Chambers and Partners 2020 – Health and Safety
Guy Bastable, Richard Reichman and Tom McNeill of BCL Solicitors LLP
Health and safety and other regulatory offences continue to make headlines due to high-profile incidents and associated multi-million pound fines, particularly in view of the increased public scrutiny of corporate attitudes and culture. New regulatory challenges are emerging as the workplace and workforce change and regulation is developing to maintain safety.
In April 2019, just over three years after the Sentencing Council’s guideline 'Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences' came into force, the Sentencing Council published an impact assessment. The data shows that the average fine has increased substantially (around fivefold); the periods 10 months before and after the guideline were compared, with the mean fine level rising from £40,500 to £221,700 and the median fine level rising from £12,000 to £60,000. Fines for large and very large organisations are around 15 times higher than before the guideline (i.e. a fine of £20,000 would now be around £300,000). There were also unexpected increases in fines for smaller organisations and individuals, and a greater number of suspended sentences imposed on individuals. The Sentencing Council intends to continue investigating the operation of the guideline and consider whether any revisions are necessary.
In July 2019, the HSE published the latest annual fatal accident statistics. 147 workers were killed at work in Great Britain in 2018/19, an increase of six fatalities from 2017/18. Whilst there has been a reduction from 179 fatal accidents in 2008/09, the figures have been broadly flat since around 2013, suggesting that higher fines have, at least not yet, impacted on reducing fatal accidents.
The recent case of Valero Energy UK Limited illustrates the continued high fines under the sentencing guideline and gives further clarity regarding the sentencing of very large organisations. On 6 June 2019, the defendant company was sentenced following the death of four workers at its oil refinery in Pembrokeshire in 2011. Culpability was found to be ‘high’, with the case falling within harm category 1. As the offences resulted in four fatalities, the judge placed the offending at the top of the range for this category of offence (£6 million for a large organisation). The defendant company was treated as a very large organisation and the judge chose to reflect this by increasing the starting point for the fine from £6 million to £7.5 million. This figure was reduced by one-third, to take account of a guilty plea, to £5 million, the joint highest levied since the sentencing guideline came into force.
In early 2019, guidance was given regarding the operation of the sentencing guideline in relation to linked organisations in the cases of NPS and Faltec. Under the sentencing guideline, the resources of a linked organisation can be considered when “exceptionally it is demonstrated … that the resources … are available and can properly be taken into account”.
In NPS, the Court of Appeal held that the sentencing judge was wrong to read the sentencing guideline as entitling him to treat the defendant company as a large organisation, due to the financial position of linked organisations. It is the defendant organisation's turnover, not that of any linked organisation, which determines its size under the guideline (unless there are reasons to ‘lift the corporate veil’, such as artificial corporate structures). However, the resources of a linked organisation may be considered, in exceptional circumstances, later on in the sentencing process, when examining the financial circumstances of the offender in the round and assessing the "economic realities of the organisation".
In Faltec, the Court of Appeal held that the sentencing judge had been entitled to treat it as an exceptional case where the resources of Faltec’s holding company could be taken into account when considering the economic realities. It would have been unrealistic and misleading to ignore the holding company’s resources due to the defendant’s dependence on the holding company.
The importance of expert evidence for sentencing was highlighted in two cases in 2019, Squibb and Faltec. In Squibb, statistical expert evidence regarding the likelihood of harm persuaded the Court of Appeal to reduce a fine by over 50%. Leggatt LJ stated that likelihood of harm was “not something which is rationally capable of being assessed simply on the basis of supposition, impression or imagination”. This approach was endorsed in Faltec: “the likelihood of … harm arising can only be assessed having regard to the scientific evidence before the court”.
The Department for Work and Pensions published its tailored review of the efficiency and effectiveness of the Health and Safety Executive (HSE) at the end of 2018. The review made financial recommendations, with a particular focus on the Fee for Intervention scheme (FFI). The report recommended that “HSE should explore opportunities for expansion of the use of cost recovery in certain sectors, building on the lessons learned from [FFI] to ensure clear objectives”. Following the review, HSE increased its FFI hourly rate by nearly 20% from £129 to £154 from 6 April 2019. The resourcing challenges faced by Local Authorities were also noted with the review recommending that consideration is given to extending the FFI costs recovery regime to Local Authorities. With ongoing budgetary pressures, we expect to see extensions of the FFI regime in the future.
The HSE’s new CEO, Sarah Albon, took up her position in September 2019, stating that her focus would be “continuing to deliver improvements in health and safety performance as our workplaces move into a future with new challenges, new technologies and new opportunities”. Future challenges facing the HSE include the changing workplace, for example new risks posed by artificial intelligence and automation, cyber risks posing threats to the security of safety critical electronic control systems and preparations for Brexit.