Health and Safety update - the application of the new Sentencing Guidelines

We consider two recent decisions applying the new Sentencing Guidelines and what their implications are for medium and small companies.

Falcon Crane Hire Limited: Medium business

A crane hire company has been fined £750,000 following a HSE investigation following a 2006 crane collapse in Battersea, London. The collapse caused the death of the 37 year old crane operator and a 23 year old pedestrian. Falcon Crane Hire Limited subsequently pleaded guilty to breaches of section 2 and 3 of the Health and Safety at Work Act 1974. Separate charges against the Managing Director were dropped in exchange for a guilty plea by the company.

Southwark Crown Court heard that the crane had been badly overloaded with twelves tonnes of counterweights instead of eight after the wrong instruction manual was used to erect the crane. The extra weight would have increased the tension on a crucial set of bolts by "100-plus per cent" according to the HSE inspector. The company had failed to investigate why four bolts on the crane had failed two months earlier.

The case is a good example of the new sentencing guidelines being strictly complied with. The company's £22,000,000 turnover placed it within the "medium" sized company bracket for the purposes of the guidelines. The company's high culpability and the significant aggravating features of the case (not investigating the cause of the earlier bolt failure and the fact that the breach resulted in two deaths) meant that the starting point for the fine would be higher than the £950,000 starting point for that sentencing bracket. Assuming this was reduced for the company's guilty plea by up to one third this represents a starting point of approximately £1.1m. Indeed, given the two deaths the company potentially risked being found to have a "very high culpability", under which the potential starting point is £1,600,000.

Rainbow Waste Management Limited: Micro business

A Derbyshire-based waste and skip hire firm has been fined £136,000 and ordered to pay £64,770 costs after a worker was fatally crushed by the bucket of a motorised loading shovel.

In the 10 days leading up to the incident, CCTV cameras at the site captured over 200 examples of unsafe working practices. These included dangerous operations with the shovel such as workers being lifted in the bucket or having to take evasive action to avoid contact with moving vehicles.

The HSE Inspector said that: “Rainbow Waste failed to put in place basic legal requirements of training and supervision. The death of this young man was entirely avoidable.”

Applying the new Sentencing Guidelines, the Judge concluded the firm’s culpability was high with a category one harm level. With a turnover of less than £2 million per annum, the company fell into the "micro" category in terms of size of enterprise. These factors brought the fine into the range £100,000 to £250,000 with a starting point of £160,000. The fine was reduced due to an earlier guilty plea although the array of unsafe working practices, and the number of employees exposed to them, constituted a significant aggravating feature.

The case clears up any lingering doubt that a court will be reluctant to hand down significant fines to "micro" businesses. It has been suggested that the new guidelines are of greatest concern to the largest corporations who could now be fined an unlimited amount and who are likely to face the largest percentage increase in fines. However, the judge in the case said that "for a micro company, fined full costs and with six years to pay [the fines] off [it’s significant]. Given that the objective of sentencing is to bring home the seriousness of the offence and impose a significant financial penalty under the company under the new sentencing guideline this fine clearly will do so.” Smaller businesses will therefore be unable to excuse failures to take action to protect employee safety due to their low turnover without risking significant and potentially crippling penalties being imposed.

Author: Simon Naylor

This 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.

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Paul Matthews

Partner - Head of Regulatory (Yorkshire and North East)

I am a Partner in the Regulatory team and a corporate defence specialist who provides up-front regulatory compliance advice and representation to businesses and senior managers in relation to investigations and prosecutions by regulatory bodies.