Out-Law News 3 min. read

‘Very large organisations’ face higher fines under Sentencing Council guidance


Very large organisations (VLOs) could face higher fines for health and safety offences under amended guidelines published by the Sentencing Council for England and Wales.

Kevin Bridges, regulatory expert at Pinsent Masons, said: “The amendments could see the starting points for fines under the relevant Sentencing Council’s guidelines significantly increase for health and safety, food safety and food hygiene, corporate manslaughter and environmental offences committed by VLOs.”

The new amendments aim to provide greater clarity and consistency in sentencing organisations whose turnover far exceeds the threshold typically used in existing guidelines. Until now, courts have had limited direction on how to scale fines appropriately for companies with turnover “very greatly” exceeding the threshold for large organisations of £50m, often leading to inconsistent outcomes.

As previously worded, the Sentencing Council’s guidelines categorise corporate defendants based on their turnover for the purpose of reaching a starting point for a fine, having assessed levels of culpability and harm following a guilty plea or conviction. A ‘large organisation’ is one with a turnover in excess of £50m. However, sentencing courts are also directed that “where a defendant company’s turnover or equivalent very greatly exceeds the threshold for large companies, it may be necessary to move outside the suggested range to achieve a proportionate sentence”.

There is no judicial definition of what constitutes "very greatly exceeds" or in what circumstances it may be necessary to move outside the suggested range to achieve a proportionate sentence and by how much.

The council acknowledged that the existing framework did not adequately address the sentencing of VLOs.

However, the amendments do not set a threshold value for VLOs and offer no further guidance on how to specifically approach the sentencing of such organisations. Instead, they reflect recent case law and sentencing principles, stating that it should be “obvious” when an organisation is a VLO. In a change from the wording originally proposed by the Sentencing Council in their 2024 consultation on this and other matters relating to sentencing, the phrase “it may be necessary to move outside the suggested range to achieve a proportionate sentence” in relation to sentencing VLOs, will now read "where an offending company’s turnover or equivalent very greatly exceeds the threshold for large companies, courts should consider fines outside the range for large companies to achieve a proportionate sentence”.

Bridges said: “This is significant and is intended to avoid any implication that a sentencing court should start with a consideration of the sentencing ranges for large organisations. It was said to be ‘somewhat inconceivable that these ranges could ever be applicable’”.

The sentencing court must consider the culpability and harm factors, the aggravating and mitigating factors, the purposes of sentencing, including punishment and deterrence, and the financial circumstances of the offending organisation, in setting fines proportionate to the organisation’s means and sufficient to emphasise the need for regulatory compliance.

To meet concerns that the reference in the original proposal to a fine being ‘sufficient to bring home’ the need for regulatory compliance over-emphasised the size of the organisation at the expense of the relevance of the findings of seriousness, this has been amended to emphasise that the fine should be sufficiently large to constitute appropriate punishment depending on the seriousness of the offence, and sufficient to bring home to the management and shareholders the need for regulatory compliance.

These changes are set out in ‘step 2’ in the relevant guidelines.  This is where the starting point and range of fines are determined. As a result, the amendments could lead to a significant increase in the starting point for fines for VLOs, as the court would consider proportionality at this stage rather than at ‘step 3,’ where the court currently reviews the fine level after setting an initial amount.

Bridges said: “Despite the changes to the amended wording resulting from the consultation, there remains a lack of clarity on how courts will arrive at the starting point when it comes to a VLO. Sentencing judges are likely however to give more active consideration to the proportionality of the fine and ensuring it is sufficiency large to ‘bring home the message’ to management and shareholders of the need to comply with the law.”

The update on VLOs is part of a wider package of changes introduced by the Sentencing Council.

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