Punitive penalties on the way for careless companies | 12 November 09
COMPANIES face the prospect of fines running into millions of pounds if they fall foul of stricter sentencing on workplace fatalities, a leading law firm has warned.
Businesses found guilty of the corporate manslaughter could face a minimum fine of £500,000 and maximum fines running into millions, health and safety experts at Ward Hadaway say.
Convicted companies also face being forced to make their prosecution known to the public as well as informing shareholders and customers.
The proposals have been put forward by the Sentencing Guidelines Council, which produces guidelines on sentencing policy for courts in England and Wales.
James Thompson, partner in the health and safety team at Ward Hadaway, which has offices in Newcastle and Leeds, says that the plans show how seriously the Corporate Manslaughter Act is being treated by those who set sentencing guidance for the courts.
James said: “Whilst these are proposals for sentencing guidelines and are open to consultation, they show very clearly the direction which the sentencing policy is heading when it comes to treating companies which cause death through gross breaches of care.
“The words used in the proposals to describe how the fines should be are ‘punitive and significant’ and they are certainly both of these.
“Fines running into hundreds of thousands of pounds would be enough to cause many companies to go out of business while even large organisations would find multi-million pound penalties hard to cope with.
“The proposal to force companies to publicise a corporate manslaughter conviction is also likely to cause untold amounts of damage to corporate reputations.”
The guidelines also propose that factors increasing the seriousness of the offence – and hence the size of any fine – include how common is the kind of breach of care in the organisation and how far up the organisation the responsibility for the breach went.
Other factors that aggravate the offence and may attract a larger fine include failure to heed warnings, cost-cutting or deliberate failure to obtain or comply with relevant licences.
No account will be taken of the impact of any fines on the shareholders or directors of an offending company, although the effect of the offence on employees should be taken into consideration.
The guidelines also propose that health and safety offences in the workplace that cause death should result in fines of at least £100,000 and may be measured in hundreds of thousands of pounds or more.
James Thompson said: “This underlines once again just how important it is for companies to make absolutely sure that all their processes, systems and operations are as safe as they can possibly be.
“Scrimping on health and safety really is a false economy when you compare it with the financial, reputational and human cost of what can happen if things go wrong.
“The message from these guidelines is very clear for all companies and organisations: if you don’t follow the rules, prepare for very significant financial pain or worse.”
Ward Hadaway is holding two seminars over the next few weeks looking at the impact of the proposed sentencing guidelines for Corporate Manslaughter and health & safety offences which result in death and how organisations can deal with it.
The events take place at the firm’s offices in Newcastle and Leeds.
The Leeds seminar takes place on Friday, November 27 at Ward Hadaway’s offices at 1A Tower Square, just off Wellington Street, from 8am.
The Newcastle seminar is being held on Wednesday, December 2 at Ward Hadaway’s offices at Sandgate House on the Quayside from 8am.
For further details, please see our Events section.