A recent prosecution of a large food company has interesting lessons for other companies undergoing significant growth and the parallel health and safety issues this presents. It also provides an opportunity to reflect on the role of the financial analysis, “The risk of harm”, and mitigating factors in anticipation of the new Sentencing Guidelines.
A food company has been fined £60,000 after an agency worker was trapped between a forklift truck and a lorry he was about to unload. The Director of Operations at the time was also given a two-year conditional discharge after pleading guilty to two similar offences on the basis of negligence, and ordered to pay £50,513.18 costs after the Judge was told that this would be covered by the food company's insurers.
The incident occurred when the injured party and a HGV driver were unloading a lorry parked on the road, and the injured party put a pallet truck on the forks and stood on them himself whilst they were raised. As the HGV driver drove forward towards the lorry, with the injured party still standing on the blades, the vehicle fell out of control and jolted forward, and he was trapped between the lorry and the forklift blade, suffering a fractured pelvis and vertebrae.
As well as its own employees, the food company used around 200 agency workers across four sites. After successfully bidding for a contract and winning business for a major sporting event, the company had to make more use of the one of their sites, which was unprepared in terms of capacity and suitability both in terms of the site itself and the personnel.
The site where the accident happened became the 'picking and loading centre’ and there was a notable increase in the volume of HGV movement and, because of insufficient room for them all to park, some were loaded and unloaded on the road.
It was also observed that the surface was unsuitable for forklift trucks because of potholes. There were some poor working practices too - on the day of the accident, a HGV driver was driving a forklift despite not being licensed or familiar with this type of work equipment.
Moreover, the company’s Health & Safety Officer said everyone at senior level knew there were problems with the movement of vehicles at these premises.
The Judge noted that there was very serious breach of the company's responsibilities, which had necessitated “a substantial financial penalty”. There are significant warnings here for businesses that experience a period of success and growth. In these circumstances health & safety might be overlooked due to business pressure, however it is more important than ever to ensure that health & safety practices are adapted at the same rate to help mitigate the increased associated risks.
The risk of harm
Significantly, it was noted that the injuries could have been worse or even fatal and this was a significant factor in the judgment. Perhaps the most pertinent point of this commentary is that under the new draft Sentencing Guidelines the fine is governed by “the risk of harm” which can cause movement up the scales if the offence involved the potential exposure of multiple people to harm and/or was the significant cause of actual harm.
Simply put, potentially under the new guidelines, even if the injured party suffered very slight injuries, if there was a chance the injury could have been fatal and the breach involved serious failings, for large companies the fines will be unprecedented and much larger than the fine handed down here.
In 2013, the company had a turnover of £50 million and a gross profit of £10 million. This would have placed it in the top financial tariff under the new draft Sentencing Guidelines, which, applying our estimates of probable harm and culpability, could have culminated in a fine of around £500,000.
Interestingly, by way of mitigation, Michael Lavery, for the company, said the profit in 2013 was £1.2 million rather than £10 million, after the company had made losses in the previous two years. Whilst this referencing of financials is now commonplace, we anticipate that this rigorous detailing of a company’s financial health will be increasingly necessary to shift the judicial mind-set from the strict application of the guidelines, particularly given the potential handing down of ever increasing fines for “large companies” (those with turnover above £50 million).
Evidence of steps to remedy the problem – sword or shield?
In this case, the company argued that it had done "all it feels it can" to improve its health & safety, having accrued costs of £27,833. The Judge accepted that the company's practices at the date of sentence were appropriate for a company of its size, rendering it “quite a different company to what it was”.
Notably, although taking steps to remedy to the problem is a mitigating factor under the new Sentencing Guidelines and may assist in reducing potential fines for companies, this approach should be treated with caution as demonstrating that compliance could be secured by making changes strongly suggests that such measures were “reasonably practicable”, thereby establishing guilt, and could exacerbate potential fines if there is any suggestion that profit was placed before safety.
- The lesson to be learnt is that companies should always ensure that their health & safety practices keep pace with increasing demands and pressures.
- This case also provides a useful contrast between the approach under the existing regime and the potential new approach. Although the company was heavily fined, under the new tariff structure, large corporates (even when the worst possible outcome is avoided and fatal injuries do not materialise) will see significantly larger fines - in this instance, the fine could have potentially been five times larger than the one handed down due to the perception that the residual risk of harm was high.
- It also serves a reminder that in this world of ever increasing fines, a robust presentation of a company’s financial health will be increasingly necessary.
Author: Simon TingleThis information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.