Zoe Betts of Pinsent Masons answers your questions about Sentencing Guidelines
Zoe Betts answers readers’ questions about sentencing guidelines posed in the most recent SHP and Barbour EHS webinar
Our recent webinar focused on the impact of sentencing guidelines one year on from the incident at Alton Towers and the G4S case, Brexit, and what impact it may have and the HSE and the changes to the fee for intervention dispute process.
After the webinar Zoe Betts, senior associate at Pinsent Masons answered a number of questions from readers. We are very pleased to publish her answers here:
Although the outcome is based on a variety of factors, is it more accurate to say the decisions is based on potential or risk-based criteria under the ‘new sentencing guidelines’?
Step one of the Guideline deals first with ‘culpability’ and then with ‘harm’. It says this, “Health and safety offences are concerned with failures to manage risks to health and safety and do not require proof that the offence caused actual harm. The offence is in creating a risk of harm”.
The assessment of harm involves both the seriousness of the harm risked by the offender’s breach, and the likelihood of that harm arising. Where the offence was a significant cause of actual harm, the Judge may decide to move up a harm category, or move up the category range when deciding on a starting point for the fine. For these reasons it is certainly fair to say that sentencing for H&S offences is risk-based instead of outcome-focused (which was what used to happen, more often than not, prior to February 2016)
In reference to the G4S case, can you foresee future health related transgressions seeing high fines due to only needing to prove ‘potential harm’? I am especially thinking in respect to long latency diseases: silicosis, asbestosis and potentially Noise Induced Hearing Loss.
The answer is “yes”. Any employer is vulnerable to a H&S prosecution, conviction and a fine (determined by various factors but based primarily on its turnover) if it creates a state of affairs which poses material risks to its employees and/or non-employees. The law is based on risk of harm, not actual harm, and so now is the sentencing regime. So, to use your examples, if the evidence demonstrates that an organisation is failing to manage its undertaking (or its operational activities) in such a way as to expose people to the risk of silicosis, asbestosis or noise-induced hearing loss, there is the potential for a successful prosecution and imposition of a financial penalty. It matters not whether there is evidence of actual harm.
As you rightly recall about the G4S case, there was insufficient evidence to link the employee’s diagnosis of Legionnaire’s Disease to their place of work and their employer’s failure to manage the hot and cold water systems. That did not prevent the conviction and £1.8 million fine. Had there been such evidence, and the ability to prove that the breaches had caused the harm, there is no doubt in my mind that the fine would have been even higher as the Sentencing Guidelines specifically provided for that.
How will the legal changes impact business with a global footprint – would total business turnover globally be considered or contained to UK operations only?
The general principle underpinning the Sentencing Guidelines is that it is the defendant organisation’s turnover that is relevant when determining the appropriate fine for H&S offences committed by that entity. It would not, therefore, be appropriate for Judges to routinely look beyond the finances of the defendant organisation and make enquiries into other group companies and/or entities elsewhere in the world. It is not beyond the realms of possibility, however.
At Step Two of the Guideline it says this,
“The offender is expected to provide comprehensive accounts for the last three years, to enable the court to make an accurate assessment of its financial status……Normally, only information relating to the organisation before the court will be relevant, unless exceptionally it is demonstrated to the court that the resources of a linked organisation are available and can properly be taken into account”.
Much has been covered on fines, but what data is known on personal prosecutions and compensation?
Accurate and current statistics for the number of people who are prosecuted in their personal capacity for breaching H&S legislation are hard to come by. In late 2013, a Freedom of Information Act request revealed there had been a 400% increase in prosecutions of directors and managers under s.37 of the Health and Safety at Work Act 1974 over the preceding 5 years. It is my understanding that there are, on average, around 35-40 prosecutions of senior managers and directors every year under s.37
There are, on average, 15 – 25personal prosecutions under s.7 HSWA 1974 (which relates to employees at work who fail to take reasonable care for themselves or others).
Compensation is a civil issue and not something I can comment on. Fines imposed on organisations for breach of health and safety law, following a conviction, are paid into central government funds and not to any injured person(s). Claims for compensation for persona injury are commonly brought against the employer and may be settled / paid by the employer’s insurer once liability has been admitted.
Much of the focus of sentencing guidelines has been on large and very large companies. How are these changes likely to affect the small and medium sized business?
The changes to the sentencing regime will affect businesses of all sizes. The Sentencing Council confirmed that the new Guidelines were introduced to ensure that fines “fairly and proportionately” reflect the seriousness of the offence and the means of offenders.
The new sentencing guidelines give rise to potentially much higher fines even for cases not involving a death given that the new guidelines provide for a range of fines up to £10 million with a starting point of £4 million against large organisations for most health and safety offences not involving corporate manslaughter. For medium companies, the guidelines provide for a range of fines of up to £4 million with a starting point of £1.6 million. For small companies, the guidelines provide for a range of fines of up to £1.6 million with a starting point of £450,000. The point within the range that a case falls is largely a matter for the discretion of the court.
Having assessed culpability and harm, as well as applicable aggravating and/or mitigating factors, Step Three in the Guideline requires the Judge to “step back”, review and if necessary, adjust the initial fine based on turnover to ensure that it fulfils the objectives of sentencing and is proportionate to the overall means of the offender. In this sense, profitability of an organisation is relevant (and regardless of whether the organisation was identified as Micro, Small, Medium, or Large by reference to its turnover).
In theory, therefore, the Guidelines should have the same “real economic impact” on a business, regardless of its size. In practice, however, my own analysis of a number of fines imposed by the courts since Feb 2016 appears to reveal a disproportionate effect on small and medium sized organisations, and I covered a number of those cases during the webinar.
An issue for the courts to consider when punishing small and medium sized businesses for health and safety breaches is the extent to which any fine may prevent the company from properly investing in H&S going forwards and to preventing a future recurrence.
Fees for Intervention – Are these payable upon successful prosecution, or in all cases where the HSE services notices of breaches? Or are these fees recouped via the fines imposed at court?
Fee For Intervention (“FFI”) fees are not dependent upon a successful prosecution by the HSE. There need be no prosecution at all for the FFI invoice to be issued and be payable. You may find HSE48 (Fee For Intervention – What You Need To Know) a useful guide. It makes clear that the FFI scheme enables the HSE to recover the costs it incurs in investigation breaches and requiring duty holders to remedy those breaches, including the taking of enforcement action (up until the point when summons land to initiate a prosecution. At that point, the FFI costs would cease to be racked up but a separate tally of ‘prosecution costs’ would be kept and the defendant would need to pay these costs, as well as any fine, if it is convicted of one or more H&S offences).
The scheme “bites” when the HSE Inspector forms the opinion that the duty holder is in material breach of the law and puts that opinion into writing, commonly via a Notification of Contravention letter and/or an enforcement notice. That written opinion identifying material breaches paves the way for the subsequent invoice(s). The invoice, and the underlying opinion of the inspector, can be queried and disputed although this process has recently been threatened with judicial review due to a perceived lack of independence and it is currently under consultation.
In answer to the other question, FFI fees and fines imposed by the courts are entirely separate. FFI fees go to the HSE; fines imposed by courts are paid into central government funds. The fact that an organisation has paid FFI invoices prior to being prosecuted has no bearing on the ultimate fine it may receive from the sentencing judge.
When it comes to occupational Health and Safety, how it would be assessed under the sentencing guidelines? As it takes long time to develop.
Any employer is vulnerable to a H&S prosecution, conviction and a fine (determined by various factors but based primarily on its turnover) if it creates a state of affairs which poses material risks to its employees and/or non-employees. The law is based on risk of harm, not actual harm, and so now is the sentencing regime. So, if the evidence demonstrates that an organisation is failing to manage its undertaking (or its operational activities) in such a way as to expose people to the risk of hand arm vibration syndrome, silicosis, asbestosis or noise-induced hearing loss, for example, there is the potential for a successful prosecution and imposition of a financial penalty. It matters not whether there is evidence of actual harm or whether those conditions, in reality, take a long time to develop. It is the risk of harm that is key nowadays to H&S sentencing.
In the G4S case there was insufficient evidence to link the employee’s diagnosis of Legionnaire’s Disease to their place of work and their employer’s failure to manage the hot and cold water systems. That did not prevent the conviction and £1.8 million fine. Had there been such evidence, and the ability to prove that the breaches had caused the harm, there is no doubt in my mind that the fine would have been even higher as the Sentencing Guidelines specifically provided for that.
to ensure people’s health and safety, and the only reason for the risk arising was an individual’s failure to follow a safe system of work upon which they had been trained.