Impact of sentencing guideline on regulatory fines

The impact of the Health and Safety, Corporate Manslaughter and Food Safety and Hygiene Offences Definitive Guideline (the “Guideline”), introduced on 1 February 2016, has recently been analysed in a Sentencing Council report (impact assessment).

Published figures show a significant increase in the sizes of fines imposed on organisations since the Guideline came into force. In this article we look at the report’s findings; revisit the courts’ approach to the Guideline; and suggest some ways to make sure you keep your regulatory house in order.

Conclusions of the impact assessment

The purpose of the impact assessment was to assess the Guideline’s impact on sentencing and levels of fines since inception, alongside analysing implementation and operational issues. Using data obtained from the Ministry of Justice’s Court Proceedings Database (CPD), the Sentencing Council report compares pre- and post-Guideline sentences.

Findings within the impact assessment are split between the three sorts of offences covered by the Guideline:

Health and safety offences

It was anticipated by the Sentencing Council that there would be a substantial increase in the size of fines imposed on larger organisations, and the data bears this out. What was not expected, and is highlighted in the assessment, is the fact that fines have also increased for smaller organisations.

In a 10-month period prior to Guideline implementation, the average fine for a health and safety offence was £40,500. This increased to a staggering £221,700 in the 10-month period post-Guideline.

The impact assessment also reveals that individuals are being sentenced to larger fines than previously. This, like the increases for smaller organisations, was not anticipated.

In 2017, approximately 200 individuals were sentenced by the courts for health and safety offences. 57% of these were sentenced to a fine, 10% to a community order, 21% to a suspended sentence of imprisonment, and 5% to immediate imprisonment.

Individuals may be prosecuted for their own failings, or where their consent, connivance or neglect with an organisation’s failings can be established. In our experience, officers of small to medium sized enterprises are at greatest risk.

The Health and Safety Executive’s own enforcement statistics reveal that 45 fines of over £500,000 were imposed by the courts in England, Wales and Scotland for the period 1 April 2017 to 31 March 2018. The single largest fine imposed was £3 million. Compare this to the 2014/2015 period, when there were just five fines at or above £500,000, and the single largest fine was £750,000 - and the effect of the Guideline’s implementation can be fully appreciated.

Food safety and hygiene offences

According to the data released by the Sentencing Council, the number of successful prosecutions of organisations for food safety and hygiene offences more than doubled from around 60 in 2013, to around 130 in 2016. This number has largely plateaued, however, since the Guideline came into force. It remains markedly less than the number of successful prosecutions of organisations for health and safety offences (340 in 2017).

The impact assessment suggests that the introduction of the Guideline has resulted in an increase in the size of fines for organisations convicted of food safety and hygiene offences; the average rose by almost £5,000 from pre- to post-Guideline. This is a smaller increase than for health and safety offences, and food safety and hygiene offences generally attract smaller penalties in any event. The average fine for an organisation in the post-Guideline period assessed was £7,100.

Both organisations and individual offenders see most of their cases dealt with in the magistrates’ courts (97% of organisations, and 92% of individuals in 2017).

The levels of fines imposed and the fact that most prosecutions are dealt with in the magistrates’ courts may reflect the fact that food safety and hygiene offences with very serious consequences are, fortunately, few and far between. The Guidelines do, however, anticipate fines for large organisations of up to £3 million for the most serious offences.

There were 260 individuals sentenced for food safety and hygiene offences in 2017. 92% received a fine, 2% received a community order, 3% received a suspended sentence and less than 1% received an immediate custodial sentence.

Corporate manslaughter offences

Prosecutions for corporate manslaughter remain very low in number. There have been few convictions since the Guideline was rolled out and so the data must be treated with caution, but the impact assessment has tentatively concluded that these fines have also increased. More data will need to be collated before definitive conclusions can be drawn.

The courts’ approach to the Guideline

It has been over three years since the Guideline came into force. The sentencing landscape has changed beyond recognition, especially for very large organisations. The impact assessment seems to confirm that the courts have taken on board the Sentencing Council’s direction to impose fines that are “sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with [regulation]”.

We can’t say we are overly surprised by the statistics. Our own experience is that the courts are generally following the Guideline in the methodical way intended, and that heavier penalties are being imposed. By the same token, fewer appeals have been successful since the Guideline’s introduction. But does this indicate, as Michael Caplan QC of the Sentencing Council hoped when they came into force, “a consistent approach to sentencing, ensuring fair and proportionate sentences…”?

The Guideline requires the court to assess and categorise both culpability and harm, and then to consider the means of the offender. The main steps in the Guideline are as follows:

Step 1: Determine the category of offence by reference to culpability and harm. In the context of these offences, harm relates both to that caused, and that risked. The risk of harm will often be greater than that actually caused.

Step 2: Determine the starting point and category range. For organisations, the focus here is on turnover, which determines the general level of financial penalty the Court will be considering.

Organisations are categorised between “micro” (turnover of less than £2 million) to “very large” (turnover greatly exceeding £50 million). The Guideline gives the court a starting point and range based on the size of the organisation, and the penalty will vary within the category range according to the presence of aggravating and mitigating factors. There are no starting points or category ranges for “very large organisations”. The Guideline requires the court to consider “[moving] outside the suggested range [for large organisations] to achieve a proportionate sentence”

Step 3: Step back and review the proposed penalty, and in particular whether any financial penalty is proportionate to means. This exercise affords the court a wide measure of discretion to move outside the confines of the suggested category range. For instance, an organisation with a large profit margin may expect to receive an upwards adjustment to the fine.

When culpability and harm are not in dispute, and the organisation’s (or individual’s) means are modest, then the Guidelines enable us to predict the likely sentencing outcome with a reasonable degree of accuracy.

However, both culpability and harm can be difficult for the court to assess, and recent case law endorses the use of expert evidence to assist: R v Squibb Group Ltd [2019] EWCA Crim 227. We have found that disputes about the assessment of culpability and harm can add a great deal of complexity to sentencing hearings, and the outcome can have a substantial effect on the magnitude of any penalty imposed.

Where an organisation is at risk of being considered “very large” under the Guideline, then it remains difficult to assess how the sentencing court might approach it. The Guideline, and subsequent case law, offer very limited practical assistance.

Moving forward

The impact assessment is an important reminder for all businesses to remain diligent when it comes to health, safety and welfare in the workplace. There are additional obligations on businesses that are required to adhere to food safety and food hygiene regulations. Prosecutions are likely to bring negative reputational and financial consequences.

We suggest four top tips to ensure you’re on the right track:

1. Top down commitment – make sure health, safety and welfare (and food safety, if applicable) are on the agenda for senior staff members;
2. Paperwork – make sure that your policies are comprehensive and up to date;
3. Training – ensure all workers are equipped with the correct knowledge and training, and are provided with regular updates; and
4. Plan for an incident – accidents can happen, no matter what. You will be judged on how you react. Have a plan in place and make sure that it is understood. We recommend that you take legal advice promptly in the event of a breach occurring.