November 22, 2018

£1m+ fines the ‘new norm’ for health & safety failures

Fines worth £1m or more for breaches of Health and Safety legislation are the 'new norm' within the UK.

An analysis of the Health and Safety Executive's (HSE) enforcement statistics 2018[1] has revealed the high level of fines companies now 'routinely' receive for health and safety breaches together with confirmation of the upward trend in the level of health and safety fines, imposed by both the Magistrates and Crown Courts. 

High value fines now commonplace

HSE data shows a total of 45 cases in 2017/18 where a fine of over £500,000 was imposed, with the largest single fine of £3m being imposed by Caernarfon Crown Court on a Spanish Construction Company following a fatal fall from height.  Our own research found there were 19 cases with fines exceeding £1m imposed by the UK's criminal courts for the 12 month period to 31 October 2018 – with less than half of the cases involving very large organisations (VLO's), dispelling the notion that only those companies with turnovers in the hundreds of millions or billions receive £1million plus fines.  Organisations in receipt of £1m plus fines included those within the public sector and a company with an annual turnover of £25m. 

Targeted and successful prosecutions – fewer but higher fines

HSE Prosecutions were down by 16% in 17/18 to a total of 517 – the lowest number in 5 years, with the HSE revealing an impressive conviction rate of 95% where cases resulted in a conviction for at least one offence, albeit such statistical interpretation does not recognise the numerous cases where the HSE has charged multiple offences and the defendant company has successfully defended one or more of the allegations, or caused the HSE to withdraw multiple and/or more serious allegations.   Notwithstanding this, the fact section 40 of the Health and Safety at Work etc. Act 1974 places a reverse burden of proof on companies wishing to establish the defence 'that it was not practicable or not reasonably practicable to do more than was in fact done to satisfy the duty' means HSE conviction rates against companies will always be higher, as the legislation is weighted in the Prosecution's favour by placing the onus on the defendant company to prove they've satisfied their legal duty.

Although Local Authority prosecutions are not included in the 517 prosecutions referred to, the HSE Enforcement data does reveal a significant increase in the enforcement activity of Local Authorities (LA's), showing an annual increase of 7% to 2,580 in the total number of enforcement notices issued by LA's in 17/18 i.e. improvement and prohibition notices. This figure amounted to 22% of all enforcement notices issued during the 17/18 period.  As the Health and Safety (Enforcing Authority) Regulations 1998 determine the appropriate enforcing authority for health and safety, dependent on the main work activity of the business, companies operating in the retail, leisure, hospitality etc. sectors are typically regulated by LA's, rather than the HSE. In the last 12 months companies including Tesco and DHL have been fined in excess of £1m for health and safety breaches resulting from LA prosecutions.

Emphatic and rapid change in Sentencing Landscape

Stark evidence of increased fines for all sizes of business as a result of the introduction in February 2016 of the Sentencing Guideline for Health and Safety Offences[2] is revealed in the average level of fine for 17/18 rising from the previous year (again), by 17%, to £147,000 – with the average level of fine showing a remarkable increase of over 400% during the 3 year period from 14/15 when the average figure was £29,000.  The HSE statistics helpfully contrast 14/15 i.e. the final full year before the sentencing guideline was implemented, with 17/18, noting the largest fine in 14/15 was £750,000, with only 5 cases with fines of £500,000 of more.  

Our analysis

Fines of one million pounds or above are unexceptional nowadays and we've become accustomed to reading about them, with similar numbers reported in each of the last 2 years. Although the Court of Appeal's helpful guidance in the case of R v Whirlpool for criminal courts to resist the temptation to approach sentencing very large organisations in an arithmetic way means we have not seen the glut of multi-million pound fines many had predicted, it is notable that the sentencing guideline continues to have a far greater impact on SME businesses, with the level of fines routinely being a significantly greater percentage of turnover than the fines imposed on large and very large organisations, despite the same harm categories and levels of culpability.

[1] http://www.hse.gov.uk/statistics/enforcement.pdf

[2] https://www.sentencingcouncil.org.uk/wp-content/uploads/HS-offences-definitive-guideline-FINAL-web.pdf