Time for a review

Since the introduction of the new Sentencing Guidelines just 12 months ago, prosecutions of company directors and senior managers for health & safety offences have escalated, along with fines. The message to UK Plc is clear; health & safety must now be firmly on the Board Room Agenda, says Bryan Lawrie

When the new sentencing guidelines for health & safety, corporate manslaughter and food safety and hygiene offences came into effect in February 2016 businesses were warned that the resulting rise in fines and prosecutions could have a serious impact on their bottom line. The new guidelines heralded a greater emphasis on fines being related to turnover rather than profit and a new focus on hypothetical risk of harm as well as actual harm, while also giving magistrates the power to impose unlimited fines.

The new approach
The new guidelines are designed to give courts a more consistent means of passing sentences by taking a step by step approach which begins with determining the offence category by considering culpability and harm. Courts must now decide whether a defendant’s culpability was “very high”, “high”, “medium” or “low”. They must then establish a harm rating of between 1 and 4 (with 1 being the highest rating) depending on the scale and severity of potential harm. The next step is to apply the harm rating and culpability assessment to a series of tables with fine ranges that correlate to levels of annual turnover. The recommended fines range from between £50 to £450,000 for micro-organisations with a turnover of less than £2 million, to between £3000 to £10 million for large organisations with a turnover of £50 million and above (separate guidelines for corporate manslaughter offences apply). The subsequent steps involve close examination of the company’s finances, the defendant’s plea and consideration of other factors that affect the individual case.

Fines in the millions, with or without actual harm
Prior to the publication of the guidelines, a breach of health & safety regulations which did not result in injury was likely to have resulted in a fine in the tens of thousands. Now organisations are regularly receiving fines in the millions.

The first large organisation to be convicted and sentenced under the new guidelines was ConocoPhillips (UK) Limited, one of the world’s largest oil and gas exploration and production companies, which received a fine of £3 million on the 8th February 2016. ConocoPhillips admitted serious safety failings after two uncontrolled and one controlled but unexpected gas releases.

Although no-one was hurt in the incidents, crucially the scale of the fine reflected the risk of death and serious injury with the Judge highlighting that despite the company having procedures and safeguards in place, they had failed to properly identify and control risks. It is also worth noting that the £3 million fine was awarded even though Conoco Phillips Limited, which had a turnover of £4.8 billion, had reported a pre-tax loss of £85 million.

Cases such as that of Conoco Phillips clearly illustrate the courts’ new confidence in awarding significant fines even in the absence of injury and are a strong reminder to businesses that health & safety procedures and safeguards must be stringent and up-to-date. Such cases are also attracting a significant amount of media attention showing there is nowhere to hide for businesses that are falling short on their health & safety obligations.

Fines & prosecutions rise
Analysis of data, made available following a Freedom of Information Act request by Osborne Clarke and published in a joint report produced with IOSH: Health and safety sentencing guidelines one year on (http://www.iosh.co.uk/ Books-and-resources/Health-and-safety-sentencing-guidelines. aspx), highlighted a sharp upward trend in terms of both fines and prosecutions over the last year, with the following observations:

  • The largest fine in 2016 was two-and-a-SS half times the size of the largest fine in 2015 and almost ten times larger than the largest fine in 2014.
  • Nineteen companies received fines of a million pounds or more in 2016 (the largest being £5 million), compared to only three in 2015 and none in 2014.
  • Total income from the highest 20 fines in 2016 (£38.58 million) was higher than the total fine income for the 660 prosecutions successfully brought by the HSE in its reporting year of 2015/2016 (£38.3 million).

In addition to these trends, latest figures for 2015/16 show that prosecutions were up six per cent overall, with HSE and COPFS prosecuting 696 cases resulting in at least one conviction in 660 of these cases, giving a conviction rate of 95 per cent. HSE and COPFS prosecutions led to fines totaling £38.3 million in 2015/16, compared to just £18.1 million in fines from 2014/15.

Director prosecutions treble
Meanwhile, research last year by law firm Clyde & Co identified that the number of company directors prosecuted for safety and health offences more than tripled in one year. Data obtained directly from the Health and Safety Executive (HSE) shows that 46 company directors and senior managers were prosecuted by the HSE in the year to 31 March 2016, compared to 15 in the previous year, demonstrating a rise of over 206 per cent. During the same period the number of employees prosecuted fell, with just one individual employee prosecuted by the HSE in 2015/16, compared to ten in the previous year.

What does this mean for businesses?
The steep rise in fines and prosecutions over the past year clearly demonstrates that health and safety is a businesscritical issue and must be managed as such. Thankfully for most businesses, health and safety will not be new to the boardroom agenda, but it may be time to raise its profile. In light of the recent upturn in fines and prosecutions, businesses that haven’t done so already would be wise to review their health and safety policies.

If a review highlights any areas of concern, particularly in terms of correct competency training it may be necessary and/or prudent to enlist outside help. Employers are obliged to appoint someone competent to help them meet their health and safety duties which could be a combination of themselves and/or one or more of their workers, or someone from outside their business.

The costs of failing to effectively manage health and safety may be rising fast, but the benefits of getting it right are wide reaching and, with the right, support businesses can realise these benefits and protect both their workforce and their bottom line

Bryan Lawrie is sales and marketing director at Arco. Arco is the UK’s leading safety company. It distributes quality products and training and provides expert advice, helping to shape the safety world and make work a safer place. Founded in 1884 and with a heritage spanning four generations, Arco integrates traditional family values with pioneering innovation to offer a world-class range of over 170,000 quality assured, branded and own brand products, including personal protective equipment, clothing, footwear, gloves, workplace safety and hygiene products.

For further information please visit: arco.co.uk