Peter Clark, Account Executive at Pro-Sapien Software, discusses how organisations should be looking at the new sentencing guidelines strategically and positively, using them as the perfect opportunity to change perceptions and improve safety culture.
Reported as “the most dramatic change in health and safety enforcement since 1974“, the guidelines for sentencing in England and Wales have recently been updated, meaning fines upwards of £20m for high culpability corporate manslaughter. It’s all very concerning, especially for the EHS Directors and CEOs whose salary and freedom may be on the line. Who wants to go to jail for 3 years? To demonstrate how seriously they are taking it, the Sentencing Council states it is not afraid to put a business out of business with a fine.
To put the new fines into perspective, here are a couple of examples of what fines could look like from now on:
We know that accidents happen. They’re a fact of life. 611,000 incidents occurred in the workplace in 2014/15 in the UK. What’s important is how you deal with them, what you learn from them, and how that same accident is avoided in the future. A company’s approach to health and safety – safety culture – sets the tone for wellbeing of its employees, and on top of law, there’s the moral obligation to make sure everyone goes home at the end of the day. Prison time is going to become a more popular feature in sentences from now on, as the HSE aims to deeply engrave responsibility into those rightly responsible.
What large organisations should also be thinking about is how this is all going to affect insurance premiums. This won’t come as news, but it’s not just the Sentencing Council that will be considering your efforts into risk management: it’s the insurance companies and brokers too. Paying a high premium will be the least of your problems if you can’t get an insurance company to cover you at all.
Insurance doesn’t pay for the fines following a guilty conviction from the HSE; unfortunately, that’s left up to you. But they do pay the compensation claim from the victim or their family. If fines are rising, compensation claims could follow suit. When an organisation calls on its insurance to pay a £1m compensation package, this will be considered when calculating future premiums – common sense really, because that company is now a higher risk. If you can’t prove that you are putting time, effort and investment into preventing that accident from happening again, you could be faced with the very real and tricky issue of no insurance.
Under UK law most companies cannot operate without employers’ liability insurance, with the HSE charging up to £2500 for every day your company goes uninsured. What you need to do is start planning how you’re going to differentiate your company as a lower risk client to cover.
We recently spoke to the EHS team in a firm who acknowledged their exposure to the risk of the new non-compliance fines due to their lack of follow up actions. There was no system in place to monitor or update, and many corrective actions fell to the bottom of EHS Manager’s to-do lists. In this case, the company would be penalised in the event of an accident for insufficient efforts into mitigating risk, and would be open to the new fines of up to £20m. In the future, this could prove problematic in the form of sky-rocketed insurance premiums, or even worse – employee injury or fatality. What Directors and Executives now need to ask themselves is “How should I be looking at these new sentencing guidelines strategically and positively?”
And that’s exactly how we’ll be looking at them. The biggest shakeup in sentencing guidelines since the HSE was created in 1974 is the perfect opportunity to change perceptions and improve your safety culture.
On 17th March, Peter will be hosting a webinar discussion with Marsh Insurance and Brodies LLP on the sentencing guidelines. Following the webinar attendees will be offered a free, one hour, 1-2-1 consultation with any of the panel.
Peter has spent his working life in the UK, Europe and North America enabling his customers and partners to implement IT solutions that predict business outcomes and don’t just record business activities. As a passionate advocate of the moral side of Occupational Health and Safety, he joined Pro-Sapien Software in 2014 as he believes technology can be used not only to help make people safer, but to also increase operational efficiencies.
