Wed, 27 Jun 2018
Michelle Di Gioia
Following the introduction of the Sentencing Guidelines on February 1, 2016, there has been a significant change in the scale of fines imposed by the courts.
It is useful to look at how the guidelines have been applied two years on and the level of fines which businesses are exposed to.
In the first year, more than £73m of fines were ordered, marking a 111.7% increase in fines from the previous year.
Notably, fines are now calculated on the basis of a business’ turnover, an approach not previously taken.
Micro companies are those with a turnover of less than £2m whose maximum exposure to fines is about £450,000, whereas a small company is considered to be a company whose turnover is anywhere between £2m and £10m, with a maximum
exposure to a fine of £1.6m.
Contrasted with a large company (where annual turnover is more than £50m) and if found to have a very high culpability could be exposed to a fine up to a painful £10m.
Last month, RK Civil Engineers Ltd and RK District Heating Ltd, a civil engineering firm and a district heating firm, were fined £1m each after the engineering firm’s employee sustained fatal injuries when a heating pipe weighing 840kg and measuring 12 metres in length fell on him. The pipe was being moved by an excavator and was incorrectly placed above stillages, which resulted in it rolling off and falling on to him. The firms were found guilty of breaching the Health and Safety at Work Act 1974 which imposes a duty on all employers to ensure the safety of their employees.
In February this year, Tata Steel was fined £1.4m plus costs of £140,000 following the death of a 26-year-old electrician. The electrician was examining a crane as part of his inspection when an overarching crane crept over the cage that he was in, crushing him to death.
Upon investigation, the Health and Safety Executive (HSE) found that Tata Steel failed to enforce its own safety mechanisms despite two fatalities having previously occurred. The HSE also concluded that Tata Steel failed to install essential control measures that could have prevented this.
The courts are also taking a punitive approach even in circumstances where injury/ fatality has been avoided, but where the risk of exposure to injury or death is high.
In 2016, ConocoPhillips (UK) Limited, one of the world’s largest oil and gas exploration and production companies, received a £3m fine following a gas leak off the Lincolnshire coast. Although the leak did not result in any injuries, the court concluded that the case was one of high culpability because of the exposure to its workers of the high likelihood of injury or death.
Businesses must not under-estimate the level of culpability that a court can attach based on risk to exposure.
All employers must ensure a safe place of work for their employees.
In addition, the Companies Act 2006 prescribes duties on directors to ‘promote the success of the company’ and this includes ‘the interests of the company’s employees’ and ‘the impact of the company’s operations on the community and the environment’.
Directors may consider this as a timely reminder to assess the company’s exposure to health and safety. It is important to consider what measures are in place to ensure health and safety compliance. Directors of companies may be held personally liable for health and safety breaches.
The HSE’s Leading health and safety at work is a useful guide providing guidance to organisations to promote health and safety at work and ensure compliance with the regulations.
Businesses must therefore remain vigilant and take preventative measures in health and safety compliance as the exposure to fines under the guidelines can be potentially monumental.
Michelle Di Gioia is a Partner in the Dispute Resolution Team, at Gardner Leader's Newbury office
T: (01635) 508141