Expect more multi-million pound corporate fines for health and safety law breaches, expert says

Out-Law News | 11 Feb 2016 | 4:33 pm | 2 min. read

Companies should expect multi-million pound fines for health and safety law breaches and other regulatory offences following the entry into force of a new sentencing guideline, an expert has said.

Earlier this week, energy firm ConocoPhillips was ordered to pay £3 million plus costs by Lincolnshire Crown Court after it pleaded guilty to three charges involving leaks from one of its offshore gas platforms. The fine could have been even higher had the court been required to formally apply the new sentencing guideline, which came into force just after the sentencing hearing began, according to health and safety law expert Kevin Bridges of Pinsent Masons, the law firm behind Out-Law.com.

"The case is significant as it represents a substantial fine in a non-injury case, where the new guidelines were not formally applied given the sentencing hearing started before 1 February," he said. "The fine was also discounted from £5m to take account of early guilty pleas and other mitigation. ConocoPhillips' turnover in recent years has exceeded several billion pounds, placing it in the 'very large' category of companies."

"Even before the new sentencing guideline came into force we have witnessed in recent weeks the courts imposing increasingly higher fines for health and safety offences. Fines of £1m or £2m were becoming commonplace. Before long under the guideline, fines could reach £10m for the most serious health and safety offences and £20m in corporate manslaughter cases, and could go even higher for very large companies," he said.

The Sentencing Council's definitive guideline for use by courts in health and safety, corporate manslaughter and food safety and food hygiene cases came into force on 1 February 2016. The document follows similar publications for use in environmental and fraud, money laundering and bribery cases, and is intended to ensure a consistent approach to the sentencing of individuals and organisations convicted of these offences by courts in England and Wales.

The guideline requires courts to first assess the overall seriousness of an offence based on the offender's culpability and the risk of serious harm, regardless of whether any harm was in fact caused. It then sets a starting point and a range of possible fines based on the seriousness of the offence, as well as a non-exhaustive list of mitigating and aggravating factors that the courts can take into account when setting the level of the fine. In corporate cases, different starting points and ranges apply depending on the size of the organisation based on turnover or the equivalent.

ConocoPhillips was fined after admitting to serious safety failings between 30 November and 1 December 2012, which resulted in two uncontrolled and one controlled but unexpected gas release in breach of the 1995 Offshore Installations (Prevention of Fire and Explosion, and Emergency Response) Regulations. An investigation by the Health and Safety Executive (HSE) found that the releases had been caused by poorly planned maintenance work, and that the lives of up to 66 workers on board the platform would have been at risk had an explosion occurred.

The court's sentencing decision was issued a few days after multinational chemical producer Solvay Solutions was fined £333,000 and ordered to pay costs after pleading guilty to an offence under the 1974 Health and Safety at Work etc Act. The leak of dangerous gases during the breach was so severe that sections of the M5 near Oldbury had to be closed by the Highways Agency, and the incident had to be reported to the European Commission.

Health and safety law expert Kevin Bridges said that in future sentencing hearings, evidence of a company's 'harm' and 'culpability' could be "vitally important" to the overall outcome of a case.

"The better course for any organisation is therefore to ensure proper ongoing investment in health and safety, such as training, competent advice, planned preventative maintenance and competent staff and managers, as the benefits in improved safety performance and the costs associated with such preventative measures will be a fraction of potential fines under the new sentencing regime," he said.