- The increase applies to cases reaching the courts from February 2016, even if the incident that led to the prosecution occurred before that date.
- Health and Safety fines are now based on turnover.
- These fines are in addition to court legal costs, and there is also potential for individuals to be imprisoned or disqualified as a director.
Health and Safety Fines
From February 2016, fines for health and safety (H&S) offences, corporate manslaughter and food safety breaches increased substantially. The increase applies to cases reaching the courts from February 2016, even if the incident that led to the prosecution occurred before that date. e.g. the recent fine for Merlin Entertainments for the ‘Smiler’ ride incident at Alton Towers.
Health and Safety fines are now based on turnover. For example, a company with a turnover of less than £2m can now face a H&S fine up to £450,000; between £2m and £10m, the fine can be up to £1.6m, and a company with a turnover of £10m- £50m could face a fine up to £4m. So-called ‘very large companies’ will be subject to even higher fines.
If your company is part of a bigger group, it is possible that the court could seek to levy a fine based on total group turnover, and thus increase the level of the fine.
These fines are in addition to court legal costs, and there is also potential for individuals to be imprisoned or disqualified as a director. In the event of a corporate manslaughter conviction, the court may require the offending company to publicise the conviction on their website and other literature. Moreover, the conviction would have to be disclosed on procurement tenders.
Further details regarding these new sentencing guidelines are available, click here.
In addition to achieving greater consistency, it is clear that the Definitive Guideline will generally result in much greater fines being imposed. The key objectives of these guidelines are deterrence and the protection of the public.
“The objective of prosecutions for health and safety offences in the work place is to achieve a safe environment for those who work there and for other members of the public who may be affected. A fine needs to be large enough to bring that message home where the defendant is a company not only to those who manage it but also to its shareholders.”
The largest fine in 2016 was £5m, handed to Merlin Entertainments after five people were seriously hurt in a rollercoaster crash at its Alton Towers theme park.
This was two-and-a-half times the size of the largest fine in 2015 and almost ten times larger than the biggest fine in 2014.
Examples of recent fines include:
The trust which runs Burghley House, a stately home near Stamford, has been fined £266,000 after a butler was crushed by a luggage lift. The court heard no competent lift engineer had ever inspected the lift.
A Wiltshire estate agent has been fined £200,000 after a househunter fell 9m down a well during an “open house” viewing at a property being sold after the owner’s death
The largest fine in 2016 was £5m, handed to Merlin Entertainments after five people were seriously hurt in a rollercoaster crash at its Alton Towers theme park.This was two-and-a-half times the size of the largest fine in 2015 and almost ten times larger than the biggest fine in 2014.
Bakery giant Warburtons must pay a £2m penalty after a worker fell while cleaning a mixer, breaking his back. The court heard that the dangerous cleaning operation was routine, and staff were unprepared
What do you need to know?
Events prior to February 2016 will also be subject to the new level of fines. If there are any prosecutions pending clients should take advice on the likely level of the fine and make appropriate financial provision.
The new level of fines is a timely reminder to clients to review how they approach operational risk management issues such as H&S. How confident are the directors of your company that their H&S management would be able to withstand a prosecution? Company directors have a duty under the Companies Act 2006 to ‘promote the success of the company’ and to take into account ‘the interests of the company’s employees’ and ‘the impact of the company’s operations on the community and the environment’.
An alleged breach of duty by a company director could expose you to claims under their Directors & Officers Liability policy, a cover that some smaller customers may not have seen as necessary. Clients are reminded of the need to ensure they have appropriate levels of cover to give them peace of mind.
A useful document to bring this to the attention of clients is an IOD/HSE publication Leading Health and Safety at work - http://www.hse.gov.uk/pubns/indg417.pdf
This document is aimed at company directors and includes a health and safety leadership checklist and a guide to further advice sources.