The Sentencing Council has published guidelines to be used by Judges when sentencing corporate manslaughter, health and safety offences and food safety and hygiene offences.
The guidelines will apply to all sentences passed on or after 1 February 2016 irrespective of when the relevant offence was committed. They are expected to result in significantly larger fines being paid, particularly by large corporate defendants.
The Definitive Guideline
The final guidelines are almost identical to a draft version issued in November 2014 as the basis for a consultation which ran until February 2015. We discussed the draft guidelines in our blog post dated 16 December 2014, available here.
The guidelines were produced following a review of sentences passed over a number of years in corporate manslaughter and health and safety cases. They reflected the Sentencing Council's conclusion that there was a lack of consistency in the approach to sentencing and a perception that the fines imposed on large corporate defendants were often too low to satisfy the public policy requirements that fines should be proportionate and should deter future wrongdoing. The guidelines followed a line of cases in which the financial means of corporate offenders were considered increasingly closely when passing sentence. See for example our e-bulletin on the Court of Appeal ruling in R v Sellafield, R v Network Rail.
The guidelines represent a more structured and mathematical approach to setting fines for corporate offenders than has previously been applied although uncertainty still exists when it comes to sentencing the largest corporate entities.
The guidelines require a Judge to determine the appropriate fine via a multi-stage approach which is summarised below.
- Determine the category of offence by reference to the level of the offender's culpability and the risk of harm created by the relevant breach
The level of culpability ranges from "low" to "very high" and is assessed by reference to a range of objective factors. For example, where a company's breach arose from its failure to put in place safety measures that are considered to be industry standard, that would point towards a high level of culpability. Where, by contrast, a company has made significant efforts to mitigate the relevant risk that would point to a lower level of culpability in cases where its efforts proved inadequate.
The Court will then consider the risk of harm created by the breach. It is important to bear in mind that health and safety offences focus on the creation of a material risk of harm, not on causing actual harm. The guidelines do acknowledge, however, that an offence resulting in actual harm should lead to a larger fine than one which merely creates a risk. The Court will determine a 'Harm Category' by assessing (i) the seriousness of the harm that could have (or did) eventuate (from minor injury up to serious injury/death); and (ii) the likelihood of that harm eventuating. The lowest Harm Category (4) will be appropriate where, for example, the breach could only ever lead to a minor injury and there was a low chance of even that happening. The highest Category (1) will be appropriate where there is a high probability of death or serious injury.
The above relates primarily to health and safety offences. Considering relative levels of culpability and harm is much less relevant in the context of corporate manslaughter (where both culpability and harm must by definition be of the most serious nature). Nonetheless, the guidelines do provide a mechanism for distinguishing between more and less serious instances of corporate manslaughter (referred to as Categories A and B) by considering factors such as the level of foreseeability and the number of people killed (or put at risk of death or serious injury).
- Identify the appropriate starting point and range of fine (by reference to the category of offence and the financial means of the offender)
The Court will then consider financial information concerning the corporate offender and classify it based on annual turnover:-
- "micro" (up to £2 million turnover);
- "small" (£2 million – £10 million);
- "medium" (£10 million – £50 million); or
- "large" (more than £50 million).
The guidelines accept that in some instances it will be necessary to look beyond turnover (e.g. where a company has a large turnover but very small – or non-existent – profits, that may be a relevant consideration). The onus will be on the company to show that turnover alone does not properly reflect its financial position.
The guidelines include matrices specifying appropriate ranges and starting points for fines by reference to the category of offence and size of company. So, for example:-
- where a "small" company commits a health and safety offence within Harm Category 1 (i.e. where there is a high likelihood of death or serious injury eventuating) and its culpability is found to be "high", the starting point is £250,000 and the range is £170,000 – £1 million. Where a "large" company commits an equivalent offence the starting point is £2.4 million and the range is £1.5 million – £6 million.
- where a "micro" company is found guilty of Category A corporate manslaughter the starting point is £450,000 and the range is £270,000 – £800,000. For a "large" company the starting point is £7.5 million and the range is £4.8 million – £20 million.
The guidelines also refer to a fifth category of "very large" companies and provide that "where an offending organisation's turnover…very greatly exceeds the threshold for large organisations [i.e. £50 million], it may be necessary to move outside the suggested range to achieve a proportionate sentence". Neither the draft guidelines nor the final version provide any clarity as to how much more than £50 million turnover would make a company "very large".
- Set the fine within the range
Having identified the applicable starting point and range, the Court will consider relevant aggravating and mitigating factors in order to determine where within the range a fine should be set. Aggravating factors include previous convictions and cost cutting at the expense of safety. Mitigating factors include self-reporting and evidence of steps having been taken to remedy the problem.
Finally, the Court will (i) consider whether the level of fine arrived at via steps 1 to 3 needs to be adjusted to ensure it is proportionate to the overall means of the offender; and (ii) apply any reductions that are appropriate for, for example, an early guilty plea or assistance provided to the prosecution.
The guidelines provide a similar approach to be followed for individuals who commit health and safety offences. Appropriate starting points and ranges of sentences (including both fines and imprisonment for up to 2 years) are set by reference to the offender's culpability and the nature of the risk created by their offence.
Amendments to the Guideline following consultation
As noted at the outset, the final Definitive Guideline is virtually identical to the draft issued in November 2014. There has been no change to the overall approach to sentencing nor to the specified levels of fines.
The minor changes to the text include the following:-
- "Targeting vulnerable victims" has been included as a new aggravating factor (to be considered at step 3 in the sentencing process). According to the Sentencing Council's response to consultation document, this factor is intended to apply where, for example, an employer uses workers who are unable to challenge unsafe practices due to limited language skills.
- As noted above, one mitigating factor to be considered at step 3 is the extent to which a company has sought to remedy the problem after the offence has been committed. The word "voluntarily" has been added to the final text to reflect that fact that offenders are frequently required (by the HSE or other regulators) to remedy unsafe practices or replace unsafe equipment and no credit should be given for complying with these requirements.
- The terminology used to describe the extent of an individual offender's culpability has been amended to mirror the terminology used for companies. Previously an individual's culpability would be "low", "reckless", "negligent" or "deliberate". Now it will be "low", "medium", "high" or "very high".
Several responses to the consultation highlighted the lack of clarity as to (i) what level of turnover will lead to a company being classified as "very large"; and (ii) how this will impact on the level of fine imposed. The Sentencing Council declined to make any amendment to address this. This is consistent with the approach taken by the Court of Appeal in R v Thames Water Utilities Ltd  (see our e-bulletin on this case here).
R v Thames Water was the first case in which the Court of Appeal applied sentencing guidelines for environmental offences which are very similar to the new guidelines for health and safety offences and corporate manslaughter. In that case there was no doubt that Thames Water was "very large" (with turnover of £1.9 billion and profits of £346 million). The question was how this should impact on the level of fine. At first instance the Recorder took a mechanistic approach and multiplied by five the fine she would have imposed on a "large" company. The Court of Appeal upheld the fine but rejected the approach and indicated that it would have upheld a much higher fine. The judgment stated that (i) there should not be a mechanistic approach to calculating fines for "very large" companies – the exercise involved complex issues and such an approach would hinder the sentencing Judge's ability to properly reflect such issues; and (ii) in serious cases, fines imposed on "very large" companies may be measured as a percentage of pre-tax profits (up to 100% in the most serious cases, even if that leads to fines of over £100 million). The Sentencing Council cites the judgment in its consultation response document and suggests that this will provide guidance for Judges required to assess fines for "very large" companies.
In our December 2014 e-bulletin on the draft guidelines we suggested that if they were implemented they would lead to larger (and potentially much larger) fines for larger companies and great uncertainty for companies that could be deemed to be "very large". This remains our view.
It is inevitable that discussion of the new guidelines tends to focus on the potentially huge fines for corporate manslaughter and the most serious health and safety offences. However, it will also be the case that there will be a significant increase in fines for less serious offences. Consider, for example, the case of a "large" company that commits a health and safety offence by creating a 'medium risk' of 'Level B' injuries (i.e. injuries that are serious but not life-threatening). If the company is found to have 'medium culpability' (the second lowest category) it will face a fine of up to £750,000. This is very significantly higher than the level of fine that would previously have been imposed for such an offence. Indeed, £750,000 is more than the largest fine imposed to date for corporate manslaughter (a fine of £700,000 passed in December 2015) despite corporate manslaughter being a very substantially more serious offence in terms of both culpability and harm. Again, it remains to be seen how sentencing Judges will apply the new guidelines.
The Definitive Guideline and the Sentencing Council's response to consultation document can be accessed on its website here.