CIPD: Corporate manslaughter may cost larger organisations £20 million. New sentencing guidelines for courts dealing with corporate manslaughter, health and safety, and food safety offences were published recently. They will mean significantly higher fines for any case sentenced on or after 1 February 2016. Any HR professionals responsible for health and safety legislation compliance in their organisation, for example, those working in SMEs without dedicated health and safety departments, should be aware of the potentially devastating commercial consequences of future prosecutions.
The guidelines cover a huge range of offences. Examples of conduct which might expose an organisation to criminal sanctions include:
- causing an outbreak of food poisoning due to a lack of proper hygiene at a food processing plant
- neglecting residents at a residential care home
- inadequate risk assessments on a building site where someone subsequently suffers an injury.
Previously, only corporate manslaughter and health and safety offences causing death were covered by specific guidelines and there was a sense that the process of calculating fines was insufficiently rigorous. Also, because courts do not deal regularly with health and safety matters, there was a lack of consistency in sentencing. In addition, there was concern that fines, particularly for larger organisations, did not fulfil the purposes of sentencing (punishment, deterrence, and public protection) and sometimes failed to reflect the seriousness of the harm caused and/or the culpability of the offender.
The most significant aspect of the new guidelines is a huge increase in fines for companies that are successfully prosecuted. In the past, fines for corporate manslaughter offences started at £500,000 and could go up to millions of pounds (the amount was unspecified); fines for health and safety offences causing death were £100,000 and upwards. In fact, fines rarely reached these minimums. The new guidelines provide a much more detailed calculation mechanism. For the most serious forms of corporate manslaughter committed by large organisations, for example, fines may be as great as £20 million.
The most important aspect of a company’s finances for the purposes of calculating any fine is turnover, rather than profit. The stated intention of such fines is to have a “real economic impact” and, in some cases, put a convicted organisation out of business. So it is important that any organisation considers its health and safety obligations properly.
Under the new guidelines, a convicted organisation must provide comprehensive accounting information to the court so that its financial status can be accurately assessed. If the court is not satisfied that sufficient reliable information has been provided, it may infer that the organisation can pay a fine of any size. So company directors (and, by extension, HR) will want to ensure that all requisite data is provided.
Sentencing guidelines only take effect once the worst has happened: a breach of health and safety legislation leading to prosecution and conviction. The aim of any organisation should, of course, be to avoid such situations. Whether the new penalty levels will prove an effective incentive to avoid prosecution is open to question. Statistics show workplace accidents and deaths are actually falling year on year. The number of organisations sentenced for health and safety and food safety offences has been decreasing since 2012 and the number of corporate manslaughter convictions is so small, it has barely reached double figures since the legislation came into force in 2008. It may be that better training or other measures might have a greater influence on compliance with legislation rather than ever harsher sentencing.