Health and safety fines on the rise!

There have now been ten fines of over £1 million issued applying the new sentencing guidelines (albeit that two referenced the guidelines as opposed to directly applied them, in the week preceding the guidelines).

Just look at these two cases:

R v Watling Tyre Service Limited

On 1st June 2016 at Canterbury Crown Court, Watling Tyre Service Limited were sentenced to a fine of £1 million. This followed the death of an employee in January 2006 when a tyre he was repairing exploded. There were serious deficiencies in his training and supervision and systemic failings at the company in relation to health and safety. The Director of the company was acquitted at trial having pleaded not guilty to offences under s37 of The Health and Safety at Work Etc. Act 1974 alleging that the failings of the company were borne out of his consent, connivance or neglect.

When it came to the sentencing of the company, who had earlier pleaded guilty to charges under the health and safety legislation, the Judge followed the guidelines that have recently come into force notwithstanding the staggering ten year delay between the incident and the sentencing.

The Judge decided the likelihood of harm was high and the seriousness risked was level one, which produced an overall harm category of 1.  The annual turnover of the company made it a medium sized organisation for the purposes of the sentencing guidelines, with profits of just over £200,000 in the year up to 30 November 2014. The fine was therefore five times its annual profits!

The starting point for a medium sized firm with a harm category for one offence would be £950,000 with a range between £600,000 and £2.5million for high culpability, whereas the starting point would be £540,000 with a range between £300,000 and £1.4 million for medium culpability.

The Judge held that the starting point should be between £1.3 and £1.4 million, therefore sitting between medium and high culpability.  This was reduced for a guilty plea by 25% as this was not entered at the earliest opportunity so the level of fine was £1 million.  Costs of £99,485 were ordered to be paid within two months, despite the company's request for 12 months.

The fine represents five times the profit of the organisation.

The injustice? Had the company been fined within two or three years of the incident (which is more usual) then its accounts would have looked very different and resulted in a much lower fine. Had the Director's trial not been part of the process then the company would have been sentenced before the new guidelines had come in which would have resulted, we suspect, in a much lower fine.

HSE v Large Steel Company

On 26 July 2016 a large steel company was fined nearly £2 million after separate incidents at its Corby plant that saw two workers’ fingers severed by machinery that did not have suitable guarding.

The Court heard that on 12 September 2014, a 26 year old employee lost two thirds of his left hand and his middle and ring fingers as he attempted to clear a blockage on a steel tube manufacturing line.

Five months later, another employee was receiving refresher training when his left hand became caught in an inadequately guarded machine, severing his little finger. These were two separate and avoidable incidents.

The company pleaded guilty to two breaches of Section 2(1) of the Health and Safety at Work Act. It was fined a total of £1.98m, £185,000 for the first offence and £1.8m for the second. It was ordered to pay costs of £22,500.

The company's turnover was £4.17 billion up to March 2015 but with a loss after taxation of £851 million. The Judge accepted that, at step two of the guideline, he needed to move outside the suggested range to achieve a proportionate sentence.

For the second offence he increased the starting point from £1.1 million (High Culpability Harm Category 2) to £2.4 million and then increased this further to £2.75 million at steps three and four to reflect the extent to which the company fell below the required standard and the requirement to set a fine, so that it has a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation.

The Judge was not impressed with the submission by the company that ‘a fine of £1.1 million is obviously out of proportion to the risk of injury to fingers compared to death’ stating that ‘legislation is not in place to prevent death but to ensure the health and safety of employees, so far as is reasonably practicable.’ Interestingly, the Judge came to the conclusion that ‘the overall attitude of senior management was inadequately focused on day to day safety.’ The Judge reduced the level of fine to £1.8 million for the guilty plea.

In relation to the first offence, the Judge found that there was medium culpability and harm category 3 but due to the size of the company, the Judge moved up a harm category to 2 with a starting point of £600,000. Given the nature of the failings, the Judge moved up to £700,000 and reduced it for the early guilty plea resulting in a fine of £465,000. However, the Judge looked at the Totality Principle at Step Eight of the guidelines and reduced the fine further by 60% or £280,000 resulting in a fine of £185,000 and an overall financial penalty of £1,985,000 for the two offences.

This provides a very useful insight into the way in which a Judge will look at the guidelines especially when sentencing very large organisations, albeit with very large losses and in a very unsettled environment. Of particular interest is the comment of the Judge about the correlation between the injuries and the level of fine – health and safety sentencing is not about the injuries or consequences of the incident, it is about the level of risk.

There also remains a question mark over the sentencing of 'very large organisations.' The Judge in this case referred to a multiplier of 80 given that the turnover of the company was 80 times that of a large organisation as set out in the guidelines. Fortunately for the company, he did not go on to adopt that multiplier to his level of fine.

Author: Simon Tingle

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.

Simon Belfield

Senior Associate

I am 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.