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July 8, 2009

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Corporate manslaughter guidelines could lead to increased fines

The Sentencing Guidelines Council (SGC) has confirmed it is aiming to publish this summer a draft guideline on the amount of fines as a percentage of turnover that should be handed down in convictions in corporate manslaughter and other workplace fatality cases.

The appropriate level of a fine is currently determined by the annual profit a company makes, not its turnover. Nick McMahon, partner at London law firm Reynolds Porter Chamberlain, commented: “The recommendations, if implemented, are likely to lead to a substantial increase in fines for convicted companies. Particularly in the current economic climate, there is concern that a change to calculating fines from turnover, as against profit, would, in some cases, cripple companies who do not have healthy balance sheets.”

Although not specifying exactly when the guideline will be announced, the Sentencing Guidelines Council and Sentencing Advisory Panel’s (SAP) fifth joint Annual Report, released on 24 June, says that the calculation of fines for organisations of different sizes and structures that fulfil different purposes is a “fundamental issue”.

The SAP has recommended fines of up to 10 per cent of turnover in corporate manslaughter cases and 7.5 per cent for charges involving a fatality under the HSWA 1974.

The SGC has undertaken extensive research into public opinion on the principles of sentencing and has consulted directly with a wide variety of bodies on the approach to sentencing for corporate manslaughter in the development of its guideline.

The potential problems with linking fines to turnover were hotly debated at SHE 09 in May this year, where it was argued that fines should be linked to a firm’s ability to pay instead.

 

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