reasons for and explain the effect of the sentence and this will I think limit the opportunities for appeal So that, in a nutshell is a summary of the new guidelines in relation to health and safety offences. Fines are undoubtedly going to go up and go up substantially. I will leave you with 6 key points to think about:
- The best advice we can give you is to focus and invest in avoiding situations that might lead to prosecution in the first place.
- Do review your risk assessments – make sure they are realistic and accurately identify risks and potential harms without exaggeration.
- Make sure health and safety is led from the top down – failure to do so might lead to prosecutions of individuals as well and the guidelines in those cases are more likely to lead to prison sentences than they were previously.
- Make sure you audit your health and safety practices and follow through any issues raised to ensure they are resolved.
- If you have an incident then seek advice early – you don't want to be defensive and risk loss of a significant discount for an early indication of guilty plea but equally you don't want to be admitting offences when there is a defence, and finally
- Do think about the evidence that might help to put your business turnover and profits into context if you are prosecuted
For a case study on how the guidelines are likely to apply and work in practice, please do have a look at our related podcast.
Thank you for listening and if you have any questions at all about health and safety and the new guidelines, please do call or Email anyone in our team.