My name is Natalie Barton and I am a Senior Associate in the Regulatory Crime Team.
As you've heard in part one of this podcast there are new sentencing guidelines coming into force on 1 February 2016 which are going to mean significantly increased fines for health and safety offences amongst others.
I am going to apply the new approach to the facts of a case study to highlight the difference that these new guidelines will make. If you haven't already you can download a copy of the sentencing guidelines from https://www.sentencingcouncil.org.uk.
The case that I am going to talk about is a real case, although I have used a different name for the company. This was a serious case, a fatality and one which was initially investigated by the Police as a potential corporate manslaughter charge but was eventually prosecuted by the Health and Safety Executive under Section 2 of The Health and Safety at Work Act. It was sentenced in the Crown Court and this company who I'll call Resistance Construction Limited received a £180,000 fine.
Here are the relevant facts:
Mr Damarin an employee for RCL was tasked with loading the component parts of a concrete batching plant into open topped shipping containers. Mr Damarin was killed when a large steel structure he had moved with an overhead crane toppled over and crushed him.
The steel structures were four large metal frames known as blisters weighing one and a half tonnes, measuring over eight metres long.
Mr Damarin was provided with a drawing prepared by RCL's drawing office, showing how the four frames might interlock when fitted into the container. He was not given a lifting plan. As it turned out the CAD drawing was inaccurate and the four frames could not be interlocked within a single container. Mr Damarin reported this to his manager and was told to leave it until a new plan was drawn up. However Mr Damarin made another attempt and using an overhead crane he placed one frame on top of another frame. He attempted to disconnect the web slings using a pendant control to lift the chains and hooks clear of the steel frame. Unfortunately one of the hooks caught on the upper frame which fell, causing Mr Damarin fatal injuries.
The key findings of the Court in this case were that although Mr Damarin was experienced and had been trained in lifting operations, he was not trained to plan and carry out complex lifts.
The Court found that lifting was essential to RCL's work and there should have been a lifting plan. The Court in particular commented that failing to do so was serious and fell well short of the standard required. The Court also found that the equipment was worn, although it was accepted that this was not causative of the incident, the Judge stated that this was indicative of the company's attitude to health and safety.
So those are the facts and the findings, let's now apply these new sentencing guidelines.
You will remember from part one of the podcast that the Court will consider first how culpable you are and the seriousness of the harm risked to find the starting point for a fine.
The first step then is to look at culpability.
The definition of high culpability in the Sentencing Guidelines is that the offender fell far short of the appropriate standard, for example by failing to put in place measures that are recognised standards in the industry.
Now these are the exact words that the Judge used in this case in relation to Resistance Construction Limited's failure not to properly plan the lifting operations for the steel structures. This certainly falls within an example of failing to comply with recognised industry standards so they would be pretty clearly within the definition of high culpability.
You will also remember that in part one of this podcast we outlined how the Court will look at determining the harm category. First the Courts will look at the seriousness of the harm risked and the likelihood of that risk arising. Now remember this is all about risk. So in terms of seriousness this will be level A, not because someone died but because there was a risk of death. It would be level A even if the steel frame had missed Mr Damarin and hadn't injured him at all. The likelihood of the risk arising is also high, the lifting operations were taking place all the time and the risk was therefore arising again and again. If you can refer to page five in the Sentencing Guidelines you will see that this gives us harm category one. The Court will then look as a second step at whether they should adjust this category of harm, based on how many people were exposed and whether the offence did in fact cause any actual harm.
In this case there were a low number of people exposed to any risk, just those working in the yard but it was also a significant cause of Mr Damarin's injuries so it is very unlikely that the Court would adjust the harm category.
As a next step the Court will then look at the size of the organisation. Resistance Construction Limited had a turnover of £20.8 million in the most recent year preceding this offence. Although it is worth noting that their net profit figure was £1.6 million. However the net profit figure is not relevant here, they would be considered a medium sized organisation based on their turnover.
So you will remember from part one of the podcast that there are sentencing grids and we need to look at the medium grid for this company. For a high culpability category one harm offence there is a starting point of £950,000 with a suggested range from £600,000 to £2.5 million. Now remember that pre-Sentencing Guidelines this company was in fact fined £180,000 and you can already see the significant difference that the Sentencing Guidelines are going to make.
The Court would then look at aggravating and mitigating features and there were a number of mitigating features for RCL. They had no previous convictions and they took steps very swiftly afterwards to replace all of their lifting equipment and to ensure that there was a safe system of work for all lifting operations. However, causing a death is always going to be a significant aggravating factor. Taking all of those facts into account we would expect this company to be fined at least £1.75 million under the new Sentencing Guidelines. Would that figure then have been adjusted upwards or downwards based on the requirement under the guidelines for the Courts to step back and review. Is this proportionate to the means of the offender and what impact will the fine have on the business?
Now you will remember that net profit figure of £1.6 million that I mentioned earlier. This is your opportunity to put as much information before the Court as you can to demonstrate the real impact that any fine will have on your business. For example will it impact on the business' ability to comply with the law? There were in fact in this case, for Resistance Construction Limited, some difficult financial circumstances which the Court was persuaded to take into account. Translating this to the guidelines I would anticipate a reduction to £1.5 million plus extra time to pay the fine. It's unlikely that there would be any adjustment for any assistance to the prosecution on the facts of this case but the most significant impact on the fine would be the fact that the company pleaded guilty at the earliest opportunity which would give then a one third reduction to £1 million. It is clear that a fine of this size would be a substantial impact on the company's profits and would send a substantial message to the company's shareholders but it is important to see that this is completely realistic under the new Guidelines. Now compare this again to the fine the company actually did receive of £180,000.
Now I want you to think about your own company turnover and your own profit margins and consider how that compares. For those of you listening whose organisations have a turnover of over £50 million for exactly the same circumstances your starting point for a fine is £2.4 million. For those of you here whose organisations are going to fall into the very large category the Court will have no hesitation in multiplying that starting point which could even be up to and including 100% of your pre-tax net profits. So those are pretty stark figures. There are a few key points to take away. First on 1 February there are going to be much bigger fines than there ever has been before for all health and safety offences. You need to be taking steps now to identify what are the risks in your organisations which would be in particular classified as harm category one and you need to be reviewing your risk management processes to make sure that you are not in a high culpability bracket. These areas are going to attract the highest fines and need to be prioritised.
Finally if you need to, I suggest you download a copy of these guidelines and use them to justify any increased spend that you need to make. A failure to comply with industry standards lands you in high culpability territory and not only is cutting corners considered an aggravating feature but any cost savings you've made are likely only to be added to any fine. So now is the time to look again at your budget.
If you have any questions at all about anything in this podcast then please don't hesitate to get in touch using the details available on our website. Thank you for listening.