This in turn has an important knock on effect for insurers at every stage of an investigation. At the outset, companies will want to put forward strong defences to corporate manslaughter investigations and, even where cases proceed with the HSE alone, to challenge parts of cases to achieve the most favourable basis of plea and avoid very high fines. They will no doubt look to their insurers to support them in achieving these objectives.
There have been a number of attempts in recent years to further criminalise failures of health and safety law:
- In April 2008, the Corporate Manslaughter Act 2007 came into force, creating a new statutory offence of corporate manslaughter for organisations.
- The Health and Safety Offences Act 2008 came into force in January 2009, which, amongst other things, introduced imprisonment as an option for individuals for breaches of most health and safety legislation.
Whilst undoubtedly both have had a significant effect on how health and safety offences are perceived and investigated, they have not to date led to a flood of corporate manslaughter prosecutions or prison sentences.
Sentencing guidelines
In February 2010, the Sentencing Guidelines Council introduced 'definitive guidelines' for sentencing organisations convicted of corporate manslaughter and/or health and safety offences causing death.
The guidelines are a hugely significant development as, for the first time, figures are identified in monetary terms as guidance to a sentencing judge when dealing with such cases. In brief, the guidelines suggest that, for a company convicted of corporate manslaughter, a fine should seldom be less than £500,000, and that a fine for a health and safety offence, where the offence is shown to have caused death, should seldom be less than £100,000.
What effect have the guidelines had?
A year on is a good time to assess whether or not the guidelines have led to changes in the way that companies are actually being sentenced and whether we can expect to see bigger fines. We have conducted our own research to make that assessment. This suggests that fines in 2010 unquestionably increased for most cases involving death, but that the courts are applying the guidelines with care.
The crown courts have been assisted in their application of the guidelines by two important decisions of the Court of Appeal:
- In March 2010, just a few weeks after the guidelines came into force, the Court of Appeal rejected an appeal by Bodycote HIP that their sentence of £533,000 with costs of £200,000 was excessive for a health and safety offence involving the death of two of its employees. The Court of Appeal pointed to what it described as “a dismal attitude towards the health and safety of its employees” and “multiple systemic failures”.
- In July 2010 the Court of Appeal upheld a fine of £100,000 against Marble City Ltd, but in doing so it made it clear that the guideline that a fine should seldom be less than £100,000 should not be treated as some form of tariff, and that quite intentionally, the guidelines had not given a specific bracket, allowing all the circumstances to be considered in each case. This includes, importantly, the different financial circumstances of each defendant with, in the current economic climate, the courts having the difficult job of balancing what a company can afford.
The result is that the general trend in 2010, following those two decisions, is for significantly increased fines for those that can afford to pay them. Examples, in addition to the Bodycote HIP case and the multi-million pound fines imposed on companies involved in the Buncefield case, include:
- Tangerine Confectionery Ltd fined £300,000 for breaches implicated in the crushing to death of an employee in a sweet-making machine.
- Enterprise Inns PLC fined £300,000 for breaches implicated in the death of a pub landlord from carbon monoxide fumes.
- British Telecommunications Plc fined £300,000 for breaches implicated in a fatal fall from height of one of its employees.
- Walkers Snack Foods Ltd fined £350,000 for breaches implicated in the death of a driver overcome by chlorine dioxide fumes.
However, at the other end of the spectrum, there are examples of small companies where fines of less than £30,000 have been imposed for breaches causing death.
Future impact
There is no doubt that the guidelines have already had a significant effect in raising the levels of fines for those companies implicated in a health and safety offence causing death, where the company can afford to pay. We expect fines to keep increasing in 2011 and, when the effects of the recession lift and companies become more solvent, for there to be a smaller number of fines below £100,000.