The New Sentencing Council Definitive Sentencing Guide :
Health & Safety, Corporate Manslaughter and Food Safety & Hygiene Offences : Part 1
The Sentencing Council have published a new Definitive Guide to sentencing to be used by the Courts in the context of breaches of the Health and Safety at Work Act 1974 (HSWA) and the Corporate Manslaughter and Corporate Homicide Act 2007 in November 2015. This new Definitive Guide will apply to all offences sentenced after 1 February 2016, regardless of when the offence(s) took place.
The guidance also applies to food hygiene offences, albeit the same are outside the scope of these particular articles. Nevertheless, readers of these articles should be aware of the potential for such offences also to give rise to increased fines from 1 February 2016.
Thus, any individual or organisation which falls to be sentenced for a serious health and safety offence in 2016 is likely to be sentenced pursuant to this guidance. Moreover, the guidance represents the first ‘one stop’ guidance for the Courts in the context of both serious health and safety offences generally and corporate manslaughter offences. Previously, separate guidance existed in regard to health and safety offences giving rise to death or serious injury and corporate manslaughter. Obviously, in the context of both, the former guidance and the new guidance, case law will play a role in assisting the Court in arriving at a suitable and proportionate sentence. However, the new guidance does represent a new departure in a number of respects. On a more prosaic level, the financial penalties likely to be imposed will be, potentially, significantly greater than the previous penalties.
In this, the first of two articles on the new Definitive Guideline, we will examine, initially, its impact in terms of Health and Safety at Work Act 1974 offences. In the second article, we will then consider the impact of the Definitive Guide on the specific offence of corporate manslaughter pursuant to the Corporate Manslaughter and Corporate Homicide Act 2007.
The sentencing guidelines will also apply to public sector organisations as well as the private sector. Somewhat different considerations, however, apply to public and private sector organisations, as we shall see below.
In summary, the new sentencing guidance, via the Definitive Guideline will, in the appropriate circumstances, give rise to a significantly increased level of fine to be imposed upon a particular organisation. Additionally, the various stages of the sentencing process are likely to require expert consideration and legal input in order to ensure, as far as possible, that fines are appropriate and, where possible, minimised for the organisation concerned.
Application of the guidelines
As above, the new guidelines will apply to all sentences which are imposed from 1 February 2016, regardless of when the offence(s) took place. Section 125(1) of the Coroners and Justice Act 2009 already provides (for offences committed after 6 April 2010) that "every Court… must, in sentencing and offender, follow any sentencing guidelines which are relevant to the offender’s case…."
Health and safety offences (excluding corporate manslaughter)
The Definitive Guideline requires the sentencing Court to engage in a staged analysis of the offence, including the various factual elements of the offence, the implications of the offence (for the victim) and the financial resources of the organisation concerned.
In that specific context, the mechanism of sentencing engaged by the guidance is very similar to the approach taken by Courts since time immemorial. However, as touched upon above, the approach at each stage of the sentencing process is now more rigid, and a series of specific steps are required to be explicitly engaged with, rather than an overall ‘holistic’ approach. In that context, the sentencing process is (hopefully) likely to be a more transparent and understandable process for both offenders’ and victims’ families alike. Perhaps unlike the current situation, where the process can appear difficult, if not arcane, to those who are not members of the legal profession.
On the other hand, the number of factors and issues to be engaged with by the Court at each step of the process does have the potential to increase legal argument considerably as to which view the Court should take of a particular aspect of the offence/offender.
Step 1 : Determine offence category
The Court is initially required to determine the category of the offence by considering (a) culpability and (b) harm. In carrying out these two assessments, the Court is required to consider two specific tables provided within the Definitive Guide.
In regard to culpability, the Court is required to resolve whether the offence falls into 1 of 4 categories as follows:
In each such category, elements of the offence are required to be considered to determine the categorisation of the culpability of the offence. Thus, in this context, the position is summarised as follows:
Very High Culpability
Deliberate breach of or flagrant disregard of the law
Offender fell far short of the appropriate standard, for example, by:
Failing to put in place measures that are recognised standards in the industry as a whole
Ignoring concerns raised by employees or others
Failing to make appropriate changes following prior incident(s) exposing risks to health and safety
Allowing breaches to subsist over a long period of time
Serious and/or systemic failure within the organisation to address risks to health and safety
Offender fell short of the appropriate standard in a manner that falls between the descriptions in ‘high’ (above) and ‘low’ (below) culpability categories
Systems were in place, but these were not sufficiently adhered to or implemented
Offender did not fall short of the appropriate standard, for example, because:
Significant efforts were made to address the risk, although they were inadequate on this occasion
There was no warning/circumstances indicating a risk to health and safety
Failings were minor and occurred as an isolated incident
Readers will immediately anticipate the opportunity for disputes between the parties as to these aspects. How these aspects can be resolved will be discussed later in this article.
Having resolved the level of culpability, the Court is then required to consider the issue of harm. This assessment is also undertaken via a table within the Definitive Guideline, and this table, in very simple terms, requires the Court to compare the level of harm risked (for example, at the upper end of the spectrum, ‘level A’ represents "a risk of death, physical or mental impairment resulting in lifelong dependency on third party care for basic needs and/or significantly reduced life expectancy") against the likelihood of that harm arising, on a scale from ‘high likelihood’ to ‘low likelihood’.
By considering these factors, the offence is then categorised (according to the table) as a ‘harm category 1’ offence (the most serious in terms of harm) to a ‘harm category 4’ offence.
Before moving on from Step 1, however, the Court is required to consider the following two factors ‘in the round’ before deciding whether the overall harm category should be adjusted upwards or downwards. These two factors are:
Whether the offence exposed a number of employees or members of the public to the risk of harm (the greater the number of people at risk, the greater the risk of harm and, therefore, the greater the perceived need to adjust the harm category upwards, and, presumably, vice versa).
Whether the offence was a significant cause of actual harm – the Court will be required to consider whether the offence was a significant cause (in the sense of being a contribution which is more than minimal, negligible or trivial) of the actual harm. In this context, note, the actions of the victim (ie – his or her own culpability) are specifically "unlikely to be considered (relevant) for sentencing purposes." The reason for this is that offenders are required to protect workers and others who may be neglectful of their own safety in a way which is reasonable foreseeable. Thus, these factors are likely to increase the risk of the harm category being increased, whereas the actions of the victim of the offence are unlikely to have the opposite effect (if relevant).
Step 2 : Starting point (for penalty) and category range
Having carried out an initial assessment of the offence, the Court is then required to categorise the offence, initially, by reference to the financial size of the organisation, in the context of its annual turnover or equivalent, in order to reach a starting point for the fine.
For private sector organisations, a company will be expected to produce 3 years worth of annual (audited) accounts. The Court is then required to pay specific attention to elements of those accounts, such as turnover, profit before tax and directors’ remuneration (including pension arrangements), etc.
Note : "Failure to produce relevant recent accounts on request may properly lead to the conclusion (on the part of the Court) that the company can pay any appropriate fine."
For public sector organisations (Local Authorities, Fire Authorities and similar public bodies), the Annual Revenue Budget is the equivalent of turnover and "the best indication of the size of the organisation. It is unlikely to be necessary to analyse specific expenditure or reserves (where relevant), unless inappropriate expenditure is suggested." Thus, for public sector organisations, the Court is required to consider the ‘top line’, as it were, via the Annual Revenue Budget; it will not need to ‘drill down’ beyond that into specific directorate budgets or departmental budgets. In certain circumstances, this may be of assistance (if a directorate requires considerable capital expenditure), however, in other situations (smaller directorates, for example), the particular ‘department’ may be considered in the context of an overall budget which it, realistically, sees little of.
There then follows, within the Definitive Guideline, a detailed table setting out the starting points and ranges for fines according to category of offence and size of organisation. This table is best considered in the context of a specific offence, rather than being set out verbatim here. However, some specific examples provide a ‘flavour’ of the parameters one could be dealing with:
For a large organisation (turnover £50 million or over) involved in a high culpability/category 1 harm offence, the starting point for a fine is £4 million. The range for the fine for that offence is £2.6 million to £10 million.
For a medium sized organisation (turnover between £10 million and £50 million), a starting point for a fine for an equivalent offence is £1.6 million and the range of fine is £1 million to £4 million.
By way of contrast, for a large organisation involved in a low culpability/category 4 harm offence, the starting point for a fine is £10,000 and the range for the fine for that offence is £3,000 to £60,000. For the same offence involving a medium organisation, the staring point for a fine is £3,000 and the fine range is £1,000 to £10,000.
Readers should be aware that a "small" organisation within the Definitive Guide is categorised as having a turnover of between £2 million and £10 million (and fine starting points/ranges reduced accordingly), and there is then a smallest category of business, known as a "micro business" with a turnover or equivalent of less than £2 million.
Having considered the overall fine parameters at stage 2, before leaving this stage of the process, the Court is required to consider, specifically, the issue of aggravating or mitigating features within the offence.
Specific aggravating features are as follows:
Previous convictions, particularly those taking place relatively recently and for similar or identical offences.
Cost-cutting at the expense of safety.
Deliberate concealment of illegal nature of activity.
Breach of any Court Order.
Obstruction of justice.
Poor health and safety record (presumably, not confined to offences as such, but encompassing warning, prohibitions and improvement notices served by the enforcement Authority).
Falsification of documentation or licences.
Targeting vulnerable victims.
Specific mitigating features include:
No previous or no relevant recent convictions.
Evidence of steps taken voluntarily to remedy the problem.
High level of co-operation with the investigation, beyond that which will always be expected in the context of a health and safety investigation.
Good health and safety record.
Effective health and safety systems in place.
Readers will immediately recognise, therefore, the need to ensure that evidence of mitigating features is available and, similarly, evidence of aggravating features is at least considered and dealt with, insofar as they can be. Schedules of both mitigating and aggravating features (so called "Friskies Schedules") have always been important documents in the context of sentencing for health and safety offences. However, they now, obviously, take on a more important function, in that their content (for good or ill) will explicitly inform the Court’s consideration of the position at stage 2.
Thus, there is likely to be considerable debate as to the precise content of such Schedules.
Stages 3 and 4 : Stepping back and reflecting
Having set the overall parameters of the fine by, initially, reference to the offence itself and, then, secondly, by reference to the financial health of the organisation concerned, the Court is required to stand back and consider (a) whether the proposed fine based on turnover is proportionate to the overall means of the offender and then (b) whether other factors may warrant adjustment of the proposed file.
Stage 3 : Proportionality
At this stage, the Court is required to consider section 164 of the Criminal Justice Act 2003, which requires that the fine must reflect the seriousness of the offence and that the Court must take into account the financial circumstances of the offender. The process and intent of the process at this stage is perhaps best summed up in the following passage from the Definitive Guideline:
"The level of fine should reflect the extent to which the offender fell below the required standard. The fine should meet, in a fair and proportionate way, the objectives of punishment, deterrence and the removal of gain derived through the commission of the offence; it should not be cheaper to offend than to take the appropriate precautions."
"The fine must be sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation."
The writer anticipates, in the way of these things, that this passage will be quoted by both prosecution and defence in appropriate cases!
As part of this ‘stepping back’ process, the Court is required to examine the financial circumstances of the offender in the round to assess the economic realities of the organisation and the most efficacious way of giving effect to the purposes of sentencing. Profitability is relevant in this context; if the organisation has a small profit margin relative to its turnover, downward adjustment of the fine may be required. Similarly, if a high profit margin is enjoyed on a relatively modest turnover, an upward adjustment may be required. In summary, the assessment of turnover at Stage 2 is not a mechanistic or ‘blind’ process.
Readers should note, however, that the effect of the fine (in terms of putting an organisation out of business) is relevant, albeit perhaps not in the manner which might be anticipated; the Guideline states : "In some bad cases (putting a company out of business), may be an acceptable consequence." This statement should come as no surprise as this was an indication provided in the Cotswold Geotechnical Holdings case; the first corporate manslaughter prosecution, which also went on, obviously, to consider the level of fine to be imposed.
Stage 4 : Other factors
Other factors, which the Court is then required to consider as part of the ‘stepping back’ process, are the impact of the fine upon the offender’s ability to make restitution to victims (albeit see below), the impact of the fine on the offender’s ability to improve conditions within the organisation to comply with the law and the impact of the fine on the employment of staff, service users, customers and the local economy (but not shareholders or directors).
At this point within the Definitive Guideline, the following is stated:
"Where the fine will fall on public or charitable bodies, the fine should normally be substantially reduced if the offending organisation is able to demonstrate the proposed fine would have a significant impact on the provision of its services."
This indication is welcome news to public sector organisations, obviously. However, the language of this element of the guidance should be specifically considered.
Firstly, the use of the word "normally" indicates that it is by no means universally the case that a fine on a public sector body will be reduced due to the impact on the provision of services. Presumably, this will depend upon other factors within the assessment and an astute prosecutor may well seek to enhance the categorisation of the offence initially in order to mitigate the impact of this almost enshrined reduction later. Similarly, a public sector organisation’s history of offending may be relevant in this context and those representing such an organisation will need to be clear what that history is and how previous offences in other directorates might be sought to be distinguished from the current offence.
Secondly, the language of this element of the guidance clearly indicates that the burden of proof as to impact upon services is with the public sector organisation concerned. To an extent, this is relevant to the third consideration below, but, clearly, it will be necessary for the organisation concerned to deploy evidence of the potential impact of likely fines. It will be insufficient, it is submitted, for such an organisation to simply assert that this impact will manifest itself, no matter how obvious such an eventuality might be in the current age of austerity. Again, the language of the Guideline makes clear that the Defendant has to discharge this burden and, therefore, cannot simply rely upon the deductive powers of the Judge.
Thirdly, and to an extent, growing out of the second point above, the Defendant will need to consider the Definitive Guideline in advance and have an understanding or appreciation of the likely level of fine to be proposed. In that specific context, the Defendant can provide proper mitigation on the basis of the specific impact of a proposed fine on specific service provision. In other words, it is very easy to say that a fine will impact on service provision (generally) without appreciating or understanding the likely level of fine; it becomes very difficult to mitigate effectively by provision of evidence as to the cost of particular service provision in the context of a proposed fine level.
Stages 5 and 6 : Explicit reduction elements
At Stage 5, the Court is explicitly required to consider whether assistance to the prosecution is such that the fine should be reduced. This is pursuant to the Serious Organised Crime and Police Act 2005 and, therefore, it remains to be seen whether this is a regular element of the Courts’ consideration of matters at this stage of the process.
At Stage 6, the Court is required to ‘build in’ the usual reductions for guilty pleas, in accordance with section 144 of the Criminal Justice Act 2003. Accordingly, firstly, a Defendant pleading guilty at an early stage (albeit see below) can expect to receive the appropriate ‘discount’ from sentence. Secondly, this provides an obvious need for that Defendant to seek appropriate specialist advice at an early stage in order to consider the need for and advantages of an ‘early’ guilty plea.
Finally, in this section, a word of caution as to guilty pleas; in this context, guilty plea means, by definition, a basis of plea which is acceptable to the prosecution. Given the direct impact that the (agreed) factual circumstances of any offence will have (elsewise) upon sentence, it will be necessary to ensure, as far as possible, that appropriate confirmation is sought from the Court at an appropriate preliminary stage that albeit the exact basis of plea has yet to be agreed, an appropriate ‘early plea’ has been engaged as far as sentence in concerned. Otherwise, offenders risk being forced into agreeing a basis of plea (in factual terms) without considering the implications of the same in sentencing terms. Again, this is an area where specialist legal advice is a necessity given the likely impact of the factual basis of any plea (see above).
Stage 7 : Compensation and ancillary orders
Having fixed the level of fine, the Court is required to consider its powers as to compensation and ancillary orders.
In summary, the Court’s powers under HSWA comprise a power to make a remediation order, a forfeiture order and/or a compensation order. In most instances, it is the powers as to remediation orders and/or compensation orders which are likely to arise. Under section 42(1) of HSWA, the Court may impose a remedial order in addition to, or instead of, any normal penalty (ie – as well as the fine(s) considered above).
In most instances, an offender will have taken appropriate steps to remediate the risk, or perceived risk, in its systems of work giving rise to the offence(s). Indeed, failure to do so, according to the Guide, deprives such an offender of significant mitigation. However, if the offender has failed to address this aspect, it is likely to be faced with a potential ‘double penalty’, in that a remedial order may be required in addition to the proposed fine and, specifically, the cost of complying with the remedial order will be irrelevant to the quantum of any fine(s).
In addition, the Court is entitled to impose a compensation order, however, readers should note that the Guideline explicitly indicates that in most instances, such compensation is covered (in full) by civil damages and, therefore, sums for which such an order is made are (albeit elsewhere, as it were) covered by insurance. It is explicitly recognised, therefore that, ordinarily, these are matters for the Civil Courts to resolve, rather than for additional criminal sanction.
Readers should also be aware that a specific hierarchy is imposed by the Guideline as to the order in which financial penalties are to be paid by an offender, normally with a compensation award taking precedence over any fine(s) and/or contribution to prosecution costs.
Stage 8 : The totality principle
This stage of the process applies where the Court is required to sentence an offender for more than one offence. Sadly, this is a situation which one commonly encounters in regulatory prosecutions where the approach by the regulator usually appears to be on the basis of prosecuting for every available offence, rather than seeking to pick out specimen offences.
In this context, the Court is, however, required to consider the totality of the sentence imposed and, specifically, to consider whether the same is just and proportionate to the offending behaviour concerned.
Stage 9 : Reasons
The Guideline reminds the Court that section 174 of the Criminal Justice Act 2003 requires the Court to give reasons for and explain the effect of the sentence.
This once again achieves the aim of transparency in terms of sentence. Moreover, it represents an opportunity for both prosecution and defence to check the approach taken to each stage of the sentencing process and, if appropriate, consider any necessary appeal of sentence in appropriate circumstances.
The new Definitive Guideline represents a significant change to the approach to be taken to sentencing in health and safety offences. One could strongly argue that the component parts of the process are the same as they have always been, however, there is clearly now going to be a far more detailed and forensic consideration of the various aspects of the sentencing process. Moreover, those representing Defendant organisations (or individuals) in the context of health and safety offences will need to consider all aspects of this new guidance in the context of offences generally.
Quite clearly, and in a sense, this process began some years ago; there is a move towards increased fines in regard to health and safety offences. There has been political pressure to this effect for some time on the basis that increased fines bring with them an increase in the deterrent effect of such prosecutions, both to the organisation concerned and to the wider industrial community at large.
The move towards larger fines has been led by the ‘new’ offence of corporate manslaughter (which we shall examine in terms of the new Sentencing Guidelines in the next article; the fine parameters outlined above are obviously lower than those contemplated for corporate manslaughter). However, the new guidance clearly indicates that this increase in penalties will (relatively speaking) apply across the board, as it were, and any organisation which finds itself the subject of a regulatory investigation (or has recently been the subject of such an investigation) should bear in mind the above Guideline in regard to sentencing. The increase in financial impact from such situations is likely to have a number of consequences, not least of which is the fact that regulatory fines can no longer be regarded with anything other than appropriate seriousness, requiring an appropriate deployment of legal resources to deal with the same.
For a copy of the new Definitive Guideline, or for a discussion as to the same generally, please feel free to contact the writer.