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New health and safety penalty scale based on business turnover

  • Fines up to £10 million for large organisations (annual turnover over £50m)
  • Fines up to £4 million for medium-sized organisations (turnover £10m to £50m)
  • Fines up to £1.6 million for small companies with turnovers £2m to £10m
  • Fines up to £450,000 for “micro-businesses” (less than £2m turnover).
  • Large business convicted of corporate manslaughter can now face fine up to £20m.

COMPANIES now face much larger fines for health and safety offences of up to £10 million for big businesses, and up to £450,000 for small outfits, under new guidance for courts in England and Wales.

It’s an important issue for the automotive industry which is covered by so many regulations because of the risks of working with machines such as vehicles.

And it’s particularly important to the fleet industry where a comparatively small company can have a multi-million pound turnover, because it’s that – not profits or ability to pay – on which the courts will base their fines. That’s why proper fleet risk management is so essential.

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The stiff penalties apply NOW, to all organisations and offenders aged 18 and older, who are sentenced on or after 1 February 2016, regardless of the date of the offence. Maximum penalties range up to two years’ jail with unlimited fine.

The offences include breach of duty of employer towards employees and non-employees, breach of duty of self-employed to others, breach of duty of employees at work and breaches of Health and Safety Regulations, including secondary liability.

The guidelines take into account the degree of risk of harm up to threat to life, and culpability degrees up to flagrant disregard for the law.

And these new sentencing guidelines for breaches of health and safety, requiring scrutiny and a commitment to full compliance by everyone from the self-employed one-man band to managers in major corporations, are in addition to the proposed increased penalty points and fines for drivers caught using a mobile phone already reported in Business Car Manager.

With the automotive industry having to manage far more health and safety issues than most other industry sectors, the importance of full compliance is particularly important for both companies and individuals, points out the SMMT.

Previous guidelines meant that a fine for a health and safety offence resulting in death would be set at a minimum of £100,000, not less than £500,000 for “corporate manslaughter”. Now the fines are certain to be far higher, not least because annual turnover is the starting point for calculations.

Fines of up to £10m are possible for large organisations (annual turnover greater than £50m), up to £4m for medium-sized organisations (turnover between £10m and £50m), up to £1.6m for small companies with turnovers between £2m  and £10m, and up to £450,000 for “micro-businesses” (less than £2m annual turnover.

A large business convicted of corporate manslaughter can now face a fine of up to £20 million.

The new guidelines come from the Sentencing Council, an independent Ministry of Justice body. Crown courts and magistrates courts in England and Wales are obliged to follow the Council’s guidelines “unless it is in the interests of justice not to do so.” Courts in Scotland are expected to follow the same guidelines, as health and safety law applies equally throughout the UK.

Failure to produce required financial information, or the production of insufficient or unreliable information, is likely to attract an adverse reaction. The court will form its own conclusions from the circumstances and information available, including that the offender is able to pay any fine

The approach of courts in calculating fines under the new guidelines is awaited with keen interest, according to Laura Cameron, a lawyer specialising in health and safety at Pinsent Masons solicitors.

Of particular interest to smaller companies in the automotive supply chain, or owner-operator businesses, will be the requirements to provide comprehensive financial information to the court to determine the size of a fine.

Cameron said: “Organisations will be required to submit detailed financial information – including turnover figures, pre-tax profit, director remuneration, pension provision, assets and debt exposure – for the past three years (including that of any associated organisation).

“Failure to produce required financial information, or the production of insufficient or unreliable information, is likely to attract an adverse reaction. The court will form its own conclusions from the circumstances and information available, including that the offender is able to pay any fine.”

The new Sentencing Council guidelines have been welcomed by the British Safety Council, which describes them as “long overdue.”

 

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