Out-Law News | 16 Apr 2021 | 11:05 am | 3 min. read
In deciding an appeal against the sentence imposed on a not-for-profit organisation for breaching section 2 of the Health and Safety at Work etc Act 1974, the Court of Appeal held that it was not unreasonable to increase the starting point of a fine from £1 million to £2 million in order to reflect the size of the organisation, to make the fine proportionate to the offender's means and to achieve the statutory sentencing purposes of punishment, deterrence and the removal of gain.
Organisations cannot ignore the fact that public and political appetite to hold organisations to account for their safety and health failings continues to grow
Places for People Homes (PPH) was fined £600,000 in the Crown Court at Aylesbury after an investigation by the Health and Safety Executive revealed it had exposed employees to unacceptable risks associated with the use of vibrating tools and equipment over a five year period giving rise to chronic vibration related injuries in five workers.
The Sentencing Council’s definitive guideline for health and safety offences sets out a staged approach to determining an appropriate fine, predicated on an organisation’s annual turnover. In this case, financial information showed PPH’s turnover was in the region of £290m although it had assets totalling £3 billion.
The guideline defines a large organisation as one with a turnover in excess of £50m. It goes on to state that where an offending organisation's turnover “very greatly exceeds the threshold for large organisations, it may be necessary to move outside the suggested range to achieve a proportionate sentence”. The guideline does not define or provide a table for organisations with a turnover above the threshold of £50 million and so there is no precise level of excess turnover at which an organisation becomes "very large".
At step one of the guideline the judge determined the case to fall into ‘high culpability: harm category 3’, thereby providing a starting point of £540,000 for a large organisation. She raised the starting point to £1m to reflect the number of workers exposed to the risk of harm as well as the actual harm caused to the five named individuals. At step two, the judge doubled the starting point to £2 m to reflect the fact that the organisation’s turnover, at nearly six times higher than the £50 million threshold, “significantly exceeded” it. This took the starting point £550,000 beyond the range for a high culpability: harm category 3 case. She then reduced the starting point to £1.25m to acknowledge the extensive mitigating factors.
In addressing step three, the judge was satisfied that the fine was proportionate to the overall means of the offender. However, in applying step four of the guideline, which requires the court to consider factors which may warrant adjustment of the proposed fine, the judge accepted that there would be an adverse impact on the people who were the beneficiaries of PPH and so she further reduced the fine to £900,000. The one third discount for the guilty plea brought the ultimate fine down to £600,000; a penalty which PPH deemed to be manifestly excessive.
The Court of Appeal confirmed its earlier judgements in the Thames Water sentencing cases in 2015 and 2019; namely, there is no “bright dividing line” between ‘large’ and ‘very large’ organisations but in most cases it should be ‘obvious’.
The Court said that the size of the organisation lies on a spectrum and “the extent to which any increase is required will depend upon the particular circumstances of each individual case and is not something for mechanistic extrapolation”.
As the Court of Appeal deemed that the assets, turnover and operating surplus from PPH’s core activities put it squarely within the very large organisation category, it agreed that an uplift from £1m to £2 m was appropriate and proportionate to the organisation’s means. However, the court ruled that in the particular circumstances of this case the fine should be reduced from £600,000 to £400,000. It held that while the original level of fine was proportionate to the offender’s means and it had the ability to pay, such a sum would adversely impact on PPH’s ability to provide support to the vulnerable and this was not given sufficient consideration by the lower sentencing court.
Crucially, the Court of Appeal did not put a cap on the approach to sentencing very large organisations
Health and safety expert Zoe Betts of Pinsent Masons, the law firm behind Out-Law, said despite the success of the appeal, the case was nevertheless significant for organisations with a turnover considerably in excess of £50m.
“This case demonstrates the willingness of the courts to find that an organisation is ‘very large’, and to double the starting point of a seven figure fine, where the annual turnover is lower than we have seen in other cases of this kind. Crucially, the Court of Appeal did not put a cap on the approach to sentencing very large organisations, and it is easy to envisage an even greater multiplier may be required to ensure the aims of sentencing are achieved in cases where, for example, turnover approaches or exceeds £1 billion,” Betts said.
“Organisations cannot ignore the fact that public and political appetite to hold organisations to account for their safety and health failings continues to grow,” Betts said.
Co-written by Fiona Cameron of Pinsent Masons.
01 Jun 2020
04 Mar 2019